PROPERTY auctions have played an important role in the Northern Ireland property market since around 2008 and were particularly popular during 2014. They are attractive to both buyers and sellers – whether they’re owners, occupiers, developers or investors - and are likely to remain a feature into the future. But it’s important to know what you are doing.
From the perspective of a buyer at auction, one of the benefits of auctions is that they provide certainty, control and transparency. As a buyer, you are in control, deciding when to bid and how high you wish to go. A purchaser is able to buy the property at a price that was achieved competitively against other bidders in a transparent process, and if your bid is successful, then the property is yours on completion. The seller cannot withdraw.
At auction, it is also possible to buy properties quickly. If you are well organised, properly advised and have the requisite financial resources, you can exchange contracts in a matter of days. If the auctioneer is following RICS Common Auction Conditions, completion will be 20 working days after the auction.
You may also find properties are on offer with attractive low guide prices, although the eventual sale price will be determined by the level of competition in the room.
From the perspective of the seller, auctions also have a number of advantages, helping explain their relative popularity. Again they can provide certainty for the seller – properties are not sold ‘subject to contract’ in the same way as through a traditional estate agency sale method. The successful bidder is legally obliged to complete the sale once the gavel falls at the auction. There is also the potential for good marketing exposure – many auctioneers advertise in national, local and trade press. Speed is another potential advantage for the seller – sale is relatively quick.
If you’re thinking of buying or selling a property at auction, it may be in your interests to make sure the auctioneer is an RICS member. Using the services of RICS members offers real peace of mind because we will give you clear, impartial and expert advice, we have strict codes of conduct to protect you – including proper insurance, and because you are protected by our formal complaints service.
If you are a potential buyer at auction, preparation is very important. Your first step is to get a copy of the catalogue from the auctioneer. This contains the lots to be auctioned. You may want to view the property you plan to bid on before auction. Always deal with the auctioneer direct – this way you can be sure you have the most accurate and up-to-date information. If you’re viewing online, make sure you’re looking at the auctioneer’s official website, not one of the many listing sites that have no connection with them.
Look through information including the Important Notice to Bidders, the Memorandum of Sale and the general conditions of sale. Try to get hold of the specific information relating to the lots you’re thinking of buying. From the seller’s solicitor, you need the legal pack, which contains documents such as the title information, and also any special conditions of sale.
From the auctioneer, you need the guide price, any addendum, and confirmation of all of the auctioneer’s fees ahead of the auction. It’s worth keeping in regular contact with the auctioneer, so you know about any additions or amendments to the catalogue that have come up and might affect the sale of the property.
- Ben Collins is director of the Royal Institution of Chartered Surveyors (RICS) in Northern Ireland, which has 3,000 members employed in the land, property and construction markets and in associated environmental issues
- Before you decide whether or not you should bid, make sure the information you’ve been given about the property is correct – it’s worth getting professional advice and both a valuation and an appropriate survey before you buy. You also need to arrange finance – both for the exchange (normally a 10 per cent deposit) and completion.
- Once you’ve decided to bid, tell the auctioneer you’re interested in the property and keep in regular contact. Next, you need to find out what the auctioneer’s procedures are in relation to things like proxy, internet or telephone bidding, signing the Memorandum of Sale, responsibility for insurance on the property from and including the auction day, VAT, and pre-registration.
- Auctions are likely to remain popular into the future due to their benefits for both buyers and sellers. Knowing what you are doing and preparing properly can make sure they work to your advantage.
