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A Guide To Buying Property At Auction – Preparation Ahead Of The Auction

In the first in a series of articles, we take the opportunity to offer a few handy tips with regard to preparing to buy property at auction.

The main attraction of buying at auction is that you avoid the protracted negotiations and drawn out process that can often be associated with house buying. At auction the process is condensed into a matter of minutes rather than weeks or months and when the hammer falls and the auctioneer announces ‘sold’, you effectively own the property.

However, before one proceeds to purchase property in this manner, it may useful to take heed of the following: -

• In the first instance, contact the relevant auction house and request their catalogue. Most auction houses hold regular auction sales with a catalogue printed some weeks in advance. You can also subscribe to catalogue mailing lists.

• Go through the catalogue carefully, read the details thoroughly and identify the properties you are specifically interested in.

• Arrange a viewing of the lot(s) that are under consideration. Viewing arrangements will be listed in the catalogue. Set aside the time to thoroughly inspect what you are thinking of purchasing.

• Carry out comprehensive research on the property and consult local estate agents and neighbours for their opinions. This will help you identify reasons why you should be buying it and in turn what your prospective tenants or purchasers may find attractive.

• Ensure that the description of the lot in the catalogue is accurate.

• Carry out the usual property / land searches.

• Carefully read the conditions printed in the catalogue. Always get legal or professional advice from a solicitor and in appropriate cases a chartered surveyor.

• Ensure you have a 10% deposit ready for payment on auction day, when the contracts are signed, and access to the remaining 90% within 28 days.

• Make preparations for finance where appropriate. Plan ahead if you need mortgage assistance. It's important to arrange a mortgage in principal with a bank or building society before buying at auction as you could lose your 10% deposit if you fail to complete within the time given (normally within 20 working days). One of our Financial Services Partners would be glad to assist with the arrangement of an appropriate mortgage or commercial loan facility.

• Be aware that buying at auction is a binding commitment and carries the same legal implications as a signed contract by private treaty. In most cases, auction offices have copies of legal documentation provided by the seller's solicitors, which can be sent to you.

• If you're new to auctions, to avoid jitters or adrenaline rushes influencing your intended buying strategy, sit in on one first before you join in. Bidding isn't for the fainthearted!

Please note that this article is intended as a guide only. If you are considering purchasing a property at auction you should always consult with auction professionals and solicitors.

Date of Article: 7th January 2009

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This domain is owned by Warr & Co Chartered Accountants which is a member of the Institute of Chartered Accountants in England & Wales (ICAEW). Whilst the information detailed here is updated regularly to ensure it remains factually correct, it does not in any way constitute specific advice and no responsibility shall be accepted for any actions taken directly as a consequence of reading it. If you would like to discuss any of the points raised and / or engage our services in providing advice specific to your personal circumstances, please feel free to contact Peter Edwards on 0161 477 6789 or email us at info@warr.co.uk

 

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