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Buying at Auction
Many clients are interested in the idea of buying a property at auction. This can be a good way of purchasing a property at a reduced price. There are one or two advantages, but also several weaknesses in the system. Make sure that you know what you are doing before you go ahead.
First, you should identify the property you are interested in several days at least before the auction. Let us know about your intentions, we can normally obtain a copy of the title, contract and similar documents so that you know what you are purchasing. Often properties sold at auction will have title defects which may make it difficult to resell the property.
You should of course always have a survey and valuation of the property before you buy it, and this applies no less when you buy at auction. You should have no difficulty in arranging access to the property for this purpose.
As to the bidding itself, we can only advise you to go with a clear idea of what you intend to spend, and to be sure not to exceed that figure. When you attend the auction and bid successfully, you will be expected to sign a contract immediately, and to pay a full ten per cent of the purchase price on the evening of the auction.
The completion date will then be set four weeks after the auction. This is not sufficient time to arrange a normal mortgage. In practice, you will have to have funds available ready for the purchase. One you have exchanged contracts, you must complete the purchase even if, for example, the house burns down. You must therefore be ready also to arrange to insure their property immediately on exchange.
There is always a reason why a house has been sold at an auction, rather than through the usual process. There may be more than one. That reason is not always obvious. Buying at auction can be simple, quick, and relatively cheaper. The risks are, however substantially greater. Be clear in your own mind why the property is being sold at auction. You should do the simple things to minimise those risks.
|All information on this site is in general and summary form only. The content of any page on this site may be out of date and or incomplete, and you should not not rely directly upon it. Take direct professional legal advice which reflects your own particular situation.|
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