Buying a property at auction
People buy properties at auction for a number of reasons with the most common being for investment purposes. We act for many investor clients who purchase auction properties either for immediate letting or renovation and eventual resale.
For those looking to let properties, the aim is to obtain a sufficient rental yield to generate a satisfactory return on the capital investment. Clients who are looking to resell aim to add value to the property through refurbishment and other improvements.
Whatever the investment aim, the starting point should be the same. It is of the utmost importance that you find out everything you can about the property before making a bid at the auction. If you are successful at auction, then a contract will have been formed at the fall of the auctioneer’s hammer. At that point you are bound to complete the purchase subject to any problems the property may have or any additional information you discover prior to completion.
The auction listing will contain a legal pack which includes amongst other things title documents and often results of various searches which have been carried out. It will also include the ‘special conditions’ under which the property is sold. These special conditions will often contain clauses disclaiming the seller’s liability for certain issues which may arise and detail any additional costs you may incur in addition to the purchase price. It is often the case that these special conditions require the buyer to refund the seller for the cost of searches provided in the legal pack and/or contribute towards the seller’s legal fees.
If you are interested in purchasing a property at auction, we strongly recommend you instruct a solicitor to review the legal pack as soon as possible. A solicitor will be able to review the title documents, searches and special conditions and give you professional advice and guidance before you commit to the purchase. We understand that buyers can be reluctant to incur such costs before they know whether they will be successful but that is an inherent risk in purchasing via an auction – in our view it is preferable to seek professional opinion as soon as possible rather than discover what could be very costly defects when it is too late to do anything about it.
If you have any queries regarding buying or selling an auction property or any other aspect of residential conveyancing, please contact Stephen Carr on 01306 884432 or email scarr@meaby.co.uk
