4 ways to ensure you do not stumble as the gavel drops and have the funds and solicitors ready for the purchase

Posted by tungstenmg
Last updated 16th March 2020
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  • preparing for the gavel to drop on your winning offer
    preparing for the gavel to drop on your winning offer

    There are a number of things you need to carry our prior to an auction. Like with all purchases you need to do your due diligence before you say lets go …

    You will carry out searches and conveyancing steps, local demand research and checking the property information. Depending on your experience you may need to visit the property yourself or with a builder and you may need to get assistance with the legal pack. This may not be your normal solicitor as working with a solicitor who has experience with auction purchases may help with unforeseen delays. Remember auction benefits are the speed of a sale so you need those around you who add to the speed. You may wish to consider carrying out searches too?

    You will need to prove to the auction house that you have the funds to purchase the property along with giving them a 10% deposit. So how are you to purchase the property, in cash or with a mortgage? If it is the latter than you need the Mortgage In Principle ready on auction day.

    Securing a solicitor who have experience at auctions
    Securing a solicitor who have experience at auctions

    As mentioned in the introduction, a huge benefit of an auction purchase is the speed of purchase. As the buyer you need to ensure that you have the legal team to assist with the sale as most have to normally complete in 28 days.

    Before you go to the auction it is advisable to read the legal pack. But I would advise that this is checked by a legal professional. Although you are not guaranteed to win the lot some may see it as a waste of money to pay for a solicitor, but you do not have the time to check out the legal pack once the lot is won nor can you back out if you discover an issue. If there are unusual conveyancing items such as a property title not being perfect which prevented it from being sold on the open market then you are unable to objects once the gavel has fallen. A conveyancing solicitor will check over the sales pack and alert you to any issues. In my book this would be money well spent.

    A conveyancing solicitor will also be able to advise on the cost of search indemnity insurance as it is unlikely you wish to pay for and carry out searches on every property you like at auction, but would you purchase a property outside of an auction without the searches?

    You will need to find a solicitor who has experience in auctions so they can guide you on the issues, how to overcome these and work with speed to ensure you meet the tight deadline.

    securing a mortgage in principle
    securing a mortgage in principle

    Gaining a Mortgage In Principle (MIP) for an auction purchase is the same as gaining a MIP for a traditional purchase. You will need to inform your broker that you are wishing to purchase at auction as the property mortgage will work if the property is mortgageable without retention.

    When the gavel falls you need to give the auction house 10% deposit plus prove you can fund the purchase with the MIP.

    Again, you need to ensure that the mortgage broker has experience with auction purchases so they select a mortgage provider who accommodates auction purchases, and also can move with speed.

    bring 10% deposit and 2 forms of ID

    Once you have won the lot and your bid had been accepted you will need to give your details, 2 forms of ID and deposit to the auction house. You will have to sign the paper work which commits you to the auction houses conditions and within these documents will be the date and final balance that needs to be paid.

    You must have the MIP ready as it is a big mistake to assume you can get a mortgage and complete the sale within 28 days without already having the MIP.