Bargains Online or Risky Business
“Online property auctions such as Allsops ,Bid X1, BRG Wilson and DNG give you the chance to pick up a house at a bargain price. There are risks when buying at auction that don’t apply when you buy by private treaty and these need to be taken into account when considering bidding at auction. Here are some considerations you should bear in mind.
- If the property reaches the reserve it will be sold. On a rule of thumb, properties in the Irish online auctions are selling on average 40% above the guide price and in some cases up to double the guide price. If there is a low reserve this often translates into more bidders and a higher selling price.
- The closing date is set for 2-4 weeks after the auction date. This time scale is very tight if you are getting a mortgage. Most mortgage applications will require a two or four week approval period and can be two to four week drawdown period. If you do not complete at the closing date you are at risk of losing your deposit. As a result auction purchases are generally only for cash buyers.
- You need a survey. We have come across buyers who have bought properties with mica or serious structural problems at auction having not done a survey. The “ bargain” has turned out to be a very expensive purchase. Once the hammer comes down you own it and it is too late to back out.
- The title needs to be reviewed by a solicitor prior to the auction. If you have a title with a defect or almost no title at all the smart thing to do is to sell the property by auction hoping that some buyer will not check the title prior to purchase and end up with a land dispute/ court case over access or even the wrong property. Would you buy a car without checking the engine was working? Once the hammer comes down you now own it and it is too late to back out.
- Have a good internet connection. We have seen occasions where the potential buyer lost their connection at a crucial moment and lost the property.
- Set your price ceiling before you start bidding. Don’t get carried away and often it is better to have someone with you when you are bidding to make the bids.
- It can take two or three auctions before you are successful. This is part of the process of buying at auctions. Don’t worry this is normal.
At Lanigan Clarke, we have a lot of experience acting for sellers and purchasers at auctions.If you are considering buying at auction we can carry out an online title review in advance of the auction. Ideally you need to give us a more than a weeks’ notice of the auction and lot number and we can give you a quote for the title review. “
