Many more people are choosing to buy and sell land and property by auction. It can be a fast, transparent and highly efficient method to acquire or dispose of assets and it’s on the rise with 2.2% of all properties being sold by auction in 2022.
The percentage of properties being sold by auction is set to rise in 2023 as the cost of living crisis could mean that sellers are looking for a quicker sale and want to take advantage of the certainty of an exchange in the auction room.
Despite the many benefits, the same concerns and questions arise, many of which we can answer.
Selling at auction
Are auctions just for desperate sellers?
The auction process is not exclusive to those looking for a quick sale but if you do want a quick sale then an auction can be a good route. However if you have time on your side, the competitive nature of the sale room often leads to a price above the reserve and in some cases can be higher than via the more traditional route.
Are auctions only for run down properties or difficult land?
This is not always the case, as any property or land can be sold by auction. Typically the deciding factor is personal circumstances rather than property / land condition. Auction lots can include properties requiring updating, those with short leases, development sites with or without planning permission, repossessions, forced sales, investment properties, farms and land, probates, receivership sales and local authority properties. And as it becomes more common, so will the range of properties continue to increase.
What is an auction pack?
The auction pack is an essential part of the auction process. The pack contains the legal title to the property or land, the sale contract and any other relevant paperwork such as search results, tenancy agreements, energy performance certificates and any guarantees available for the property. Sellers also have a legal duty to disclose any defects and to draw the buyer’s attention to any onerous conditions such as overage clauses.
What is a guide price and reserve?
A guide price is an indication of a seller’s expectations and a reserve price is a minimum figure agreed in advance which the auctioneer will not sell below.
What happens if the property / land does not sell on auction day?
If a lot does not sell or it fails to meet its reserve in the auction room, they are often sold after the auction to an interested party, but under auction conditions.
Buying at auction
Why should I buy at auction?
Buying at auction is an assured way of securing a property or piece land. Once a bid is accepted, contracts will be exchanged on the day of the sale and the seller cannot withdraw from the sale.
Is it possible to view an auction property / land in advance?
Yes, there will most likely be a schedule of viewing opportunities for properties and land. Check with the auctioneers.
I have found a property I’m interested in, now what?
The seller will have prepared an auction pack which will contain copies of all legal papers, required to assist prospective purchasers to make an informed decision regarding the purchase. The pack will include special conditions of sale, title deeds and plans, local authority searches, leases (if applicable), answers to pre-contract enquiries and any other relevant documents. Any purchase at auction takes place under the assumption that all documentation and the terms of the contract have been read and understood. Even though sellers have a legal duty to disclose all of the defects and to draw a buyer’s attention to any onerous conditions, it is strongly recommended that any potential purchasers carry out full investigations for any lot in which they have an interest and involve your legal advisors as soon as possible. Once you have bid at auction, the seller is no longer bound to answer any enquiries in relation to the sale and it may be too late to rectify any issues which could then prove costly.
What happens on auction day?
Arrive early and register to bid. Once the hammer has come down a legally binding contract has been executed. Contracts are then exchanged and the successful purchaser will be required to pay the 10% deposit and to sign the sales memorandum, at the end of the auction. If you are the successful bidder you are legally obliged to complete the sale, usually within 28 days, therefore it is essential to have your finances (if required) in place prior to attending the auction.
If you are thinking of buying or selling a property or land at auction and need advice preparing or reviewing the legal packs please contact Esme Barker email@example.com
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