things to watch out for buying at an auction

DamoKen · 12-05-2008 08:15AM #1

Hi, just wondering what to watch out for and beware of if buying at an auction as never been to one before.

I've been told by the auctioneer that 10% of the winning bid needs to be paid on the day of the auction and is non refundable. Is this correct?

This would mean carrying a blank cheque on the day I take it, so all surveying to the satisfaction of your mortgage provider would need to be taken care of to make sure you'll get the full mortgage.

Not too comfortable with the whole notion of auctions, much prefer the private treaty option. We mentioned this to the owners when they showed us around the property, they're much the same as ourselves as in unfamiliar with auctions.

Asked them for an idea of what they'd be happy with to see if it was out of our price range,the top end of what they'd be happy with is the max we set ourselves so that's ok. Only problem is the auction is this Friday, we only saw the property at the weekend by chance when we saw an advert in a local paper. The auctioneer for some strange reason told them advertising on the internet is a waste of time!

Anyway, firstly we can't get down this Friday due to work commitments (it's outside Dublin). The only thing we could think of is having a solicitor acting on our behalf with a limit on bids set.

So really looking for advice on what we need to get done before then, we know we'd need a survey done, going to ring a guy from the area today that we know. Also going to arrange a meeting with my bank manager hopefully for this evening to see what he has to say.

What else do I need to get set up?

Hate this whole rushed feeling, the whole idea of an auction is one that disturbs me, heard enough stories about the feeding frenzies a few years back to be put off them for life!
This house though is the first one after 2 years of looking in the region that we both really liked and could see it being our home so would hate not to at least try.

Patrickof · 12-05-2008 10:09AM

DamoKen wrote: »

I've been told by the auctioneer that 10% of the winning bid needs to be paid on the day of the auction and is non refundable. Is this correct?

Yes, this is correct. And in addition you will be required to sign the purchase contract at the time you hand over the 10%. You'll be legally obliged to complete that contract and pay the remaining 90% within a set time period.

DamoKen · 12-05-2008 11:34AM

thought that might be the case. so I'm guessing standard practise is to have a blank cheque with you and 10% of your budgeted max in your account, or solicitors account?

lomb · 12-05-2008 07:49PM

traditionally auctions were places that were used to dispose of properties that
1. couldnt or would be difficult to get mortgaged due to defective title deeds
2 subsidence
3 or a destressed sale on the back of a repossesion/death/ other
4 a property whose value was uncertain due to something 'interesting' like a sitting tenant,development potential etc etc

depending on the contract you may have to complete within a set period sometimes 21 days or forfeit the 10%. alternatively there could be late payment interest at a penal rate.therfore you would need a bank where the mortgage was all but drawn down and a solicitor you 'know' to get moving.

you couldnt in all due conscience buy a house at auction and sign a contract that you hadnt read or your solicitor hadnt read, a survey, title deeds checked ,bank funding in order, and a solicitor willing to move. the vendors solicitors name and phone number would be on the brochure and/or sale board, incidentally you can simply ring them with your fax number and they will fax a copy of the title and the contract to yourself or your solicitor.
in the current market odds are that lt will not sell at auction as it wont meet reserve therefore if you are there and make a bid you can negotiate with the agent after the auction for a private treaty sale, pay a refundable deposit, sign no contract and give them your solicitors name. thats what i would do if i was in a hurry and you have none of the above done...
also remember there is alot of fake bidding in auctions as auctioneers sometimes bid on the vendors behalf up to reserve.

johnnyskeleton · 12-05-2008 10:44PM

Listen to Lomb.

My advice to anyone who wants to buy at auction is this:

DON'T

Jo King · 13-05-2008 05:12PM

If you are going to bid at auction you are going have to gamble the costs of a survey plus investigation of title. The guide price cannot be relied on so an independent valuation is essential. The owner is allowed have an agent bid on the property on his behalf to force it up to the reserve. Auctions are not for the inexperienced.

Victor · 13-05-2008 06:47PM

DamoKen wrote: »

thought that might be the case. so I'm guessing standard practise is to have a blank cheque with you and 10% of your budgeted max in your account, or solicitors account?

Talk to your solicitor as to what is the done thing, but I imagine these days a wire transfer is acceptable, but make sure all the parties, bank included are happy with this.

DamoKen · 20-05-2008 10:25PM

cheers for all the replies lads, and sorry for the late reply from myself, decided to wait until after the auction to say anything more, Ireland and boards being the small place that it is.

all good advice, and stuff that I had in place such as independent survey, excellent solicitor who is a friend and is well experienced at auctions, funds ready to go etc etc.

Didn't attend ourselves, instead our solicitor acted on our behalf. Had a limit set and lost by a very small amount. Of course, if we'd continued bidding who knows how high the other party would have gone? hence the limit and detaching ourselves from the whole thing.

Have to say we were well gutted though, the property which by the way recieved an all clear from the surveyor who was recommended by friends who are engineers and is a well respected professional went as far as to say he'd buy it in morning if he was in the market, one of the most well maintained period buildings in the most scenic location he's ever seen.

As it was it went for a fraction of what it would have got 2 years ago, it's just unfortunate that we've a few things constraining us this year from going for broke, as that was the one place I wouldn't have minded going well over what it went for. Honestly don't think we'll ever see something like that in that price range again.

things to watch out for buying at an auction

Comments