John Francis - Estate Agents - Auctioneers - Chartered Surveyors - West Wales Properties - Site Map
New Buyers Guide
Buyers and Sellers alike are increasingly buying and selling properties at auction. This is a brief description designed to help first time auction buyers through the process of an auction sale.
What Properties are Sold at Auction?
Our auctions encompass all types of properties from residential vacant houses ready for occupation or in need of renovation to development sites, commercial buildings, investments, agricultural land, country properties with land and farms. Our clients have included Local Authorities, leading Banks & Buildings Societies, Public Utilities, Central and Local Government Departments as well as very many satisfied private clients.
This guide explains how a John Francis Auction works.
What is the First Thing to do?
Having seen the property advertised or one of our for sale boards, contact our office advertising the property to ask for sales particulars. This is exactly the same process as if a property was being sold by private treaty. What you will however be able to obtain in addition is an Auction Catalogue which will list the date of the auction, the lot number of the property that you are interested in and give you the “batting order” of the properties to be sold that day.
Guide Prices
Unlike private treaty sales where asking prices are given, auction properties quote guide prices. Having established that the guide price is within your budget, you need of course to establish what price you are prepared to pay for the property. The guide price is the vendors minimum expectation on price. The guide price is not a reserve price. Where there is a good deal of competition in the auction room, prices achieved may substantially exceed the guide price.
Viewing the Properties
Viewing arrangements can be made as normally through the office selling the property. Due to the level of interest that can be generated at auctions, in many cases, group viewings only are arranged. Whether you are viewing a property individually or within a group viewing, please take time to ask our member of staff administrating the viewing, any queries that you may have about the property at the auction. Make your own mind up about the property and do not be influenced by others. It is not unusual for viewers to try and put off others by loudly moaning about this that or the other.
Registering Your Interest
If you find a property which is of interest to you, it is advisable to let us know. We can then inform you about legal packs, but also register you as a bidder which will involve you providing us with proof of identification which will include a copies of your passport and an utility bill. These are similar regulations to what you incur when opening a new bank account at a bank or building society.
Legal Pack
We ask each of the vendors solicitors to prepare a legal pack containing copies of all the legal papers which you or your solicitor are likely to need to make an informed decision about the property that you are interested in purchasing. The pack should include copies of special conditions of sale, title deeds, leases and tenancy agreements (where applicable), office copy entries, searches, replies to pre-contract enquiries, planning consents etc.
Legal Packs are, in fact, very similar to Home Information Packs, but offer more detail and more information. In addition to the Legal Pack, an Energy Performance Certificate may also be included if that is necessary as under the Home Information Pack legislation. Copies of the pack are available from our office for a small charge if you want to see the original copy. However, Legal Packs are scanned and placed on our Website and are available for viewing under the same tab that Home Information Packs appear. One note of caution, however, is that Legal Packs (unlike Home Information Packs) do get changed and updated and therefore you will constantly need to keep looking and checking on the Internet at what is included within the Legal Pack for the property that you are interested in.
If you request a Legal Pack to be sent to you, we will keep updating you with any amendments or changes irrespective of how many occur. It is also advisable to arrive at the auction early to check the documents have not been changed within the last 24 hours as there may not have been enough time to have sent these to you, nor altered them on our Website. When alterations like this happen, we will make regular announcements before the auction, but it is always wise to check with our staff on the day of auction if any changes have been made.
You must be aware that you buy subject to all documentation and terms of contract, whether or not you have read them.
What Else do You need to do Before the Auction?
If you need to raise a mortgage to purchase a property at auction, it is important to obtain the approval in principal before the auction date. Free Independent Budgeting Advice can be given by Mortgage Consultants at any of our offices. It is important that you do this as soon as possible as most building societies and banks will wish to instruct a surveyor to prepare a valuation report before making a mortgage offer. If you need a more detailed report, then it is wise to arrange this as soon as possible also. It is a normal condition in an auction contract that completion takes place 28 days after the day of the auction. You should discuss this with your lenders to make sure that it will not be a problem.
Please have your surveyor call us directly to make arrangements for access to the property for him to carry out the survey.
Legal packs can also be sent to your solicitor, or you should take the pack that we have provided to you to your solicitor, to be advised on the information contained within the pack.
At the auction, you will need to pay a deposit which is normally 10% of the purchase price made out to the sellers solicitors (subject to a minimum amount). You should ensure therefore that you have a cheque to pay a deposit for each property bought as well as a cheque of £150 plus VAT made out to John Francis for the buyers premium for each property bought. This covers our cost to comply with the Money Laundering Act. Sufficient funds will be needed within your bank account for both cheques to clear.
