When the gavel falls...
In recent months, reports have suggested that more and more people are taking the auction route into the housing market. Should you or shouldn't you? Stuart Bailey considers the pros and cons.
Why?
The Council of Mortgage Lenders says that repossessions have been rising since 2008, and are expected to rise again, due to the recession. Many of the repossessed properties are expected to end up auction. Whilst repossessions are not good news for the property owners, they inevitably lead to more deals being available at the auction house.
Great bargains can be achieved at auction. Properties can sell for thousands less than asking prices in High Street estate agents – even more so in the current market as some sellers have clung to unrealistic asking prices. Commentators believe that auction rooms are where the true market value of a property can be found, as a property is only worth what someone is prepared to pay for it on the day.
Need to know
Buying a property at auction can seem very tempting in the current market. However, house hunters looking to purchase a property privately, as well as those who are relatively inexperienced with auctions, need to be aware of the risks.
At the auction, contracts are exchanged on the day, so a buyer is committing to complete the purchase within 28 days for the date of the auction.
From the auction onwards, the price cannot be changed, or the completion date delayed. This means that there are tight deadlines involved, which adds to the pressure and the risks, especially if a mortgage is required. If so, you should advise the bank before the auction.
As the price cannot be changed, it helps to know about the property beforehand, to ensure that it is worth the money. A buyer has to prepare well in advance to purchase a property at auction, as investigations should be carried out into the property before the auction: get an experienced solicitor to examine the legal documentation beforehand and have a survey carried out at the property. Because as soon as the auction hammer falls, contracts are exchanged and there’s no going back!
The risks may be slightly higher, but you can get a great deal at auction, provided that you are aware of the process and have experienced solicitors to guide you. We at Thomas Guise have plenty of experience in this area, and have successfully acted for a variety of clients on many auction purchases. After all, when the risks can be high, it's crucial you have an experienced lawyer on board.
If you would like more information, or for a no-obligation quote, please contact Stuart Bailey on 01905 723 131 or email stuart.bailey@thomasguise.co.uk