Buying & Selling Property at Auction

Selling at auction

Selling at auction can have its advantages, it is a quick transaction with no opportunity for the buyer to negotiate or withdraw. As soon as the auctioneers hammer falls, exchange of contracts takes place.

If you are considering this, you need to think about the costs to you. You need to pay the auctioneer’s fee even if the property does not sell and if it does sell, the auctioneer will charge a commission. Unless a reserve price is stated in the contract, the auctioneer is bound to agree the sale to the highest bidder. This is important to think about and you should seek legal advice on before the auction.

A seller’s auction pack will need to be created and made available for potential buyers to review before the auction.

Buying at auction

You should arrange for your solicitor to review the seller’s auction pack prior to the auction. Your solicitor can inspect the pack and make any necessary investigations before you proceed. It is recommended that you also have the property surveyed prior to the auction as in all conveyancing transactions, it is a buyer beware situation (“caveat emptor”). Once the hammer falls, you are under contract and bound to pay a 10% deposit. Ensure you have nancing available if you are successful as completion is often 20 business days of the date of the auction and insure the property.

The above sets out the traditional method of an auction, but online auctions, often referred to as the “Modern Method of Auction”, are becoming more popular. There are still risks as a buyer.

The modern method allows the seller to set out their requirements for the auction, such as the reserve price, start date and duration, normally 30 days. The seller will appoint an estate agent and as an interested buyer you will submit your o er online, in the form of a “bid”. You can usually bid 24 hours a day, 7 days a week. The highest bid wins.

You may have to pay a participation fee, usually refundable. You may be asked to provide evidence that you have the funds to purchase the property should you be successful. Again, the sellers auction pack will be available to view, and your solicitor will check this before proceeding. In most cases you must pay, in addition to the purchase price, a non-refundable reservation fee, usually a minimum of 2.5% + VAT of the price.

If your bid is successful, you usually have 56 days to exchange and complete. The di erence to the traditional method, is that you do have the choice not to proceed, but you would lose out on your reservation fee paid.

In conclusion, if you are thinking of selling or buying at auction, it is best to discuss it with your solicitor before you proceed. At Widdows Pilling LLP, we understand the processes involved with selling and buying at auction and have the experience and expertise to guide you through the process.

For more information, contact us:

Telephone: 0161 790 1825

Email: enquiries@widdows-pilling.co.uk