Should you gamble at Auction?
- AuthorKelly Cassidy
We’ve all watched Homes Under the Hammer and thought how easy it looks to get a bargain … but is it really as simple as it appears to purchase a property for an absolute bargain? Perhaps – but only if you arrive at the Auction House fully prepared.
Here are our top five tips on how to tackle an Auction with success:
1. DO YOUR RESEARCH
It’s no good investing in a property when you have no clue about the neighbourhood, surrounding area or amenities. Buy what you know. Target the familiar. It’s all about location, location, location.
2. ELIMINATE ANY LEGAL RISK
It may look like it ticks all of the boxes – but is the property compliant from a legal perspective? For all you know, that “slightly run-down semi” that “just needs a lick of paint and a new kitchen to make it appealing to tenants” may have a Restriction registered against the title which is near impossible to remove – or contain within the deeds a covenant that prevents you from carrying out any works without the written consent of another party. Each lot has an individual Auction Pack – if you bid without getting us involved to check it then you really are going in blind. Sure, we will charge you an hourly rate for reviewing this information – but a couple of hundred pounds could prevent you from making a very costly mistake.
3. BE SENSIBLE
Know your limits. Have a figure in your head and know when to walk away – my most successful clients have trained themselves to do this. A bargain is only that if you gain from it. It is important to have that control.
4. KNOW THE LEGAL PROCESS
This is another stage in which we can help you. Not only do we summarise the title and advise of any pitfalls, anomalies and potential legal issues but we also explain how it all works in practice.
If you have an offer accepted on the open market, you have until the point of exchange of Contracts to raise your deposit, inspect the property by way of professional survey and are free to walk away without any financial consequence if any element does not work for you. At Auction once that gavel is down your bid is legally binding – you pay the 10% deposit to the Auctioneer, sign the Contract and have 28 days to finalise the deal. If you don’t have the cash by that point, you lose the deposit.
If you require a mortgage, have an Offer in Principle in place before you attend the Auction – and, remember, mortgage providers will only lend if the title is satisfactory … and Solicitors will also only sign off the file on that basis.
5. APPOINT THE RIGHT SOLICITOR FOR YOU
Although every client has different needs, they all share one thing in common – they want someone acting for them that they can trust. There is little point instructing a “factory firm” where, when you call in, you deal with a different person – or, worst case scenario – you can never reach the conveyancer at all. These companies may be cheaper but time is money and they are unlikely to dedicate the time required to meet the tight deadline that Auction purchases present. Get someone qualified, with a direct dial / email, excellent client feedback and who will put you first.
At Chattertons we are experienced in these transactions and will take good care of you – whether that be in your first steps as an Investor or expanding your current property portfolio.
Kelly Cassidy is a Residential Property Solicitor based at the Stamford office.