What Are The Pitfalls Of Buying At Auction?

What Are The Pitfalls Of Buying At Auction?

As with everything, you have benefits and pitfalls of buying property from an auction. We review the pitfalls to save you any future problems when bidding at an auction.

People often forget that the moment that hammer falls, you have legally purchased that property. When buying through an estate agent, you could get held up by numerous factors, such as surveyors, contracts, buyers etc, so in one aspect, it is very positive that things can be done a lot quicker however, you need to be aware that you need to pay 10% deposit within 4 weeks of the auction. Therefore, it is crucial that all sufficient funds are in place for this timescale and remember to bear in mind any Stamp Duty Land Tax the purchase of the property may attract.

Secondly, you need to establish the finer details about the property; do they have tenants currently living there? Is there any structural work that needs to be carried out? If a property is sold with defective or problem titles, it is therefore crucial that you investigate this beforehand and carry out due diligence on the legal pack and the property – this can be done by contacting your solicitor.

If you carry out these initial steps, you could avoid the pitfalls of buying a property at auction because what you initially think of as a ‘bargain’ could turn out to have hidden issues, that could prove to be more costly than at first glance.