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Your Guide to Buying a House at Auction

©Article written and supplied by: www.buyassociation.co.uk

Why Buy at Auction?


The instant appeal for many is the speed at which you can purchase a property.  The usual long drawn out process is replaced with rapid fire hammer blows that result in property being sold in minutes.


It is, without doubt, a thrilling experience but there are pitfalls which you should avoid.  Our concise guide to buying at action is design to help you avoid these pitfalls and guide you through the process.

 

What to do before the auction …

If you are new to the auction process there are a few simple steps to take in order to prepare you.  Our advice is not to attend an auction without preparation.  It is all too easy to get lost in the moment and end up with something your either do not want or cannot afford.


Quick Tip: If you know an auction is taking place go and sit in.  No matter what properties are for sale, simply sit there and get a feel for what actually goes on.

1. Locate a property auction house in your area and request a catalogue.  All professional auction houses have catalogues prepared which contains information and photographs of each property coming up for auction. Check to see if the auction house has a web site and subscribe to their Newsletter.

2. Study the properties available carefully and mark those which are of interest.

3. For each property you select of interest arrange a viewing. How to view the properties will be detailed in the catalogue.

4. Do Not attempt to bid on properties you have not viewed, this is asking for trouble!

5. Visit the local Realtors or Agents and ask what information they have of the property.  If you want to find out more details ask the neighbors of the property.

6. Ensure that the details in the catalogue are correct and accurate.

7. Contact your lawyer and undertake a search of the property and the land it is on.

8. Make an appointment to see your lawyer and seek their advice.  It may be necessary to have a surveyor examine the property.

9. Visit your bank and make the necessary arrangements to ensure you have the required 10% deposit.  If your bid is successful you will be required to make the deposit payment on the days.  With most auctions the contract process is swift.  Once you have signed the contract you will have approximately 30 days to pay the outstanding 90%.  Note: If you are unable to pay the balance there is an almost certain chance that you will lose your 10% deposit.

10. Make sure you have the cash funds available or a mortgage in place before buying at auction.

11. In most counties buying at auction, when the hammer goes down, becomes a binding contract in law. If you need a copy of the auction house legal documentation ask.  You should supply a copy to your lawyer and ask their advice on the contract.

 

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The Auction Day

1. Take TWO forms of ID, cheque book and banking details to the auction.

2. Get to the auction early if you want a seat at the front.

3. If you want to bid on a property you will probably have to register with the auction house.  If you have ordered the catalogue they should have advise whether registration is applicable.

4. On arrival, get a copy of any addendum sheet. These are distributed around the auction room and contain late information or alterations. Check this carefully.  Not all the properties will be up for auction on the day.  It is not unusual for properties to be withdrawn.

5. If you arrived early and you are looking to bid position yourself where the auctioneer can see you clearly, that way any bids you make will not go unnoticed.

6. Making a bid… Do not make subtle gestures like scratching your nose.  This is for the movies.  Clearly indicate your intentions to the auctioneer. Most auctions move pretty quickly so listen carefully if you do not want to miss out.

7. Many properties will have a reserved price.  That is a minimum that it must fetch. If this price is not met it may be withdrawn.  In some cases the vendor may accept your bid at the end of the auction.

8. Don't forget that the property becomes the buyer's insurable risk as soon as the hammer falls. The conditions assume that the buyer has acted like a prudent buyer. If you choose to buy a lot without taking these normal precautions you do so at your own risk.

 

Role of the Auctioneer

1. The auctioneer acts as an agent for each seller. They prepare the catalogue, from information supplied by or on behalf of each seller. They will usually have a photograph of the property, a brief description and a guide price.

2. The auctioneer sells each lot at the auction. During the auction, their decision on the conduct of the auction is final; they can cancel the auction, withdraw lots from sale, or alter the order in which lots are offered for sale

3. The auctioneer looks for bids around the room, and will take bids until there are no more and, depending on whether the reserve price has been met, will sell the property to the highest bidder. This sale is confirmed when the auctioneers gavel (hammer) falls on the highest bid. At this point the successful bidder is immediately under a binding contract.

4. The auctioneer can also choose to refuse a bid and they don't have to explain why.

5. If there is a dispute over bidding they are entitled to resolve it and their decision is final.

6. If the reserve price is not met the auctioneer may choose to withdraw the lot and not sell it. However, they are still acting as agents for the seller and bidders can put in offers for the lot after the auction, which may or may not be accepted by the seller.

7. Likewise, acting as agents, the auctioneers can take offers placed by bidders before the day of auction to the seller and the seller may decide to sell before the auction.

©Article written and supplied by: www.buyassociation.co.uk

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