Auctions

[Swimmer1]

Hi All

Has anyone any experience of buying a property at an auction. Do you need to have the full 10% deposit with you at the auction and do you sign the actual sale contracts there and then?

Thanks

Swimmer 1

 

[mf1]

Do you need to have the full 10% deposit with you at the auction

Yes


and do you sign the actual sale contracts there and then?

Yes. And the contracts are binding.

A few things:

1. Try and go to a few auctions first - there is a very distinct pattern and its helpful to see it in operation. Anyone can stroll in.
2. If you are seriously interested and intend to bid, you must (a) get a survey done (b) instruct a solicitor to inspect the title and organise a planning search and (c) make sure you have the finance organised to complete. An auction sale is not subject to loan approval.
3. Read the papers and see what is happening at auctions - a lot of properties are being withdrawn. Maybe talk to your solicitor and get a feel for what is happening out in the market place. Under no circumstances, indicate any real interest to an auctioneer - unless you are so desperate for the house that you would consider a pre-auction bid for certainty.

mf

 

[tiger]

Another question, would 10% of the AMV cover the deposit, rather than 10% of the sale amount? Probably a little lower, but a draft needs to be sorted in advance for a fixed amount. Or do they take checks?

 

[plaudit]

A very elderly relative of mine had a house up for auction a few years ago and the buyer (a doctor) saw the house the day before the auction, took one quick look around the place and then he went and won the house at the auction and paid his deposit of 10%. Anyway he tried to get out of the deal once he realised how stupid he had been to buy such a kip that needed to be completely gutted and rebuilt, he was stalling looking to see if the tiny porch had planning permission, looked for the relatives marraige certificate etc etc, tried everything to get out of it but all to no avail he was eventually forced to proceed with the purchase.

 

[Swimmer1]

Thanks for the advice. I have contacted the solicitor and she has confirmed what you have all said. She also said that there are two main reason's why a house would go to auction, one because it is a house in a well saught after location with lots of interested parties and two because there maybe an issue with the title deeds.

She advised that we do not proceed with the auction as we have not done enough prep work and also becuase it will probably be withdrawn anyway, if the market is anything to go by.

 

[mf1]

Deposit

Yes, cheques are acceptable. The deposit is 10% of the sale price. My advice to my clients is to fix their maximum price and stick with it. Make sure they have funds available to cover 10% of that.

Up to recently, at auction, the best advice to a client was to sit at the back to observe what was happening, sit on their hands and say nothing, at all. If the price went out of their reach they had lost nothing. If no-one bid at all, they sat on their hands and waited for the auctioneer to withdraw and then made a bid well below the AMV and at a figure which they felt the vendor was unlikely to sell at. At least the auctioneer then knew there was someone in the crowd interested and with whom they would negotiate. Mind you that advice is being given to everyone else so if there is a real auction situation, that will kickstart it.

The guys who buy successfully at auction are those for whom money is not a problem. The most professional guys sit and wait for everyone else to tire themselves out with creeping bids ( now gratefully accepted by the weary auctioneer) and just when its becoming clear that A is seeing off B, the end is nigh, C nonchalantly blows both out of the water. It is painful to watch as an observer and even more painful if you are either A or B. I went through a phase of being B before retiring bloodied and wounded from the fray and extending and renovating our own house.

mf