Conducting due diligence is critical prior to making a successful bid at an auction.
Buying property in the traditional way cannot quite match the excitement of an auction.
In comparison to a private treaty sale which can be drawn out over a long period, auction sales can be concluded in a matter of minutes.
In effect, you bid on the property you want, until you are the last and highest bidder.
This may sound quick and easy; however, there are certain pitfalls to watch out for.
It is a recommended practice to attend an auction as a spectator, prior to becoming a bidder.
This will get you used to the language and rituals, and will hopefully prevent a rash, impulsive purchase.
It is extremely important that you do ample research prior to entering the auction.
This means visiting the desired property and doing sufficient investigations such as employing a surveyor to check for structural defects on buildings, and a solicitor to investigate title.
If the property has a defect, the bidder inherits this problem once the hammer falls and the property is sold.
Immediately after the auction, the bidder will be asked to sign contracts and pay a non-refundable deposit.
To contrast this with a private treaty bidder’s process: The bidder would pay a refundable deposit, and would sign contracts only after surveys and weeks of legal work are completed.
The auction system is a fast-forwarded process, similar to the contract signing stage of a private treaty sale.
The auction room is now becoming the preferred method for purchasing distressed properties, some agricultural land, and property being sold through executor sales.
Conducting due diligence prior to buying is critical.
It is extremely important to be fully prepared, going into the auction.
You may also be required to pay a 10% deposit on the day.
There is a general checklist which should be followed, when considering purchasing a property at auction.
It usually takes around four or five weeks to complete a sale after an auction.
Normally, when buying a property in Ireland, condition 36 of the Law Society Standard Contract of Sale contains a warranty whereby the seller agrees to prove that the property fully complies with all planning permissions and building regulations, and they will prove this by furnishing a certificate of compliance signed by an appropriately qualified architect or engineer.
However, this warranty is often excluded, and consequently, it is extremely important to check the property prior to making a bid.
Auctions are a great place to get a bargain or to secure a property quickly without the red tape.
This can only be done successfully if all of these guidelines are followed.
The purchaser should be in constant contact with his or her solicitor, to ensure the title to the property is in order.
It is important that the solicitor would receive a copy of the contract to ensure everything is correct.
Purchasing a property at auction, if done incorrectly, can lead to disastrous and expensive consequences, unless the proper guidelines are followed.
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