With milk quotas abolished this year, dairy farmers will be seeking to acquire land, in order to maximise output.
Property auctions are a useful way of buying and selling property. It may seem a very simple process, but it can have adverse consequences unless the bidder prepares well in advance.
If you are planning on buying agricultural land at auction, there are a number of things you need to do in advance. Preparation is key and cannot be over-emphasised.
Have you seen the property? You should view the actual property, and not just the photographs.
This is a common mistake for people buying at auction.
Get a copy of the property brochure from the auctioneer, or visit their website.
It is important to view the property first and to obtain a structural survey if there are buildings on the agricultural land, or if there is a dwellinghouse passing with the property.
Instruct an engineer to carry out a full planning search. It is also important to instruct an engineer to confirm that the boundaries of the property on the ground are comprised within the map.
Ensure that you are satisfied with the map.
Find out all you can about the property to be auctioned. The more you know the better.
It is a good idea to get professional advice in advance of the auction. The cost of a surveyor, engineer and solicitor is money well spent, if it saves you thousands in the long run.
There could also be a tenant occupying the property, which may complicate matters for you if you have not checked, or the property could be located in an area which may prove difficult to sell or rent. Doing your homework first will help you to avoid the most common perils of buying at auction.
Read the legal pack. Get a copy of the contract for sale, and title documents. Contact your solicitor well in advance and give them sufficient time to peruse the contract for sale and title documentation, and to raise pre-contract enquiries with the solicitor for the vendor. Each property at auction has a legal pack, and this contains all of the relevant information in relation to the property.
You will also have the opportunity to agree the insertion of any conditions into the contract for sale for your benefit, with the vendors’ solicitor.
It is critical to be aware of the legal issues before bidding on a property.
Are the entitlements passing with the land? Double-check this. Do not assume that they are. Remember, the entitlements attach to the farmer and not the land.
4. Have you funds in place?
To arrange a mortgage, apply to the financial institution or seek advice from a mortgage broker.
Only when you have your mortgage fully approved for that particular property or your finance in place, should you go ahead with bidding.
If you succeed at auction, you will need to sign the contract immediately and pay a deposit there and then. The deposit is normally 10% of the purchase price.
You will normally be required to complete the purchase within four weeks of the auction. Once you have exchanged contracts, you are legally bound to buy the property, and if you do not complete within the four-week period, you may lose your deposit and can be sued for your failure to complete.
Be sure to factor into your budget any stamp duty, legal fees and land registry fees to complete the sale.
It is important that finances are arranged prior to the auction. Once the hammer falls, you must complete the sale. You have entered a legally binding contract.
Auctions are a very efficient and transparent method of selling property. However, you need to do your homework well in advance and arrive on auction day well prepared. If you do not do your homework and buy on a whim, you could be making a very costly mistake.
Time spent on planning and preparation can pay dividends and even save you from making a catastrophic mistake. Once the hammer falls you are stuck with the property.
Auctions are not for the faint hearted, but the upsides are that the transaction is immediate and you could possibly end up with a bargain that others in the room are not interested in on that particular day.
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