Key Post Guide to buying a house at auction

[ryaner]

Originally Posted by Bronte

I noticed on two properties the price hitting say 69K with the reserve at 70K. Property was withdrawn as it did not reach reserve. Why would one bid 69 and not go to 70? You're there on the day, you've bid, presumable you want the property and you have the money, plus you've done your figures and you're 1K off. Maybe these properties are sold afterwards for the reserve price. I presume that after the sale Allsops are open to sell these at the reserve price?

1k is a big enough jump on a property that price. It'd also be in the vendors interest to drop the price and sell instead of taking it away again I'd assume.

[Brendan Burgess]

Bronte

Excellent post. I felt as if I was actually in the Shelbourne Hotel participating in the auction. I will update the Key Post to reflect the points you made.

Blank cheques

As an alternative to putting in a 10% deposit with your maximum deposit you can put in a blank cheque. That means your max bid is not known. Not sure if there is any reason sending a blank cheque is not a good idea, if you know the firm is reputable, as is the case with Allsops, but be careful if you do not know who you are dealing with. Old school wisdom says never write a blank cheque.

It's very odd, but I would not trust an Irish auctioneer with a blank cheque, but Allsops seem to be professional and well organised.

You can write a blank cheque but cross it "not to exceed €20,000" and tell them that you are interested in two or three properties. This way they would not know what your limit was on any individual property.

Withdrawing at €69k does seem odd. They probably should have knocked it down or the buyer probably should have bid again, although it's odd to bid against yourself.

[Bronte]

You cannot do that with the blank cheque, Allsops are very clear and precise on their rules. You'd have to do a blank cheque for each property and writing things on the cheque makes it confusing and in those circumstances Allsops, it would appear to me, would not accept the cheque.

There is no substitute to being there on the day.

In relation to reserve prices, I like the fact Allsops are so rigid on this. You go in with the knowledge that if you reach the reserve it's yours (unless there is higher bidder). And if it doesn't reach reserve that's it. That's good for the vendor's too, it has a nice finality to it.

[Bronte]

I see that the addendum document on the website has disappeared, so it's only there on the day of the auction I guess, which is probably why I only noticed it for the first time yesterday.

Would anyone know what the name of a legal document that was mentioned yesterday:

It sounded like it was a document requested from a sitting tenant to renonce any ownership or tenant's rights, or to clear up the situation where a tenant had no lease. It has two words beginning with R, like renoncation of r???

[Brendan Burgess]

In relation to reserve prices, I like the fact Allsops are so rigid on this. You go in with the knowledge that if you reach the reserve it's yours

This is why I really like Allsops as well. The skullduggery which the Irish auctioneers got up to with reserve prices and guide prices would just put people off auctions.

Did Allsops not sell any below the disclosed reserve?

[Brendan Burgess]

Originally Posted by Bronte

It sounded like it was a document requested from a sitting tenant to renonce any ownership or tenant's rights, or to clear up the situation where a tenant had no lease. It has two words beginning with R, like renoncation of r???

A commercial tenant has a right to renew a lease for 20 years after 5 years in occupation, which is why you get 4 year 9 month leases. The 2008 introduce a Deed of Renunciation. Hayes solicitors explain it well here

The tenant must execute a valid written Deed of Renunciation, renouncing its right to a renewal of the lease at the end of the term of the lease;

[Vanilla]

Originally Posted by Bronte

I noticed on two properties the price hitting say 69K with the reserve at 70K. Property was withdrawn as it did not reach reserve. Why would one bid 69 and not go to 70?

Suggests seasoned, informed buyer. Usually auctioneer with deal private treaty with highest bidder after the auction, when bidder will be able to negotiate changes to the contract.

[greentree]

I searched for an answer to this one but cant find it.

Say a property is being sold in 4 lots.

Lot 1 : 2 acres
Lot 2 : 10 acres
Lot 3 : House
Lot 4 : The entire

We are very interested in lot 1. If we bid for it and are the highest bidder, can another buyer just buy lot 4 (the entire) and then our bid is thrown away? What if the hammer falls on our bid for lot 1? Thanks

[mf1]

Think it through.

