Uncovering auction`s hidden secrets

Every day we are contacted by clients who have made an auction purchase which is often a costly mistake for them. Although the world of Property Auctions may look glamorous and seem very appealing, there is also a very dark side to auction.

Ever wondered why bidding can move so quickly in the auction room? Or why properties sell for well over the advertised figure? Do you know the Auction House`s rules of sale? How to deal correctly with a legal pack?

When it comes to property auction, various problems can arise, this can be because not all auction companies are fully transparent when it comes to disclosing relevant information about a property. It`s not to say this happens with every Auction Company, because you do of course have some auction companies who are fully transparent and open about properties, and who will disclose every-if any-issues to buyers-however don`t assume they are all acting in the same way.

For Example – Perhaps the title to the property has certain conditions or restrictions in place, which the auction house are not making potential buyers aware of. At auction, always remember that Golden Rule:

CAVEAT EMPTOR

This is an expression of Latin origin, heavily associated with auctions, translated this means “BUYER BEWARE”. Now while many potential buyers are unaware of this associated saying, it also has to be said that not all auction companies impress this point to buyers, perhaps they should at the beginning of an auction, however as the saying is “Let the Buyer Beware” the auction companies must love the fact that the onus for all relevant checks, information gathering and due diligence sits with the buyer, allowing them to hide behind this rule.

We have had cases where clients have purchased properties, which in auction catalogues, seemed what you may call “a great buy” or “rare opportunity” in reality things were very different.

EXAMPLE

A first time auction buyer purchases a property, which they think is in need of a degree of refurbishment. Having experience in the building trade, the buyer then looks to make the purchase, carry out the necessary work, and upon completion of work then let the property out in order to generate a regular monthly income from the investment.

The buyer contacts the auction house, and following submitting an acceptable offer for the property, is asked by the auction house to make payment of the deposit to secure the property, along with the buyer`s premium which was payable on top of the property price.

During the process, it is uncovered the property is in fact in need of major structural works.

The Auction Company of course did not disclose this to the buyer during initial discussions, and it was not highlighted within the property schedule. Note here this issue went undiscovered until the buyer had paid the initial deposit on the property, on top of the Auction House`s Buyer`s premium fee. By this point of course, the buyer had entered into a legally binding contract, and therefore was committed to completing the purchase of a property, a property which was about to become a huge liability.

Now whether it`s due for demolition or in need of major structural work or any other “hidden” reason, when it comes to auction, always expect the unexpected, and never assume all is as it seems.

For additional examples of the types of property that can go to auction with hidden issues, contact us.

N.B. We do however work alongside some Auction Companies who are fully transparent when it comes to property particulars, who do operate a very “open book” selling policy, so if you are thinking of making that auction purchase, do feel free to contact us for any information which may assist you with it.

Email: info@propertyauctionconsultancy.co.uk

Our Services

We offer a range of property services, and can tailor make a package to suit your individual needs. Services are listed below, feel free to contact us to discuss specific requirements:

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AUCTION SUCCESS

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Auction Education and Training Packages

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Auction T&C Documentation

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SELLING AT AUCTION

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Sales & Marketing

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Explaining Auction

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Commercial Property Letting Management

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Client Satisfaction

I am so glad that I connected with Martin Lang before I made my first property purchase via auction. Martin knows property auctions like the back of his hand and is well place to provide guidance on the pitfalls which shows like Homes Under The Hammer skip! Martin guided me through the whole process, he was always at hand to any questions I had and made sure I had covered all the necessary due diligence required the auction. Thank you for all your time and the great advice! Would highly recommend Martin's services!

Andrew Logathasan