Property auctions can be an exciting way to secure a great deal, but they also come with risks. Whether you are bidding in a traditional or modern auction, it is important to be aware of potential pitfalls to avoid costly mistakes.
Traditional vs Modern Auctions
Traditional auctions take place in person or online, with buyers bidding in real-time. If you win, you must pay 10% deposit immediately and complete the purchase within 28 days. This method is fast but requires buyers to have their finances ready.
Modern auctions are usually online and allow buyers a longer timeframe. Instead of an immediate deposit, the winning bidder pays a reservation fee (usually non-refundable) and then has 56 days to complete the purchase. This gives the buyers more time to arrange financing but comes with additional fees.
Key Things to Watch Out For When Bidding
- Research the Property Thoroughly
Before bidding, check the property’s market value, condition and location. Auction guide prices can be misleading – some properties are priced low to attract bidders.
- Get a Survey and Legal Checks
Once the hammer falls, you are legally bound. You cannot back out of the deal. . Arrange for a survey to check for structural issues and have a solicitor review the legal pack for any hidden problems, like disputes or outstanding charges before you start bidding, so that you know what you are bidding for.
- Stick to Your Budget
It is easy to get caught in a bidding war. Set a maximum price and factor in extra costs such as stamp duty, renovation expenses and auction fees.
- Understand the Fees
Auction properties often come with buyer’s premiums, administration fees and reservation fees. Read the fine print to avoid unexpected costs.
- Have Your Finances Ready
For traditional auctions, you need immediate funds. For modern auctions, you have more time, but failure to complete could mean losing your reservation fee.
Final thoughts
By understanding these differences and ensuring you have expert legal guidance, you can make a smart property investment while avoiding costly mistakes. Lisa’s Law conducts thorough due diligence, reviews contracts, and identifies risks, giving you confidence in your investment. Protect your interests with our experienced team – contact us today for seamless, strategic legal support before you bid.
By Wai Ling Chin
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