If you buy Lot 1, it is sold. No-one else can buy the entire.

The only way the entire can be sold is if its put up for auction first. If it sells, there is no Lot 1 to sell.

You should take proper legal and financial advice, specific to your circumstances. You should not rely on an anonymous website, with (largely) anonymous posters, to give you anything but the broadest, non specific commentary.

mf

[Brendan Burgess]

Hi MF

I have seen what greentree has described on a few occasions and I have wondered how it worked. You have explained it well.

Is this not the type of very general question which can be answered correctly on askaboutmoney?

I fully agree that if Greentrees is interested in Lot 1, they would have to do the usual due diligence first.

Brendan

[mf1]

"Is this not the type of very general question which can be answered correctly on askaboutmoney? "

Only in broad terms. There may be all kinds of issues, raised in the Brochure, raised in the Conditions of Sale, set out by the Auctioneer in the preamble to the Auction, etc.,etc.

Unless you (as in a professional adviser) look at, and examine, the specifics of any situation, any poster can only do a very general comment.

mf

[greentree]

Originally Posted by mf1

Think it through.

If you buy Lot 1, it is sold. No-one else can buy the entire.

The only way the entire can be sold is if its put up for auction first. If it sells, there is no Lot 1 to sell.

mf

Thanks MF1 but are you sure this is correct? I can see a number of examples, where there was bidding on the lots but then the auctioneer went on to sell the entire. e.g:

http://www.farmersjournal.ie/site/fa...ord-15017.html

Selling agent Anne Carton from PN O'Gorman, New Ross initially offered the property in two separate lots that included 120 acres which was bid to €750,000, and the house and yard on 73.6 acres which fetched €525,000. Both lots were subsequently withdrawn and with that, the entire opened at €1.3 million.
Two local farmers briskly drove the sale price into €1.7 million, at which stage the agent consulted with the vendors. After being declared on the market at €1.7 million, another €60,000 secured the sale for a local dairy farmer at €1.76 million.

It seems to me that the auctioneer would be reluctant to drop the hammer on a lot without seeing what the entire would fetch. In my case above, why would the auctioneer sell lot 1 if that would then bar him from selling the entire?

[mf1]

"Both lots were subsequently withdrawn and with that, the entire opened at €1.3 million."

They were withdrawn.

Please go and get and pay for specific advice.

mf

[Brendan Burgess]

Originally Posted by greentree

I searched for an answer to this one but cant find it.

Say a property is being sold in 4 lots.

Lot 1 : 2 acres
Lot 2 : 10 acres
Lot 3 : House
Lot 4 : The entire

I asked a farmer about this who replied

My experience is that it is standard practice to offer the entire first and if that is unsold, then to sell it in bits. This format is unusual but one thing is clear and that is that if someone buys lot one and the hammer falls, then they are the owners. Perhaps your correspondent has made an error and the sale is being conducted as normal, ie, entire first?

However, I have since seen a few properties for sale the way the OP describes.

[Bronte]

Originally Posted by Vanilla

Suggests seasoned, informed buyer. Usually auctioneer with deal private treaty with highest bidder after the auction, when bidder will be able to negotiate changes to the contract.

This was niggling me for a while, I think the answer lies in

A3.5 in the document Auctioneeer's Notices, Part Two Auction conduct Conditions.

which states that the vendor can bid up to the maximum bid, actually it makes sense, there are reserves so it is an effort to get the property up to the reserve and hopefully a sale.

Don't go mad today folks, lots of good properties out there. A young colleague of my husband has gone mad for a property and will not see sense.

[Vanilla]

Selling at auction in lots is usually done like this:

Entire up for bids. Highest bid comes and lot is withdrawn.

Lots go up individually and once each reaches the highest bid they are withdrawn.

Note that none are put 'on the market' at this stage.

At the end the auctioneer/solicitor check through whether the individual lots or the entire reached the higher price. At this stage whichever reached the higher price is put up again and put on the market to sell.