Purchasing a property at auction is becoming much more prevalent as it can be an extremely cost-effective way of acquiring a property. This article aims to help purchasers fully utilise the auction process and make them aware of some of the potential pitfalls.
What are the Benefits of Buying a Property at Auction?
One of the main benefits of purchasing property at auction is the speed at which the whole process can be completed. Should the purchaser’s bid be successful they will be asked to exchange contracts immediately and provide a 10% deposit to the auctioneers. Completion is usually required to take place 28 days from exchange of contracts.
A benefit of exchanging contracts early is that it also protects the purchaser’s interest in the property and allays fears of being gazumped at a later date.
This relatively short amount of time could be detrimental, should the purchaser not be prepared. Often we are asked to act on behalf of purchasers after they have been successful with a bid at auction and are obliged to purchase the property and therefore limiting the effectiveness of the due diligence.
Even though there is a 28 day window between exchange of contracts and completing on the purchase the vendor will not be obliged to answer enquiries you or your solicitor may have; the onus is on the purchaser to carry out any due diligence prior to the date of the auction.
A purchaser only has the time between the catalogue being published and the auction taking place – usually 3 weeks – to carry out due diligence.
We advise any prospective purchasers instruct a solicitor as soon as they know they are interested in bidding for the property at auction. This allows the solicitor to review the Legal Pack prior to the auction and, should you be successful, complete the purchase in the required time.
For further advice on buying a commercial or residential property at auction please get in touch with Farleys’ experienced solicitors on 0845 287 0939 or contact us by email.