Auction Property Solicitors
If you are thinking of buying at a property auction, the team at JMW can provide the legal guidance you need to ensure you make the right decisions and that your interests are protected. We have the expertise to make sure the rights of both buyers and sellers are properly safeguarded and provide various services to both.
To find out more about how we can assist you at property auctions, contact our team today. Doing so is easy; simply give us a call on 0345 872 6666 or complete our online enquiry form and a member of the team will give you a call back to discuss in more detail.
Property Auctions Explained
Property auctions are growing in popularity among people who want to buy or sell a house or commercial property and avoid the traditional, often lengthy, process of transferring ownership. They give house hunters the chance to pick up a bargain and to also, ultimately, own a property without having to go through what is typically a drawn-out process.
There are similar advantages for sellers; they can find a buyer in a matter of minutes and have the ownership of the property transferred immediately after the hammer falls. Usually a 10% deposit is due to be paid on the day of the auction, with the deal being fully completed within 28 days.
Although house auctions can be a quicker way of buying or selling property, they can also be riskier, especially if you haven't prepared fully and sought expert legal advice. If you are thinking of buying at a property auction, you should first consult specialist real estate residential solicitors to best safeguard your rights as either a buyer or seller.
Helping Prospective Buyers
At JMW, we are able to provide a variety of services to people looking to buy a new home at a property auction. We can help prospective homebuyers to:
- Inspect or survey the listed property
- Check through the auction contract and other associated paperwork
- Discuss mortgage options
- Assess the searches included in auction sales packs
- Understand the title deeds and agreement
Helping Prospective Sellers
Our solicitors are also able to help those hoping to make a sale at a property auction. The services we offer to sellers include:
- Drafting of auction contracts and packs
- Advice on searches to include in the sales pack
- General legal advice and guidance
How long does a property auction sale take?
A sale at an auction is completed quickly. An ordinary conveyancing transaction can take at least eight weeks to complete, and it frequently takes much longer because work only starts once a buyer submits an offer that the seller accepts.
The legal process in auction property conveyancing must be completed before the auction starts.
As a result, when a bid is approved, contracts are exchanged. The buyer is then required to provide a 10% deposit and provide proof of sufficient funds to cover the remaining balance.
This means that the auction conveyancing process is completed in a lot less time than is typical because the balance is typically paid within 28 days.
How do I buy a property at auction?
Get a copy of the auction catalogue ahead of the auction to see what is being offered. This will help you to choose a property in advance and take your pricing range into account. Do your research in advance and keep your hands at your sides to avoid making rash decisions if you show up on the day without any knowledge.
Once you have determined which property is best for you, get in touch with the seller to schedule a viewing. You can determine how much work has to be done on the property and whether the location meets your needs by actually seeing it. Take a look for nearby properties that are for sale but are not listed in the auction catalogue so you can compare prices and value. Keep in mind that time is of the essence, there are typically only a few weeks between the publication of the catalogue and the auction.
A legal pack for each individual property should be supplied upon request in addition to a catalogue. This will include the outcomes of any property searches as well as other pertinent legal data.
On the day of the auction, you should arrive with 10% of the property price as a deposit, and you should deliver the remaining ninety per cent in the following 28 days.
What is an auction legal pack?
The contract used in traditional conveyancing is similar to an auction legal pack for solicitors. However, this document includes vital details regarding the land or property and specific terms of sale that may influence any decision to buy.
A completion date and information on any additional disbursements that must be paid upon completion, for instance, could be included in the conditions. The action legal pack may include the following details:
- Official Copy of Register of Title (who owns the property)
- Land registry and local land charge searches
- Special conditions of sale
- A Property Information Form and a Fixtures and Fittings Form
- Leasehold, management and tenancy agreements
- Planning permissions
- Any replies to pre-contract enquiries
Prior to placing a bid, access to the legal pack is essential. Before the auction, your auction conveyancing solicitor will make a request for the legal package and carefully analyse all of the contract's provisions and fine print. Then, any potential problem or danger to your purchase might be indicated.
What are the typical auction fees for selling?
Anyone selling at auction is required to pay an entry fee that goes toward the costs of the auction itself, the catalogue, and any prior marketing and promotion.
Depending on the auction house, fees can change, but plan on paying an entrance fee of between £500 and £1,000. The entry fee may be demanded in advance at some auction houses or may be collected after the contracts have been exchanged.
If a deal is successful, sellers must also pay a sales commission. This commission will be specified in the contract the seller signs at the beginning, and it may again differ from one auction house to another. Only after the transaction is complete is the commission due, and it is subtracted from the winning bidder's deposit.
What are the typical auction fees for buying?
An administrative charge that is paid to the auction house is typically included in auction fees for purchases. This might be a flat charge or a percentage of the sale price and is often between £200 and £300. The admin fee, which covers the costs of the auctioneer and is subject to VAT, is paid along with the deposit. A "buyer's premium”, which is an additional percentage fee added to the winning bid during an auction, can also apply to you. Properties that will be subject to a buyer's premium will be identified in the auction brochure. You must factor these costs into your budget for a property purchase in addition to the necessary auction conveyancing costs.
Do I need a conveyancer before the auction?
It is not legally necessary to hire a conveyancing solicitor before buying at auction. The best course of action, however, is to look for auction property solicitors in advance. Solicitors can provide other services in addition to reviewing the auction legal package that will aid you in deciding whether to bid or not on the auction day. This could involve using an auction title checker to look into the property's ownership, any leasehold problems, and any liens (such as unpaid mortgages) that may be attached to it.
