Most people think that the main difference between purchasing a property at an auction and buying a property through a private purchase is that an auction takes place in public. While this is true there are more important differences between properties that are sold by way of auction and those sold privately.
If you agree to purchase a property at an auction then, on the day of the auction, you will be required to enter into a binding contract to purchase the property. You will have to pay a deposit (usually 10% of the purchase price) and then pay the balance purchase monies on the “closing date”, as set out in the contract.
Before the Auction
If you are thinking about buying at auction these are some of the steps which you should complete, well in advance of the date of the auction:-
– Contact the auctioneer and arrange a viewing;
– Plan your budget – for the property itself, stamp duty, registration fees, solicitor’s fees;
– It is prudent for you to engage a solicitor to review the contracts and title documents as soon as possible. Your solicitor will review the documents, prior to the auction, and advise you of any title difficulties or issues with the property being sold and whether any such issues are likely to prohibit a bank from advancing you a mortgage to buy the property or prohibit you from selling the property in the future;
– It is most advisable that you have the property surveyed by an engineer before the auction. If a property seems like a bargain, there is usually a reason. If a defect or major defects, be it structural or title, are discovered in a property after you have signed contracts at the auction you will not be able to hold the person selling the property or the auctioneer responsible for same. It is important to note that properties at auction are not sold “subject to survey”;
– Your engineer should also check the map of the auction property to ensure that it corresponds with the position of the boundaries on the ground. If there is a boundary problem you will need to understand the extent and likely effects of same;
– If you are obtaining a mortgage you will need to sort out your mortgage application in advance of the auction. It is important to note that properties at auction are not sold “subject to finance”. The property is sold “as is”. If you are the successful bidder, you are legally obliged to complete the purchase. You do not want to find out after you are successful at auction that no lender will give you the required monies to purchase the property because of some title problem with the property.
Buyer Be Aware!