Property & land
Selling and buying property by public auction
Introduction
Property can be sold either by Private Treaty, Public Auction or by Tender. Private treaty sales are recognised as the usual traditional method. Sales by Tender, when offers are made usually in a sealed envelope prior to a deadline, perhaps given an impression of "mystery" and very often potential purchasers are deterred because of the nature of the process.
Public auction sales, especially in times of a buoyant market, are becoming an increasingly popular method of sale in order to achieve the best "open market value".
Under certain circumstances, such as a forced sale or a repossession by a Mortgage Company, the sale is advertised and announced with the indication of a low or realistic reserve price.
This sometimes gives the wrong impression that sales by auction are a "last resort". This misapprehension is far from the truth.
Advantages
- The whole process from initial advertising to completion can be undertaken within 8 - 10 weeks.
- The fall of the hammer, provided the reserve price is reached, is the contract between the seller and buyer.
- The buyer must sign the contract, available for inspection prior to the sale, immediately after the sale and pay a deposit, usually 10%. The sellers contract is also signed and the contracts are exchanged.
- The contract will stipulate the completion date when the balance of the purchase money is paid by the buyer.
- If the buyer fails to complete, then the seller retains the deposit which would cover the sale expenses.
- The seller must be in a position to buy and sign a contract. Finance must be arranged without the sale of a property. There is no chain.
- All surveys should be undertaken prior to the sale.
- Open market value is achieved with competitive bidding. Very often, with spirited bidding the realisation price exceeds expectations.
- If the property does not sell at the auction it normally remains on the market by private treaty.
Auction procedure
1. The property normally requires 4 - 5 weeks advertising. The auction notices and announcements are larger than a typical advertisement for a sale by private treaty and consequently creates a better impact on potential buyers.
The type of property dictates the publications in which to advertise. Normally the local newspapers prove to be adequate notification will also be on our website.
2. The Sale Contract and Conditions of Sale are made available for inspection by intending purchasers prior to the sale, at the Auctioneers and Solicitor's Offices. Your solicitor prepares the Contract.
Prospective purchases must be fully conversant with the Contract documents, which usually include the local Authority Search, prior to the sale. The Auctioneers work in close liaison with the solicitors.
3. Apart from ensuring the Contract is satisfactory, the prospective buyers must have finance arranged prior to the sale. Secondly, they must arrange for surveys to be undertaken prior to the day of the sale, if necessary.
4. The successful purchaser at the sale must be ready, willing and able to proceed. The buyer must sign the Contract immediately after the fall of the hammer and pay a deposit, usually, 10%. The deposit is not refundable and becomes the property of the seller.
The signing of the Contract commits the purchaser to complete the sale on the date fixed for completion which is inserted in the conditions of sale prior to signing. The completion date is when the balance of the purchase money is paid.
Failure to complete can result in penalties. The minimum and usual completion date is 28 days from the date of the sale.
Guidelines for prospective buyers
Prior to auction
1. View The Property Arrangement to be made via the Auctioneers, Michael C L Hodgson as detailed in the particulars of sale.
2. Conditions of Sale The property is sold subject to Conditions of Sale. Different conditions may apply to separate Lots if there is more than one Lot. The Conditions of Sale are part of the Sale Contract.
It is recommended you familiarise yourself with the Contract and obtain legal advice if you are uncertain on any matter within the Contract.
3. Advise Your Solicitor Please give a copy of the Auctioneer's sales particulars to your solicitors so that they can begin to make the necessary legal enquiries. Local and other Searches will be supplied with the Contract papers so that these do not need to be carried out by your solicitors but the buyer will be expected to reimburse the cost of these Searches in addition to the purchase price. You will enter a legally binding Contract if you bid is successful at the auction.
4. Arranging Finance Since you will enter into a binding contract at the fall of the hammer and pay a substantial deposit, normally 10% of the purchase price, it is essential that all financial arrangements are made well in advance. This is particularly important if you need to arrange mortgage finance. If this is the case it must be sorted out well before the auction day. The completion date is in accordance with the Auctioneer's sale brochure, as stipulated in the Contract.
5. Insurance Once a property has been sold and Contracts exchanged, it will become your responsibility for insurance cover. Make sure you have taken out cover from the date of the auction up to the legal completion date. Your solicitors will advise you accordingly.
6. Sale Prior to Auction Please check with us a few days before the sale that the Lot you are interested in purchasing is still available. It may have been sold prior to auction.
Auction day
1. Arrive Early It is best to allow plenty of time before the bidding on your particular Lot begins. If possible, meet the Auctioneer and let him know which particular Lot you are interested in. This will enable him to recognise you when the bidding starts.
(It is possible that there may be some last minute alterations and these will be announced at the time of the sale.)
2. Bidding Be positive. Signal your bid by definite movements, for instance raising your hand or catalogue. If you have any doubts about bidding then speak to your solicitor who may arrange to do this for you.
When the Auctioneer announces "Going for the first time, going for the second time, going for the third and last time - sold" this is the final stage of the sale process and you must not leave it too late if you want to bid.
3. Telephone Bids and Nominated Representatives Telephone bids to the Auctioneers Offices prior to the sale cannot be accepted. If you are unable to attend the sale personally then you must nominate a representative who must have full authority to bid and act on your behalf. The representative must have authority to sign the Contract on your behalf and provide the deposit money.
4. Success If you are successful with the bid, come forward after the sale in order to sign the sale Contract. You will be asked to provide a cheque for 10% of the purchase price made payable to the sellers solicitors, indicated on the particulars of sale.
Contracts are then exchanged and the sellers signed contract should then be delivered to your solicitors for them to take further action following the exchange.
5. Withdrawn Lots If the property that you are interested in is withdraw at the sale because it failed to reach its reserve price, please speak to one of the auctioneers staff, who will register your interest.
We hope these notes are helpful. If you require clarification on any point, please do not hesitate to contact us!