A Pre-Auction Report evaluates all of the documentation that is available, identifies any that is missing, looks into legal ownership, and flags any potential dangers for a buyer.
Do I need to have finance in place before buying at auction?
To put it simply, yes. If your bid is accepted on the day, you will need to pay a deposit of 10% of the purchase price immediately. You will then be expected to provide proof of funds to the auctioneers. Ensuring all of your finance is in place before making a bid on a property at auction is vital as you will otherwise be unsuccessful with your purchase.
Cash buyers will have to prove that they have the money, and if you are purchasing property at auction with a mortgage, you must arrange an agreement in principle before making any sort of bid.
What are the benefits of selling your property at auction?
There are a number of reasons why selling your property at auction can be beneficial:
- One of the main benefits of selling at auction is speed, namely how soon a conveyancing transaction may be completed. If no further hiccups arise, the entire process (from signing up with an auction house to the day of the sale to completion) can be finished in as little as eight weeks.
- A winning bidder must agree to acquire the property after their offer has been accepted. The moment the hammer strikes, the sale deal is considered to have been completed legally. A deposit, often 10%, must be made right away, and the remaining balance must be paid within 28 days. The buyer must forfeit their deposit if the seller doesn't fulfil their end of the bargain.
- The catalogue selling price will be chosen to promote bidding among those participating in the auction. Competition among bidders on the day of the sale can increase the sale price and allow you to make more money than if you were to sell conventionally through an estate agency.
- By setting a reserve price, you can maintain control over the transaction. This is the basic amount you hope to make from the sale. The property will be withdrawn from the auction if the auctioneer does not receive any bids that exceed the reserve price. You will then have to choose whether to modify the reserve price or engage in negotiation with those who placed a bid below it.
Why Choose JMW?
Our solicitors are highly experienced in helping both sellers and buyers with all legal aspects of a transaction. Looking after your best interests is our number one priority and we offer a wide range of services to ensure you are best placed to make the right decisions and to make sure everything is completed professionally and with the utmost efficiency.
We understand that if you are successful at auction, either as a buyer or seller, it is important that the speed with which you were able to buy or sell is replicated through the conveyancing process. This is why our auction property solicitors always endeavour to act speedily, providing the help you need, when you need it.
FAQs About Property Auctions
I want to sell my property at auction - how do I start?
For unique properties or those that require renovation, selling property at auction is often a quicker and more economical approach for finding a buyer.
The first thing the solicitor for your property auction will do is get the legal documents ready that the auctioneer requires. This makes up the legal pack for the auction that is presented to potential buyers.
In order to prevent disagreements after the sale is finalised, your auction property solicitor can also provide advice on costs and the completion date (i.e. when the property must be vacated for a new owner).
How long is a legal pack valid for?
A legal pack is generally valid from the date it was first prepared for up to six months.
To evaluate the legal package before placing a bid, potential buyers should always hire a seasoned auction conveyancing solicitor.
The legal pack should highlight any potential problems and, if necessary, give your solicitor the information they need to conduct more thorough legal research.
Can you get a mortgage for an auction property?
On some auction homes, yes, you can get a mortgage, but not all of them. Mortgage lenders will often only make a loan against a property that is in an immediately habitable or rentable condition.
Can I buy an auction property with a mortgage?
For the majority of mortgage lenders, purchasing property at auction is a risky endeavour. In fact, some properties are auctioned off because no mortgage can be placed on them.
Therefore, it is imperative that anyone who requires financing to purchase at auction gets it set up. This requires that you at the very least have a written mortgage agreement in principle from your lender.
Given the limited time available to complete an auction property acquisition, your conveyancing solicitor has to battle against time constraints to secure the necessary financing for the completion date.
A transaction that is subject to conditions provides the buyer extra time to obtain financing, a building survey, and building insurance.
Can I change my mind after successfully bidding at a property auction?
Auctions are specifically catered to those who are serious about bidding on an auction property in order to protect both buyers and sellers. Once the auctioneer's hammer falls, the buyer is legally bound to complete the sale.
How long does it take to buy or sell at auction?
Selling a house at auction might take as little as eight weeks for the seller. Property auction solicitors can be hired to do the preliminary work prior to the sale, and the auction conveyancing is often finished in 28 days.
Buyers need only show up on the designated day to submit a bid. However, a winning bid is irreversible. The buyer is then bound to make the purchase and is required to make a 10% deposit right away. After then, they have up to 28 to transfer the remaining funds and finish the transaction.
What is the difference between a conditional sale and an unconditional sale?
The specifics of the two forms of property auction sales are described in the legal pack for the individual property as well as the day's catalogue. The winning bidder in an unconditional sale is required to pay a 10% deposit right away and finish the transaction within 28 days.
The completion period is longer with a conditional sale. The winning bidder will have an additional 20 working days to finalise the sale after securing financing.
My bid was successful - when can I move in?
Auction conveyancing is completed in a lot less time than traditional conveyancing. Your solicitor typically has 20 working days (a total of 28 days) to complete the relevant documentation, provide the remaining balance of the property price, and complete the sale after your bid has been accepted and you have paid the initial 10% deposit. You will get the keys to your new home once these steps have been completed.
Talk to Us
If you would like to know more about property auctions or how the experts at JMW can help to protect your interests and get the most out of them, do not hesitate to get in touch today. Simply give us a call on 0345 872 6666 or complete our online enquiry form and a member of the team will give you a call back as soon as possible.