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First Time Auction Advice

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Article taken from John Woolett & Co. Auctions

Selling at Auction

* Arrange to meet the auctioneer at the property so you can discuss it properly. Make sure you understand the auction process, and the costs involved, such as commission charges and expenses and particularly any charges that may become due if the property does not sell.

* Ask the auctioneer to explain how and when the Reserve Price is set. This is the minimum price at which the property can be sold at auction. The auctioneer should also explain the Price Guide (the indication of the likely sale price) which is given to anyone interested in the property, and its relation to the Reserve Price.

* Obtain written confirmation of the “Terms of Business” from the auctioneer, which should cover all aspects of the marketing of the property.

* You will then need to instruct your solicitor and inform him/her that the auctioneer will be in touch. Check how much your legal costs are likely to be and when they will be payable.

* Once the marketing of the property has begun, the auctioneer should report any offers he receives and any adjustments made to the Price Guide.

* You do not need to attend the auction, as the auctioneer can sign the contract on your behalf and complete the legal formalities.

* As with private treaty sales, you will need to vacate the property on completion.

Buying at Auction

* Obtain a copy of the auction particulars from the auctioneers. This may already contain certain key information or a separate legal pack be available.

* Make a thorough inspection of both the property and the neighbourhood. Don’t be afraid to ask the auctioneer if you have any queries.

* Take your time considering the property and then, if you are still interested, ask the auctioneers to keep you informed of any alterations or amendments to the sale conditions (an ‘Addendum’). Ask them to let you know if there is any possibility of the property being sold before the auction date.

* Make sure you know how much the deposit will be (usually 10% of the purchase price, payable at the end of the auction) and check carefully which method of payment is required so you can arrange for sufficient funds to be available.

* Take the property details to your solicitors and ask them to reiterate the auction process and advise you on the legal aspects.

* You would be wise to obtain advice on the condition of the property as well as finding out any other relevant information, including planning and building regulations. If you are obtaining a mortgage or loan, then the surveyor acting on behalf of the lender should also be able to advise you. Be careful to confirm the costs before authorising the report.

Armed with all this advice, together with the Terms and Conditions of any loan, decide on the maximum price you will pay for the property.

At the Auction

It is very important to arrive at the auction well before the advertised starting time. This is because any changes or additional information about the property will either be available in an ‘Addendum’ or will be announced by the auctioneer immediately before the auction itself.

Such alterations may have a bearing on your desire to buy the property.

* You can bid personally or someone else, such as an agent or your solicitor can bid on your behalf. Some auctioneers will also accept telephone or proxy bids for which the auctioneer will require written authorisation from you (usually on a printed Proxy Form) and also your cheque for the deposit, calculated on the amount of your maximum bid.

* Usually there will be a reserve price. The auctioneer will state clearly if this is the case or it will be detailed in the particulars or conditions of sale.

* If you are successful in your bid, you will need to sign the contract and pay the deposit there and then. At the fall of the auctioneer’s gavel, you will be bound by the terms and conditions of the sale and usually liable for the insurance of the property from that moment. The date for completion when you will pay the balance of the purchase price and take possession of the property will be clearly stated in the conditions of sale.

* If a property remains unsold, the auctioneer usually has authority to sell it privately in the room immediately after the sale, so it is sensible to register your interest at once even if a sale cannot be agreed straight away.

Top of page

Forewarned is Forearmed

So, if you are considering buying a property at auction, it is worth reiterating some very important points:-

* Always make sure you are aware of all the information available on the property, by reading all written material available, asking the auctioneer prior to the auction and ensuring that you arrive at the auction in good time to hear of any last minute changes announced in the auctioneer’s opening remarks.

* Equally, read through all the legal documents carefully, as these may vary from one property to another.

* Bid clearly. Generally the auctioneer will make it quite clear as to where the current bid is in the room.

* Make sure you are aware of the method of payment and amount of the deposit. There is often a minimum figure and it is not always set at 10%. Don’t forget that you are bound to pay this at the moment the gavel comes down on your bid. Your liability for the property also starts from that moment.

and finally…

Buying and selling property at auction is a straightforward and, in many ways, fairly painless method, but be on your guard. It is essential for both buyer and seller to take careful and detailed professional advice from solicitors and valuers. Go in with your eyes wide open, armed with all the information and advice available, and the whole process should go smoothly.

These notes are offered as an introduction to a different way of marketing your property. There maybe significant advantages to selling by auction rather than the by using more usual traditional route.