Property Auctions

Property Auctions are held regularly through the country and can be a great place for a property bargain, properties that are found at auction are normally listed due to repossession, death of the owner or any circumstance where a quick sale is required.
The number of properties that are auctioned due to repossession has risen sharply in the past few years.(Written Q1 2009)

While the number of properties for sale at auction that are repossessions has risen, the number of properties actually being sold on the auction days has fallen, this indicates that the expectation of the seller to achieve a particular price is being dissappointed by buyers who are unwilling to pay that price in a falling market.

Buyers are looking for absolute bargains possibly to ensure that even if the market continues to fall they will have still bought below market value(BMV).
One thing that has been happening even if a property doesn't reach it's reserve price on the day is that vendors and potential purchasers are communicating after the auction to see if there can still be a deal done and auctioneers and estate agents are still keen to broker a deal.

If you do decide to buy a property through auction then whether you are a first time buyer or a seasoned investor there are certain things in property auctions which are expected of the buyer and so need to be considered before going to the auction:

Have you?

• taken professional advice from a conveyanceer, surveyor, accountant
• read the terms and conditions of the auctioneers, they may be different from the standard RICS auction terms
• inspected the property
• carried out the usual searches and enquiries on the auction property
• checked the content of any available leases and documents relating to the lot/property
• checked that the lot details for the auction property in the catalogue are correct to the best of your knowledge
• understood that if your bidding is successful when the hammer falls you have entered into a contract to purchase the property that you have bid on
• made finance for the deposit available, this will be expected to be paid on the day of the auction
• made finace for the balance available, this will be expected to be paid by completion date
• checked the completion date, normally within 28 days but can be as low as 7 days
• checked whether any fees include VAT

Property auction houses have the assumption that anybody that bids for a property at auction are a 'prudent buyer' and they will act in good faith in accepting your bids, simply bidding on a property will often bind you into a contract with the auction company. If you default on that contract there may be penalties either from the auction company or the property vendor.

Some tips:

• go to a few property auctions to get an idea of how it all works and don't be afraid to ask questions
• if you are considering bidding on a property ensure that you check the terms of the contract for anything that you may not be able to adhere to, such as a completion date which does not allow enough time to get finance in place
• don't assume that the guide price will be accurate, it could be higher or lower than the true value, a property is worth what somebody is willing to buy or sell it for, and it's down to who needs the property or the money the most
• do your sums then set a limit to your highest bid and don't go over it
• keep a level/business head on when bidding at a property auction, buy in haste - repent at leisure
• ABSOLUTELY ENSURE THAT YOU CAN HAVE THE FUNDS AVAILABLE BEFORE THE COMPLETION DATE OR YOU COULD LOSE YOUR DEPOSIT