Buying property at auction is highly specialised and brings with it its own challenges and opportunities. To shed some light on the process, here are our top 10 tips for making a purchase.
Before bidding at auction we strongly recommend that you seek advice from a solicitor in respect of the auction pack and legal documents for your chosen lot.
If successful at auction, you will be contractually bound to purchase the property, so it's important you're fully aware of any legal issues and obligations affecting the property.
Whilst photos of the property may be provided within the auction catalogue, we recommend you undertake a thorough inspection of the property, and instruct any necessary professional surveys and valuations. Gathering as much information about the property before the auction will help avoid any unwelcome issues being revealed later down the line.
The property will become your responsibility as soon as the hammer falls, so it's strongly recommended that you put buildings insurance in place as soon as possible following the auction. Get a quote and speak to an insurance broker prior to bidding to ensure suitable insurance is available.
Before bidding, make sure you have the necessary funds and financing arrangements in place. If successful at auction you'll be required to pay a deposit on the day, with the balance of the purchase price being payable on completion.
The contract will confirm when completion of the transaction is to take place. This is usually 20 working days (or less) from the date of the auction. We strongly recommend that you check the completion date for your chosen lot before bidding to avoid any issues with timings.
As well as the purchase price, additional charges may also be payable, such as a buyer’s premium, the seller’s legal fees and disbursements, and the auction house’s administration fee. Ensure you're comfortable with the fees payable before bidding. These are usually detailed within the special conditions attached to the contract and on the auctioneers website.
Before you can bid at auction the auction house will require sight of each bidders (and purchaser’s) identification documents. We recommend that you make yourself familiar with the requirements of the particular auction house. Whilst requirements may differ between auctioneers, you are likely to need identification such as your driving licence or passport, proof of address (i.e. a utility bill or bank statement dated within the last three months), and if purchasing through a company, any relevant company documents. You will also be required to provide evidence that you have funds in order to pay the deposit.
It is advisable to speak with a solicitor before the auction and have legal representation lined up to act on your behalf if you are successful. This will avoid any unnecessary delays in instructing solicitors following the auction. As mentioned above, there are usually strict timescales for completing the transaction, so we recommend you try to avoid any unnecessary delays.
Depending on the purchase price, Stamp Duty Land Tax (SDLT) may be payable. Generally speaking any SDLT due must be paid to HMRC within 14 days of completion (subject to the circumstances). Your solicitor should be able to advise you of any SDLT liability and the date this is to be paid by.
Once started, the auction can be fast paced, so you should arrive in good time to avoid missing your chosen lot. If your bid is successful you will be required to sign the contract in order to formalise this (however please note that as soon as the hammer falls you are contractually bound to buy the property).
We're one of the UK’s largest real estate groups, with a team of over 180 lawyers advising on thousands of transactions across England, Wales, Scotland and Northern Ireland each year.
One of our particular areas of specialism is in acting for buyers - and sellers -at auction. We have extensive experience in both reviewing auction legal packs and acting on behalf of purchasers following a successful bid.
To find out more about how we could help, get in touch with Lucy Harrison, solicitor, on +44 (0)333 006 1638 or by email.