Going, Going, Gone!
There are regular property auctions held in Kent throughout the year and buying a property from an auction can be potentially very profitable. Property may be sold under the market price, especially if it has proved difficult to sell, or if it is to be sold quickly, or it may need work carrying out to bring it up to an inhabitable standard. It is however something that you should research thoroughly, so you know what you are buying and your financial and legal responsibilities.
Occasionally properties are put into an auction where there are complications or difficulties with regard to the legal title, as there is no requirement for a buyer to check the legal title prior to exchanging contracts.
Before the auction, visit as many properties as you can to help you narrow down which ones you are seriously interested in. It is very likely a property being sold at auction will require some building work, so take an expert with you so you understand the scale and costs of any work that needs to be carried out.
There will be a legal pack available to read about each property before the auction, so make sure your solicitor checks this for you. There could be covenants or restrictions on the property that may affect the potential future value, or difficulties / complications with regard to the legal title.
You will need to have a 10% deposit to pay on the day of the auction if your bid is successful, plus the remainder will need to be paid within (generally) 28 days. If you are intending to purchase a property with a mortgage this can create difficulties. Ideally before committing yourself to purchasing a property, you should have a formal mortgage offer in place. Whilst a mortgage in principle is useful, the timescales will be very tight to enable an actual mortgage offer to issue in respect of the individual property, you also need to allow sufficient time for your solicitor to draw down the mortgage advance funds, between you committing yourself to buy the property at the auction and the contractual completion date. Furthermore it will be necessary for a Building Society Valuation / Survey to be carried out. If the property did not stand up to valuation or there were issues with the legal title, you would not be able to utilise the mortgage in order to purchase the property.
On auction day it can be both exciting and nerve wracking. It is therefore wise to attend a number of auctions prior to the one at which you wish to purchase the property, in order to get a feel for what goes on. You can bid by phone or get someone to bid on your behalf. This may be useful if you don’t trust yourself to stop bidding once you have reached your ceiling price.
If you bid on a property and it doesn’t reach it’s reserve price, then it won’t sell, however there may still be a deal to be done. Have a chat with the auctioneer after the auction.
If your bid is successful, then subject to completion of the formalities, the property will be yours within a short period of time .It is advisable to engage the services of your solicitor prior to attending the auction. This is to consider the legal pack prior to committing yourself to the purchase and to ensure that everything is in place to be able to meet the timescales if your bid is successful.
If your bid is successful then notify your solicitor immediately, as there will be a lot to be done to formalise the documentation and ancillary matters to complete your purchase.
Alan Williams Head of Residential Conveyancing can be reached at firstname.lastname@example.org