GUIDE TO BUYING A PROPERTY AT AUCTION
If you are new to buying residential property at auction, this guide is here to provide you a helping hand. The guide covers the more frequently asked questions for first time buyers and is designed to help you make the house-buying process as smooth as possible. Buying at Auction Public auctions are open to all but may not be appropriate for every individual.
The main differences between buying at auction and buying from as estate agent are: The property is placed for sale on a specific day thereby minimizing delay. There is no chance of the vendor getting ‘cold feet’ as a contract is binding on the fall of the hammer. The risk of gazumping is also removed. Auctions offer a much wider range of properties, including repossessions and properties in need of modernization.
Legal enquiries and surveys (if required) should be done before bidding at auction. All bids made in the room are unconditional and are made on the understanding that all legal enquiries have been answered and that the finances are in place. All properties in an auction are offered in open, public, competition.
Glossary of Terms Addendum The document published on the day of the auction containing all of the corrections, changes and additions to the details within the catalogue. It is important that you read this document before bidding to see if there is anything significant listed against your lot. We will be compiling these amendments right up until the auction day. The most up to date copy is always available from our office; please ask for our ‘Erratum’. The Addendum forms part of the contract of sale.
CompletionThis is the point at which the property legally becomes yours and keys become available. This usually takes place 28 days after the exchange of contracts and is typically arranged between the vendor’s solicitor and your own solicitor. You will be asked to provide any outstanding funds at this point, usually the remaining 90% of the purchase price. Any variation to these terms will be announced by the auctioneer.
Erratum This is the list of changes and corrections to the catalogue particulars that we compile up until the time of the auction. On the auction day this list becomes our Addendum, copies of which will be available in the auction room. The Erratum is available at any time leading up to the auction day from our office.
Exchange of Contracts (The purchaser is in contract at the fall of the hammer). This is the point at which you are legally obliged to buy the property signified by the fall of the hammer in the auction room. At this time you will be required to provide a non-refundable deposit. The property is not yours at this point, but there is a legal obligation for the purchaser to buy and the vendor to sell. Property insurance should be arranged at this time.
Guide Price Guide prices are published for each property and are indicative of the vendors’ minimum expectations on price. Guide prices are for guidance only and are not reserve prices. These prices may occasionally change throughout the marketing period. Where there is a good deal of competition in the room prices achieved may exceed the guide price. Legal Enquiries For legal enquiries contact the vendors’ solicitor. Their name, address and telephone numbers can be found with each lot in the catalogue.
Proxy Bidding/Telephone Bidding If you cannot attend the auction you can ask the auctioneer to bid on your behalf by telephone or in writing. In each case this needs to be arranged in advance of the auction and you will need to provide a cheque to cover your deposit in full (these cheques are not cashed unless you are successful). A proxy bidding form with instructions, is printed in the back of each catalogue to help you register your bid. Reserve Price This is the minimum price that is acceptable to the vendor for selling his lot in the auction room. We do not generally publish reserve prices and typically these are not fixed by the vendor until a few days before the auction.
Special Conditions of SaleEach lot is sold subject to the Notices and General Conditions of Sale printed in the catalogue. In addition to these ‘general’ conditions applicable to each lot the vendor’s solicitor is asked to draft additional terms applicable to their individual lot – these are the Special Conditions. These are not printed in the catalogue and are available for free from us or the vendor’s solicitors upon request. They form part of the Contract of Sale. It is important that you satisfy all of your legal enquiries and are aware of all conditions (including any Addendum) before you bid at auction.
Auction Day Procedure Registration You will require photographic I.D. to obtain a buyer card to enable you to bid at a property auction. Things to bring If you are intending to bid please remember to bring with you your catalogue, cheque book (with at least one cheque for each lot) and some form of identification – such as drivers licence, passport, credit card etc. Please also bring the contact details of the solicitor you intend to use.
TimingAuctions begin at 7.30pm in our property room in Mallusk , Newtownabbey . The lots will be sold in order as catalogued. Legal Representation Some purchasers choose to bring their own solicitor along to the sale, especially when bidding on large or legally complex lots. This is entirely at your discretion. All the legal documents that were available prior to the auction will be available for inspection with the vendors solicitor. Ideally you will have finalised your legal enquiries before auction day.
