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Thinking of selling your property via auction?
The popularity of selling properties via auction has grown recently, with both sellers and buyers becoming more aware of its merits. Larger organisations such as Housing Associations together with property investors buy and sell property this way, as do owner-occupiers.
There are many advantages to selling at auction, and it is worth being aware of these:
- There is a chance that as a seller, you may receive an offer prior to auction, which you could accept
- The conveyancing process can be quicker at auction, as the auction may commence a month after you have registered and then the completion (the moving date) takes place approximately 30 days after the auction date
- Auctions attract a variety of buyers, whom are usually in a position to make cash purchases. If there is a lot of interest, as a seller, you may achieve a higher price than on the open market
- The types of properties sold at auction, can include repossessions, as mortgage lenders seek to sell a property quickly and recover their debt. Properties requiring renovation can often be found at auction, together with unusual properties or those which may be difficult to value. Land sales are also familiar sights at auctions, especially land with potential development opportunity.
Preparing for the auction
Services provided by the auctioneer
Check with the auctioneer as to the level of service provided for within the fee. The auctioneer will typically put up the sale board, show bidders round the property and may provide online and telephone bidding in addition to the auction itself. Check the level of exposure your property will receive, such as the use of search engines, newspaper adverts and catalogues.
Will there be a reserve price?
You may wish to set a reserve price on the property, which means the property cannot be sold for less than this figure. The contract must state whether or not the property is sold subject to a reserve price. Unless this is set, then the auctioneer will simply sell to the highest bidder.
Disclosure of information
From a legal perspective, ensure that you include your lawyer in the process as quickly as possible. Your lawyer will need to check the auctioneer’s general conditions of sale and draft the contract of sale.
It is preferable to disclose information such as the title documents, search results and standard replies to enquiries within a contract pack. The pack will then be made available to potential bidders.
It is usual for the seller to commission the searches and make them available to prospective purchasers prior to the auction. A local authority search and other relevant searches such as water and drainage, environmental and flood may be included.
Do be ready to provide evidence of your identity to both the auctioneer and your lawyer, together with an energy performance certificate (EPC).
The sale contract will provide further information as to the amount of deposit payable, the time it will be paid and the methods of payment which will be acceptable
It is usual for the buyers to provide a full 10% deposit. Payment by cheque is the default position, unless the conditions in the contract have been amended. Under the Common Auction Conditions, the deposit is paid by cheque or bankers draft to the auctioneer.
If the property is subject to a tenancy agreement, there is a seller’s duty of disclosure which provides that full details must be revealed in the contract.
The contract may provide that the cost of the searches and the preparation of the contract pack will be done by the buyer. An exact figure can be included in the contract to cover these expenses, with the buyer paying these fees upon completion of the purchase.
The auction particulars will usually include provision which entitles any prospective buyer to inspect the title deeds and any searches which have been made by the seller.
Each of the lots will be described before the bidding commences and contracts are binding on the fall of the gavel. The buyer will then be instructed to sign the contract and pay the 10% deposit on the day.
Completion (the moving day and the date upon which the balance of the purchase monies are paid), usually takes place approximately 30 days later. Both the seller and buyer will need to ensure they are ready to proceed within this timeframe.
For further information, please contact a member of the conveyancing team.
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