Auctions - how it all works

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Dunners

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Have searched through key posts and previous threads but haven't been able to find information on auctions.
Can anyone give me an idea of how it all works? For example, I'm very interested in a house that's for sale by public auction in mid-July. What do I need to do in the interim? What will happen at the auction itself? Also, I presume I need to have the deposit ready there and then if I'm the successful bidder...

All advice & tips welcome!
 
Dunners said:
Have searched through key posts and previous threads but haven't been able to find information on auctions.
Can anyone give me an idea of how it all works? For example, I'm very interested in a house that's for sale by public auction in mid-July. What do I need to do in the interim? What will happen at the auction itself? Also, I presume I need to have the deposit ready there and then if I'm the successful bidder...

All advice & tips welcome!
Click to expand...


- You should 1st check that you can afford to bid at least 20% over the guide and that you have loan approval to do so.
-Then you should get a surveyor to assess the building and provide a detailed report with any idea of any costs you might incur post sale.
- The before the auction ask the agent how many conditions of sale and surveys have been requested (this will give you an idea of serious interest)
- On the day of the auction go early and get a set at the back of the room so that you can see who exactly is bidding and who drops out / comes in late
- Hold off on you bidding until the last possible minute - this might mean that you don't get to bid but there's no point in sticking your hand up early just for show

Best of luck and let's know how you get on....

MAC
 
You should ( although some very brave souls sometimes do not) have a solicitor check out the title beforehand. Once the hammer goes down to the successful bidder and the contract is signed there is a binding contract and if the title is in any way defective the purchaser has no come back.

You should make sure that the solicitor arranges for a planning search to check for any potential issues there. I have had clients call me the morning of an auction blithely wanting me " to cast my eye over a contract" - there simply is no time to arrange a planning search in those circumstances. Ther is also simply no time to check out the title which may run to volumes and have horrible planning/ tax/access/boundary issues.

So give yourself and the solicitor a break and if interested contact them not less than one week in advance of auction date.

Finally, in relation to the estate agent telling you how many contracts / surveys have issued, thats all very well if there are loads of them - no harm in being confident in those circumstances but they are unlikey to disclose if there is no interest.

mf
 
Once the hammer goes down to the successful bidder and the contract is signed there is a binding contract and if the title is in any way defective the purchaser has no come back.
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MF - I always wondered about this. A friend of mine who was so annoyed at his treatment by auctioneers was planning to attend some auctions and bid up the house to a ridiculous level. Then he would refuse to sign the contract.

Am I right in saying that there is no legal commitment until the contract is actually signed by both parties? The hammer going down does not in itself have any legal significance?

Brendan
 
Brendan

I sorta simplified the answer - in fact it is of course much more complicated than that.


Quote from J.C. W. Wylie - Irish Conveyancing Law Second Edition.

Finally the actual bringing into effect of a contract in the case of a sale by auction is governed by the special rules of contract law applicable to auction e.g. the purchasers bid is the offer which is not accepted until he is declared the highest bidder and the property is knocked down to him, which creates the contract, though it does not become enforceable until the written memorandum is sigend as required by the Statute of Frauds.


BUUUUUUUUUUUUUUUUUT

Not only has an auctioneer authority to sign on behalf of his principal the vendor but he also has implied authority to sign on behalf of the highest bidder at the auction, the purchaser.

So, I think your friend might be better employed sticking sharp pins in wax effigies rather then running risks at auctions!!
 
Realisticly speaking the auctioneer could do very little if the "bidder" has no money and has no intention of buying.
 
Can anyone tell me roughly what the cost is for:
- A survey
- A planning and title search by a solicitor
- Any other costs to be incurred before the auction

Seems like you have to shell out for quite a bit considering you may get blown out of the water at the auction .....
 
I can't speak for the rest, but a planning search in this neck of the woods costs €70 from the local authority. As for the title, it really depends on the type of title. If it's land registry, the fee will be quite small- maybe €100 plus VAT, if it's registry of deeds the fee will be higher and difficult to estimate as registry of deeds titles can vary from one or two very clear documents, to upwards of 20 very old hand written lengthy and unclear deeds. Most solicitors would have to time cost based on the title involved.
 
I'm presuming the complexity (and therefore the cost) of the search would depend on the age of the house and number of owners?
I guess the auctioneer could provide me with these details so I'd know how much effort was involved.
My problem is I don't know how much chance I have of making a successful bid so the less I have to pay out in advance the better.
 
I doubt the auctioneer would know. I'm talking about title dating back possibly a couple of hundred years, so its a matter for a solicitor, not an auctioneer as such. I understand your position, however that is the way the system works currently in this country. You may well be at risk of spending money examinining title and structure of a property that ultimately you do not buy.
 
kieranp said:
I'm presuming the complexity (and therefore the cost) of the search would depend on the age of the house and number of owners?
I guess the auctioneer could provide me with these details so I'd know how much effort was involved.
My problem is I don't know how much chance I have of making a successful bid so the less I have to pay out in advance the better.
Click to expand...


