Thinking of selling your property at an auction, then look no further, here is your guide.
Once you have decided that you wish to sell your property at auction, you should instruct the Auctioneers immediately in order to list the property in the next available auction. Once the Auctioneers have sent confirmation to your Solicitors that the property has been listed, they will then proceed to prepare what is called the “Auction Pack”.
What is an Auction Pack?
An Auction Pack is the legal bundle required to sell your property at auction, which is made available to potential buyers prior to the date of the auction. This includes the Contract, Official Copies of the Register and Title Plan (title deeds), any documents referred to in the Official Copies, a Local Search, a Mining Search (if applicable), an EPC and, if the property is leasehold, then the Lease together with any Service Charge and Ground Rent accounts. If the property being sold is from a deceased estate then Death Certificates and Probate documents will also be necessary.
The Contract, which incorporates the “Common Auction Conditions”, is somewhat different to a general sale contract as clauses are often inserted which state that the buyer is to pay your legal costs, your disbursements (the cost of the searches and Official Copies), the Auctioneers fees, the Auctioneers listing fee and a buyers contribution. These clauses are called “Costs Clauses”.
The Contract will also state that the payment of the “costs” is to be made by the Buyer to their Solicitor prior to completion of their purchase of the property. The full sale price, including the “costs”, is then forwarded to your Solicitor on the day of completion.
What happens after the auction?
If your property was not successful at auction, you can then take steps to re-list the property at the next auction and consider lowering the reserve price, if necessary.
If your property does sell at the auction, then the buyers will be required to immediately pay a 10% deposit to the Auctioneers and thereafter sign the Contract held by your Solicitor (who will have been in attendance), which becomes legally binding on both you and the buyers. Your Solicitor will have signed the Contract on your behalf, at the auction, and a completion date (moving date) of “28 days or earlier by agreement” will be inserted into the Contract. This means that completion will take place either 28 days after the auction, or earlier, if you and the buyer agree to an earlier date.
Within those 28 days, your buyer will instruct their own independent Solicitor to act on their behalf, and they will be given independent legal advice. The buyers Solicitor will be in contact with your Solicitor and they will send a Transfer Deed to them, which is known as a TR1. The TR1 is a similar document to the Contract. However, it is this document that formally transfers the property to your buyers once completion has taken place and your buyers Solicitor is required to send this to the Land Registry following completion. You will be required to sign the TR1, as will your buyers. On the completion date, your buyer’s solicitor will transfer the full purchase monies, together with the “costs” to your solicitor and “completion” has occurred once your Solicitor is in receipt of both the purchase monies and the costs.
What happens if completion does not take place within 28 days?
If your buyer is not ready to complete after 28 days, your Solicitor will serve a Notice to Complete on your buyer’s Solicitor. This puts your buyers on “notice” and requires them to complete within 10 working days, paying interest on the purchase price for every day that completion is delayed beyond the original completion date. If your buyers do not complete within the 10 working day period then you will be able to withdraw from the transaction and retain the 10% deposit paid by the buyers. The Auctioneers fee and your Solicitors legal fees will still be payable and will be deducted from the deposit, prior to the balance of the deposit being forwarded to you.
Pros of Selling at Auction?
- Auction properties generally complete in fewer days;
- Auctions usually have a higher success rate;
- Properties that “sell under the hammer” get an immediate result, with less time spent in negotiation with an estate agent;
- The buyer generally pays for all of the sellers legal costs (where the costs clause is inserted into the Contract);
- The property is sold as seen;
- Exchange of Contracts takes place at the auction and the buyer is required to immediately pay a 10% deposit to secure the property.
Cons of Selling at Auction?
- Sometimes the property may take a few attempts to sell;
- The property may not reach the expected value. However, a reserve is put in place so that the property does not sell for less than you require;
- Regardless of whether or not the property sells at auction, you still have to pay the Auctioneers listing fee.
If you would like to speak to one of our legal advisors with regards to placing your property into an auction then please do not hesitate to contact your nearest Thursfields branch, details of which are available on our website https://www.thursfields.co.uk/contact-us/