What to consider when buying a property at auction

Amidst rising house prices, buying at auction can be both exciting and a great way of getting a bargain property. However, it also comes with many risks.
Buying properties at auction is a trend that is gaining momentum. In 2020 alone, the number of properties sold at auction was up by 40% based on value, in comparison to 2019.

Many auction houses list details of forthcoming available properties online. You can start the process by carrying out your research, including up-and-coming auction days, your budget and affordability criteria, as well as carrying out basic legal checks.

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If you are using a mortgage to fund the purchase, then it is useful to get a pre-agreement from a lender beforehand. This will allow you to set a budget. Some auction houses require you to have this before you can bid.

Consider whether there is a reserve – or minimum – price on the properties that interest you.

Ensure that you obtain a legal pack for all the properties that you are interested in and have these checked over by a licensed conveyancer or solicitor beforehand. A legal pack will include details on the title deeds, searches, essential information, and other legal documents.

Attend a viewing before the auction to help you identify any issues with the property or renovation needs that may affect its value. This can help you to factor in value and budget considerations.

Ensure that you register your personal details, proof of funds, and a means of identification with the auction house in advance of the auction day.

If you are successful in a bid, you will be required to sign a contract of sale as well as to pay at least 10% of the value as a deposit immediately. Be sure to be prepared for this.

Conveyancing Solicitors

An auction property may come with many legal complications, such as a defective legal title, defective leases, ongoing disputes, and local authority enforcements.

By instructing a legal specialist in advance to assess the legal packs for the property, you will have access to a summary of the risks, detailed advice on the legal title, a breakdown of the contract as well as any hidden conditions, an examination of the information provided by the seller, and details of your financial position.

For further details of the specialist services that a legal team can offer you in the event of purchasing a property at auction, visit https://www.samconveyancing.co.uk/Conveyancing-Solicitors.

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A pre-action legal report is one of the most valuable and insightful tools that a prospective purchaser can obtain before running the risk of an unwise and financially unviable auction bid.

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