Bidding For Your Lot When the auctioneer announces your lot he will also bring to your attention any last minute items which you should be aware of. He will also read the full address of the property, so please double check before bidding that this is the lot that you are interested in. The current lot number is usually displayed with a photograph on screens at the front of the room. The auctioneer will invite bids at a particular level and you can make this bid by raising your hand or catalogue. If you wish to make a bid other than the auctioneer calls for, please shout out your bid and the auctioneer may or may not accept it. The property will be ‘knocked down’ to the highest bidder – but not until the auctioneer warns you by saying ‘going, going, gone’. Never delay until the last second with your bid – you may lose it. Remember, there may be 200 people in the room and unless your bid is clear the auctioneer may not see you.
On The Fall Of The Hammer If you are the successful bidder a member of the auction team will approach you with a simple form and ask you for your details and some form of identification (eg: driver’s licence, passport, bank cards etc). If you are bidding on behalf of somebody else we will need the name, address and telephone number of that person or company. We will also need the name and address of your solicitor. You will then be asked to provide a cheque payable to Wilsons Auctions Ltd to cover the purchase deposit (usually 10%). We will then prepare the contract for you to sign using the details provided. The contract will be available for signature at our ‘contracts desk’ approximately 10-15 minutes later. Completion will usually take place 28 days later under the supervision of your solicitor. Please do not leave the auction room without paying your deposit and signing the contract. Arrange Your Insurance Please note that as soon as contracts are exchanged the property is your insurable risk. Ensure that you arrange your building insurance immediately after the sale.
What If The Lot I Want Is Unsold?If a lot fails to reach its reserve in the room and you wish to buy it, ensure you register your highest bid with us before you leave the room. We will contact the vendor and ask them for their instructions and contact you if we think that a sale after the auction is negotiable. Alternatively call us in the office after the sale. Live Telephone Link If you cannot attend the sale but would like to keep an eye on its progress, you may listen to the Auctioneer as he conducts the sale, by telephoning 09003 411208. This is useful for telephone bidders.
Selecting Your Property Work through the Catalogue, each catalogue will contain a selection of houses, flats and land from all over the country. The first step is to mark those lots which might be of interest to you. Some lots are offered with vacant possession, some are tenanted and some may be part vacant. Make sure you understand how the property is to be offered. If you are looking for a house to live in you should be looking at the vacant possession properties or those where the tenancy will expire shortly. The remaining properties are investment properties which are popular with investors wishing to place their capital in bricks and mortar and receive a regular income and long term capital appreciation. Check Our Guide Prices Find out if the properties are within your budget by checking our guide prices in the catalogue. If you are interested in a couple of lots only we are happy to give these guide prices verbally over the telephone during office hours ( 9.00am – 6.00pm ).
Sometimes despite our best efforts, it is not possible to obtain guide prices on some properties until a few days prior to auction. We do, however, publish them the moment they are agreed. Guide prices are not asking prices and are for guidance only. View The Properties Please call us during office hours and we will be happy to make the necessary arrangements. In some cases we will be working with a local estate agent who will hold the keys and meet you at the property. In other cases, properties may be opened up for group viewings at prearranged times. Group viewings start from the issue of the catalogue and continue until the day before the auction.
It is necessary to call us to attend a group viewing.Where properties are tenanted, interested parties are normally advised to contact the tenants direct. In our experience tenants are usually happy to show prospective purchasers around since it is in their own interest to establish a good relationship with their future landlord. It may be to your advantage to leave a business card, send them a postcard or obtain their telephone number from directory enquiries in order to establish a convenient time for viewing.
Now you’re ready to get serious. Registering Your Interest If you find a property that you like please give us a call and inform us of your interest. This is entirely at your discretion but enables us to contact you if we become aware that the property may be withdrawn or may sell prior to the auction. Once you have registered your interest with us we will endeavour to inform you of any major changes to your lot.