Exchanging Contracts
If you are the successful bidder of a property at an auction the sale is binding on the fall of the hammer (gavel). You will then be asked to sign and exchange contracts in the auction room, either during or immediately after the auction has completed. The “memorandum of sale” will be signed by you (or your agents) and the seller (or the seller’s agents).
N.B. Properties are not sold “subject to contract”, “subject to finance” or “subject to survey” when you buy at auction. They are sold unconditionally. If you are the successful bidder, you are legally obliged to complete the sale.
Auction Day Procedure
Things to bring:
Cheque Book with at least 2 Cheques (for each lot).
If you have not registered as a bidder in advance, you will need to register on the day of the auction at the registration desk and, therefore, you will need to provide some form of Identification such as driving licence, passport, credit card, utility bill. If you have already registered but forgotten your bidding number, you will be able to have your number confirmed at the registration desk.
Details of the Solicitors you intend to use in your purchase.
Timing
It is important that you arrive at least half an hour before the advertised time for the auction to commence. This ensures that you are not rushed to register, find a seat, check for alterations to the legal pack etc. It also gives you an opportunity to find out if lots have been withdrawn or pre-sold and to note any price guide changes. Lots are almost always offered in the order in which they appear in the catalogue. Any changes will be announced. Sales by auction are very quick and sales are normally finished within an hour of their advertised start.
Bidding for Your Lot
When the Auctioneer announces your lot he will give a brief description of the property.
We usually provide a Powerpoint Presentation of the property so it is difficult for you not to be aware which property is being sold.
The auctioneer will invite bids at a particular level and you can make a bid by raising your hand.
The auctioneer will regulate the bidding increments and the property will be “knocked down” to the highest bidder. This will not take place until after the auctioneer warns you by saying “going once, going twice, for the third and last time …………… sold”
Never delay until the last second your bid – you may lose out.
When the Hammer Falls
If you are the successful bidder, a member of the auction team will approach you, to take you to the table where the contracts will be signed.
You can either attend with your Solicitor or merely provide us with your solicitors name, address and DX number if applicable, telephone and fax numbers.
You will then be asked to provide a cheque of 10% (subject to a minimum) as a deposit, made out to the sellers solicitors and a separate cheque for £150 plus VAT made out to John Francis representing the buyers fee.
We will then, later that day or the next, write to your Solicitor advising them of the terms and parties involved.
Completion will usually take place 28 days later (unless varied on the special conditions of sale) under the supervision of your solicitor.
Please do not leave the auction room without signing the contract. If you do leave without signing, the auctioneer will sign the contract on your behalf. You will still be liable for the purchase!
IMPORTANT INFORMATION
As soon as the hammer falls there is a binding contract of sale. The property is your insurable risk from this point. Please ensure that you arrange your building insurance immediately after the sale.
If you Cannot Attend the Auction
It is always wise to be able to attend the auction, but if you are unable to do so, then it may be possible to bid in other ways:
By telephone – we will telephone you when the lot is being auctioned provided that before hand we have received a bankers draft for 10% of your anticipated maximum purchase sum or if a personal cheque is used, having received proof of funds from your bank or building society.
By proxy in writing where you specify your maximum bid and the auctioneer bids on your behalf. Again a deposit cheque/bankers draft for 10% of the maximum sum you are prepared to bid should be provided as well as proof of funds by letter/reference from your bank or building society.
You may engage an agent or friend/relative to bid on your behalf as your agent. In doing so you and your agent would be wise to exchange letters confirming that the bidder is acting on your behalf as your agent and giving your full name and address as the bidder and details of your Solicitors.
For more information on proxy bidding, go to our link on this Website.
What if the Lot You Want is Unsold?
If a property fails to reach its reserve price i.e. the minimum price that is acceptable to the vendor in the auction room, it may be possible to agree to purchase the property if the seller is present immediately after the auction. It may be possible to exchange contracts with you in the room on the day of sale, providing an acceptable offer is made by you the buyer to the seller. If this is not possible for you or the seller, then we will arrange to contact you after the auction or on the following day.
Buying a property at auction does not need to be a daunting prospect provided you have made all your enquiries well enough in advance and have your maximum bid figure thoroughly set in your mind. If you have any questions before the sale, contact us and we shall endeavour to help you. If you have any queries before the auction, then ask to speak to someone about the legal pack of the property that you intend bidding on.
WARNING – If you are still unclear about anything before the auction commences and you cannot obtain satisfactory answers to your enquiries, you are best advised not to bid.
If you are successful in buying a property at auction, you can relax and savour the moment in the knowledge that your seller cannot change their mind or be tempted to “gazump” if another purchaser offers more money. Having savoured the moment, you will then quickly need to organise and confirm finance etc so that you are ready for the completion date.
