Buying a property at auction can be intimidating, particularly if you’re not familiar with how auctions are generally conducted. That’s where time spent on planning and preparation can pay dividends and even save you from making a catastrophic mistake.
There are a number of legal responsibilities that the purchaser has when buying at auction that all intending purchasers must be aware of:
The offer to purchase is immediately binding.
You will be required to pay a 10% deposit right away and complete the entire transaction within the time specified - usually 28 days.
Failure to carry through on this will cost you your 10% deposit, could expose you to being sued through breach of contract and commit you to pay any shortfall between the price you offered and a subsequent sale price.
Here are a few recommended tips to help you prepare:
1. Find out all you can about the property for be auctioned
This includes all details relating to the property - the state of repair, the locality, any information relating to planning and so on. The more you know the better.
It is a good idea to get professional advice in advance of the auction. The cost of a surveyor, solicitor and builder could save you many thousands of euros in the long run.
Never, ever buy at auction “site unseen”.
2. Arrange your Finance
Knowing that you are committed after an offer to purchase, you should have all of your finance arranged in advance of the auction. This includes quick access to the 10% deposit and the funds required for a fast completion. Check with the auctioneers about methods of payment, this is usually by banker’s draft.
You need to have a mortgage (link) offer in writing. Talk to us if you need help or advice on your financial requirements.
3. Engage a Conveyancing Solicitor Before Buying at Auction
All legal issues must be checked out in advance. Get your solicitor to do this work well before the auction to ensure that there are no outstanding issues with the property to be sold or obstacles to your purchasing it.
4. Decide on Your Maximum Bid Price
To avoid getting carried away with the excitement of an auction, you need to decide in advance what your maximum bid price will be in advance of the auction. If necessary, you can even get someone else to bid on your behalf. Solicitors and property agents often provide this service for their clients.
The Day of the Auction
The big day has finally arrived and you’ve prepared as much as possible.
Try to arrive early. Some auctions take longer than others so it is a good idea to be present well in advance. Don’t be intimidated by other people in the room or by stories you have heard about eye winking, nose scratching and so on. The auctioneer is professional in conducting auctions and will ensure to take bids from genuine interested potential purchasers.
Try to avoid making the first bid and when two bidders are in competition with each other, wait until they have stopped before you jump in. Slowing the pace of bidding can sometimes have the effect of dampening your opponents’ enthusiasm. The auctioneer will give the room ample time to enter a bid.
Remember, on no account should you exceed your maximum bid.
Finally
Auctions are not for the faint-hearted but the upsides are that the transaction is immediate and you could possibly end up with a bargain that others in the room are not interested in on that particular day.
If the property fails to sell at auction, discuss your interest with the auctioneer after the sale. You just might get yourself a bargain!
The downsides are the costs incurred and time invested - whether you manage to secure the property or not.
Martin Shortt is regulated by the Central Bank.
Eastern & Midlands Holdings Ltd t/a Martin Shortt is regulated by the Central Bank.