Hi Kieran - can empathise with you having been there (on both sides). Rule of thumb... if you are prepared to only pay the guide don't bother spending any moeny. If you are prepared to add 10% to guide then it's a hard call (I probably would not spend it). If you are prepared to pay 20% over guide you should get all the survey / searches etc. If you can go over that then DEFINITELY pay to get it all done.

My previous comments in the form of MACTHENKNIFE still apply ie:
- You should 1st check that you can afford to bid at least 20% over the guide and that you have loan approval to do so.
-Then you should get a surveyor to assess the building and provide a detailed report with any idea of any costs you might incur post sale.
- The before the auction ask the agent how many conditions of sale and surveys have been requested (this will give you an idea of serious interest)
- On the day of the auction go early and get a set at the back of the room so that you can see who exactly is bidding and who drops out / comes in late
- Hold off on you bidding until the last possible minute - this might mean that you don't get to bid but there's no point in sticking your hand up early just for show

Best of luck

Roy
 
Sounds like a tough call. I could probably afford the 20% over but whether I think the place would be worth it or not is a different kettle of fish.
Is there a shorter timeframe for payment than for a private treaty sale, i.e. do I need to pay up pretty much straight away? Presumably I would still need time for the bank to do a valuation and all the usual paperwork.
 
kieranp said:
Sounds like a tough call. I could probably afford the 20% over but whether I think the place would be worth it or not is a different kettle of fish.
Is there a shorter timeframe for payment than for a private treaty sale, i.e. do I need to pay up pretty much straight away? Presumably I would still need time for the bank to do a valuation and all the usual paperwork.
Click to expand...

Hi Kieran, never said it was easy - only room for REAL MEN when it comes to auctions :) actually I've seen quite a few "real men" wilt at the auctions under pressure from the other half. Personally I would recoomend for auctions that the couple discuss what their limit is and only 1 go to the auction.... sounds a bit clinical but you really don't want to be sweating and shaking / nodding your heads to each other at the height of battle!

Don't forget, if you "win" you have to stump up 10% there and then. In my case the auctioneers sidekick nearly ran across the floor to me when the hammer came down to "congratulate" me (or make sure I could write the cheque there and then more likely. The date for closure is announced before the auction - you brief will have had details before if they sought conditions of sale in advance (which they normally do).

Yes to all that bank stuff too. Some people incur even further expense bringing their brief along too. I remember doing that when I was buying my first house about 20 years ago...... he never even got to stick up his hand :-0 at least if he wasn't there I might have had the chance to do that myself :) still as I said before ... REAL MEN........

Best of luck and keep us posted
Roy
 
kieranp said:
Sounds like a tough call. I could probably afford the 20% over but whether I think the place would be worth it or not is a different kettle of fish.
Is there a shorter timeframe for payment than for a private treaty sale, i.e. do I need to pay up pretty much straight away? Presumably I would still need time for the bank to do a valuation and all the usual paperwork.
Click to expand...

As a matter of interest Kieran is the house you are interested in with a big agent? If so can you tell us I know a few on DNS and the seem to have different strategies......

Roy
 
Nah, I think they're a small enough crowd in Galway, Smith & Co.
To be honest I'm thinking I might baulk at the whole thing.
Probably won't have mortgage approval in time, and to have the 10% on the day would mean selling stock in advance, which sounds like plain madness to me.
Just a thought, the ads etc, say the auction os on such a date unless previously sold. Is this just a standard thing they stick in or are they actually open to offers? Is it worth trying to make one?
 
Hi Kieran - it's standard practice but the seller won't sell prior if there is good interest. In my experience that means 20%+, actually I sold my last one prior to auction for I think 23% over the guide.

In general (I'm talking about Dublin) the expectation is 20% over the guide so most people build that into their strategy for the auction.

Either way, best of luck

Roy
 
So if I'm buying at Auction I will have to pay a non refundable 10% deposit on the day AND sign contracts with an agreed date for closing and paying the balance?

Also am I correct in saying the contract for sale is available in advance of the auction from the vendors solicitor? Presumably any issues re the contract are sorted out on the day? Generally speaking how long is it between the auction and closing the deal?


Thanks!
 
So if I'm buying at Auction I will have to pay a non refundable 10% deposit on the day


Yes.


AND sign contracts with an agreed date for closing and paying the balance?
Yes.

Also am I correct in saying the contract for sale is available in advance of the auction from the vendors solicitor?
Yes.


Presumably any issues re the contract are sorted out on the day?
Thats a bit late - any issues should be raised and resolved before the Auction. Solicitors try to avoid entertaining objections at auction - normally from someone disgruntled ( ex-partner, angry beneficiary etc,.etc)


Generally speaking how long is it between the auction and closing the deal?
The closing date will be nominated in the Contract - depending on the level of interest and the needs of the vendor will be more or less flexible.

mf
 
So if my solicitor requests an amendment to the contract before the auction (to which the vendors solicitor agrees) and then I get the property at the auction, will a new contract reflecting the change have already been typed up? Do they do this for everyone!? Or are the changes scribbled in by hand straight after the auction?
 
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