Steps for Purchasing Property at Auction
Before the Auction
- Consult your solicitor. Your solicitor will contact the Seller’s Solicitor and they will examine the legal documentation relevant to the property that you are purchasing. This is a crucial stage in the purchasing process as it will allow your solicitor to uncover any potential issues with the title of the property and will often determine whether or not you decide to purchase the property.
- Once your solicitor informs you that he is satisfied with the legal documentation you should then engage an Engineer to carry out a survey of the property. It is important to note the difference between buying a new property and a second-hand property. When buying a new property you have a guarantee for structural defects for 10 years and minor defects for 5 years under the Homebond scheme. When buying a second-hand property that is not still subject to the Homebond guarantee you are buying it “as is,” therefore, it is essential that you are aware of any issues that affect the property both of a legal or structural nature.
- Whilst financing the purchase should be considered before even consulting a solicitor it is at this stage important that you know where the purchase funds are coming from. You may be a cash purchaser or you may be getting a mortgage. It is important if you are getting a mortgage that you have an unconditional letter of loan offer from your bank or financial institution as once you have the winning bid at an auction you are legally bound to purchase the property. No property being sold at auction will be on a subject to loan basis.
- It will be necessary to have a deposit ready for the auction. This will normally be 10% of the purchase price. For online auctions, it will be necessary to have a security deposit paid in advance and this can be done by credit/debit card.
At the Auction
- To allow you to pay the deposit at auction you must have a blank cheque or bank draft available.
- Once you are the winning bidder at an auction you will then have to sign the purchase contract in duplicate and you should now ensure the property as you have an insurable interest in it.
- You will be given one of the purchase contracts and you should then contact your solicitor and give them one of the purchase contracts immediately.
Closing the Sale
- Once you have given your solicitor one of the purchase contracts they will then proceed to close the sale which will normally take place a month after you purchased the property at auction.
- The last thing you have to do is arrange the rest of the purchase price. If you are securing funds from a bank or financial institution you will need to have the funds drawn down by the closing date. If not, you may be asked by the seller’s solicitors and ultimately be legally bound to pay interest on the amount of the purchase price.