This creates a legally binding agreement between both parties. There is then a limited period of time to formerly 'complete' transferring what is more commonly a significant asset, for a large sum of money.
The auction conveyancing process is therefore condensed into a matter of days rather than months. For both buyer and seller, this speed can prove to be extremely advantageous; however, it should not diminish the significance of the transaction – there are many considerations for both parties.
Can I buy a property at auction from outside the UK?
Yes, you can buy property at a UK auction even if you are based outside the UK.
There are no legal restrictions on foreign ownership, you will however be subject to more rigorous identification checks though, as a foreign national or expat, and you will have to pass rigorous Anti-Money Laundering (AML) checks.
You will likely need to register to bid in advance, providing detailed identification and proof of funds so ensure you have all your documentation and funding in order.
On the day of the auction, bbidding can tale place primarily through online, telephone, or proxy bidding.
Can I use mortgage or bridging finance to buy at auction?
While for those that can afford to, the ease and speed of using cash to buy at auction is beneficial, it is possible to use both mortgage or bridging finance.
Although mortgage finance is available for auction purchases, with the tight auction completion schedule of twenty working days or less, it is best to arrange it before the auction. With the appropriate funding amount, for that exact property, approved prior. Then, following the fall of the gavel, the broker and lender will have to swiftly finalise the mortgage processing and make funds available in time. If the valuation or legal paperwork takes too long, you risk losing your 10% deposit and penalties.
Bridging finance is used to provide a fast flexible solution to buy residential property, as well as commercial assets and land. Often preferred for renovation-heavy properties or uninhabitable properties, which don’t meet regular mortgage lenders’ criteria and may therefore be deemed unmortgageable. They can also cover additional costs, including legal fees, stamp duty, and auction fees. Most buyers use a bridging loan to enable them to complete on their purchase then undertake the refurbishment works before refinancing onto a traditional mortgage.
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How Much Deposit Do I Need to Buy an Auction Property?
Normally the auction house will require payment of a 10% deposit immediately on the Lot having been won. This will be taken into account by your solicitors with the remaining 90% being paid when you Complete shortly after (twenty working days or less as standard).
Do I need to use a lawyer or solicitor before the auction?
Quite simply, it’s not mandatory but it might prove money well spent.
On the whole potential buyers with limited auction experience, will consult a solicitor, lawyer or licensed conveyancer prior to auction to advise upon the content of the Legal Pack. Such professional due diligence provides an experienced, clearer interpretation of the content, scope, costs and risks of the intended asset acquisition.
That said many experienced auction buyers feel sufficiently educated to commit their investment to their own analysis. However, on occasion even professional investors and developers opt to employ a legal professional to provide further analysis and guidance to their initial due diligence.
Upon instruction, your appointed legal adviser will be able to liaise with the auctioneers and download the Legal Pack from their website liaising with the seller’s lawyers and solicitors where necessary.
Post auction, if you are the successful purchaser and have exchange contracts on the fall of the gavel you will need to provide the auctioneer with your appointed solicitor or lawyer’s details. This will be recorded on the Memorandum of Sale and contracts will be sent to them.
For more information, please review - https://www.auctionconveyancing.com/auction-legal-process
Do I need a survey when buying an auction property?
Obtaining a survey isn’t compulsory but if you are unsure about the condition, structure or costs associated with a property then you might wish to engage a surveyor, an engineer or builder. Remember that once the gavel falls, contracts are exchanged and, whatever the condition, you are committed to buying it.
How long will I have to complete an auction purchase?
Statutory Completion is twenty working days but a different schedule or specific date maybe included in the Auction Special Conditions of Sale.
What deposit will I need when buying an auction property?
The deposit is payable on exchange (the fall of the gavel) and is normally 10% of the purchase price and sometimes with a minimum amount. The deposit may differ for certain Lots, where it should be detailed in the Auction Special Conditions of Sale.
Do I need to arrange finance before the auction?
At an auction you are committed to buy the property on the fall of the gavel and Completion then occurs within a short limited period. So it crucial to arrange and secure your finances in advance of any bidding. Who will lend on the asset? How much can you borrow and is it sufficient? Will your application will be processed, with funds released, in time for Completion?
What Solicitor details can I put down when registering for an auction?
Solicitors: Taylor Rose MW
Contact: Jane Baird and Luke Humphries
Address: Stuart House, St John’s Street, Peterborough PE1 5DD
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