Do your home­work be­fore bid­ding for a home at auc­tion

Yorkshire Post - Property - - PROPERTY - John Rob­son An­swer

I HAVE re­cently taken early re­tire­ment. Hav­ing just turned 60, I still wish to work and have de­cided to use my cap­i­tal to start a prop­erty ven­ture.

Ac­cord­ingly, I am look­ing to buy a run-down prop­erty to ren­o­vate and then, de­pend­ing upon the sub­se­quent val­u­a­tion, ei­ther to sell or rent it out.

Over the last six months, I have been fol­low­ing the prop­erty auc­tions held in York­shire and have seen a num­ber of suit­able prop­er­ties for sale by auc­tion. How­ever, I have no ex­pe­ri­ence of buy­ing a prop­erty at an auc­tion and re­quire some ad­vice and guid­ance. BUY­ING at auc­tion takes away the un­cer­tainty usu­ally associated with buy­ing prop­erty as the legal com­mit­ment be­tween seller and buyer is achieved on the fall of the ham­mer.

This means that both par­ties are com­mit­ted to the legal con­tract with a fixed com­ple­tion date. The suc­cess­ful buyer is re­quired to pay a 10 per cent de­posit and to take on the build­ings in­surance li­a­bil­ity from the date of the auc­tion.

Once you have lo­cated a suit­able prop­erty to be sold in a forth­com­ing auc­tion, there are a num­ber of key steps you must take, namely:

Ar­range a thor­ough in­spec­tion of the prop­erty to fa­mil­iarise your­self with it and its suitabil­ity for your pro­posal.

Ar­range for an in­de­pen­dent sur­veyor to carry out an in­spec­tion with a view to pro­vid­ing you with a de­tailed re­port on the state, con­di­tion and val­u­a­tion of the prop­erty, to re­port on the costs of ren­o­va­tion works pro­posed and the prob­a­ble value of it fol­low­ing ren­o­va­tion.

You should be present at this in­spec­tion with the sur­veyor and to ask ques­tions so as to ob­tain as much in­for­ma­tion as pos­si­ble.

In­struct a con­veyancer to ob­tain, in­spect and re­port upon the legal con­tract pack and the terms and con­di­tions of the auc­tion sale con­tract.

It is most im­por­tant you ob­tain proper legal ad­vice be­fore the auc­tion to en­sure there are no legal ti­tle is­sues and ad­verse search en­tries which could af­fect the ti­tle and fu­ture saleabil­ity of the prop­erty.

If you in­tend to part-fund the pur­chase by way of a mort­gage, you need to sub­mit an ap­pli­ca­tion prior to the auc­tion ad en­sure you are able to ob­tain the re­quired fi­nance be­fore you bid for the prop­erty.

Re­mem­ber that the legal com­mit­ment is made at the fall of the ham­mer and if for any rea­son you are un­able to pay for the prop­erty on the com­ple­tion date, you will for­feit your 10 per cent de­posit paid and risk be­ing sued for any loss on re-sale and associated costs.

You will need to reg­is­ter with the auc­tion­eers and to pro­vide them with your pass­port as proof of iden­tity and a re­cent util­ity bill as proof of your ad­dress. If you do this prior to the auc­tion, it will make things less stress­ful on the day.

It is open to you to make an of­fer for the prop­erty prior to the auc­tion. Re­mem­ber the “guide price” set by the auc­tion­eers will be at the bot­tom end of the ex­pected even­tual sale price and set to ob­tain as much in­ter­est as pos­si­ble from po­ten­tial buy­ers.

I per­son­ally would not make a pre-auc­tion of­fer as ex­pe­ri­ence sug­gests the re­serve price is set by the amount of in­ter­est and the level of any of­fers re­ceived.

Ob­tain a copy of the auc­tion cat­a­logue and read the auc­tion­eer’s notes on how to bid and their re­quire­ments. Con­tact the auc­tion­eers or your con­vey­nacer if you re­quire any clar­i­fi­ca­tion.

Fol­low­ing sur­vey and val­u­a­tion, set you own ceil­ing price and stick to this at the auc­tion.

Buy­ing at auc­tion can be an ex­cit­ing and fi­nan­cially at­trac­tive way to buy prop­erty. How­ever, you must fol­low the above steps to en­sure you pro­tect your fi­nan­cial out­lay.

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