Make Your Legal EnquiriesPass a copy of the auction catalogue to your solicitor or contact us and request that we send a copy directly to him. Your solicitor may wish to contact the vendor’s solicitors in order to make legal enquiries on your behalf. We ask the vendor’s solicitors to provide Special Conditions of Sale, copy title documents, lease details (where applicable), office copy entries, searches, answers to general enquiries, planning documentation etc, but sometimes not all of these will be available in time Special Conditions are important legal clauses…… Items that apply to your particular property must be seen by a solicitor so that he can advice you properly. Don’t forget that if you are the successful bidder at the auction sale you will also be asked to sign the contract in the auction room. The Auction catalogue will form the basis of the contract of sale. The ‘Memorandum of Sale’ in the back of the catalogue shows the form of the contract. Properties are not sold ‘Subject to contract’, ‘Subject to finance’ or ‘Subject to survey’, when you buy at auction they are sold unconditionally.
If you are the successful bidder, you are legally obliged to go through with the sale. In the eyes of the law an exchange of contract occurs upon the drop of the auctioneer’s hammer. Have your finance ready If you need to raise a mortgage it is important that you obtain approval in principal before the auction day. Most building societies and banks will wish to instruction a surveyor to prepare a valuation report before auction day. You will need, therefore, to make your mortgage application as soon as possible. Properties sold at auction are not sold ‘Subject to finance’, it is assumed that you will be able to raise the price you bid. A deposit is required on the auction day which is usually 10% of the purchase price, the remaining 90% is usually payable 28 days later. You will need to discuss this time scale with your lender to ensure that this will not be a problem. Obtaining a surveyor’s report (recommended)
If you require a survey it is important to ensure that this is carried out quickly.Please call us (or have you surveyor call us direct) and we will be happy to make arrangements, where possible, for access to the property. Have your deposit ready Make sure that your lenders know that you are buying at auction. If your bid is successful youwill be required to provide the auctioneers with a cheque for 10% of the purchase price on the auction day. The minimum deposit is £2000 for most lots. We accept any cheque drawn on a bank with a UK branch. Cheques will be specially cleared the same or next day and do you should make every effort to ensure that there are funds to cover your deposit on the auction day. If you are bidding on several lots, bring your cheque book so you have one cheque per deposit. As with a normal private treaty sale, the balance of the monies due will be payable on completion – usually 28 days after the contract is signed. (See the special conditions of sale for any variation of the 28 day rule.)
Make a proxy bid (IF YOU CANNOT ATTEND THE AUCTION) If you cannot attend the sale, it may be possible to bid by proxy. You can do this in two ways: By telephone – we will telephone you when the lot is being auctioned. In writing – where you specify your maximum bid and the auctioneer will bid on your behalf. In each case we must have a registration form and a cheque to cover your deposit. If you specify an amount on your cheque you will only be able to bid up to ten times this amount (since the deposit must be at least 10% of your maximum bid). You may send a blank cheque which means that you may bid up to any amount in the room. (A minimum of £2000 is applicable to each lot unless otherwise specified.) We always include a proxy bidding form in the catalogue for you to complete. Please ensure we receive it in good time for the auction. It is generally in your best interests to attend the auction if you can. Beware of last minute alterations Occasionally over the marketing period, changes need to be made to the catalogue particulars.
It is important that these are brought to your attention so that you can take them into consideration. We publish all of these changes in our Erratum leading up to the auction. On the auction day they are printed in our Addendum (a copy of which will be distributed in the room and attached to each contract). If at any time during the marketing period of the auction you would like to check whether your lot is to be sold subject to an addendum please call us and we shall be happy to inform you of the details. Sometimes properties sell or are withdrawn prior to the sale. We therefore advise potential purchasers to call us on the day before the auction to make sure that the lots in which they are interested are still available to help minimise unnecessary costs and inconvenience. PLEASE JUST ASK….. Bidding at auction need not be a daunting prospect provided that you have made all of your enquiries and you have your maximum figure firmly in mind. If you have any questions before the sale please do contact us and we shall endeavour to help you.
A word of warning – if you are still unclear about anything by the date of the auction and you cannot obtain a satisfactory answer to your enquiries you are best advised not to bid. We wish you successful bidding. We hold 7 – 8 residential auction sales per year at our Mallusk Auction Complex , N Ireland , held on Monday evening at 7.30pm .
Each auction usually consists of between 25 – 40 lots. We produce a catalogue for each auction detailing all the properties that are to be sold, price £5. The catalogue is an essential first step to buying at auction. Our auctions are comprehensively advertised in local papers and on the internet.
If you require any advice, contact Auctioneer Richard Bell FNA VA or Stafford Lynn FNAVA
© Wilsons Auctions 2005