Buying at Auction
Buying at auction can often get you a bargain, and buying property is no exception, but there are dangers which you should be aware of.
Normally you agree to buy a property, arrange your finances, instruct a solicitor and obtain a survey before binding yourself to an exchange of contracts. However, buying at auction means you are contractually bound to purchase at the time your offer is accepted. The completion date is also fixed at this point and is normally about four weeks after the auction but can be sooner.
Important points to consider when buying at auction:
Check the completion date on the conditions of sale before the auction. If you are not clear what the date is, ask the auctioneer;
You must have your finance arranged before bidding at the auction. Preferably this would mean that you have the cash available but could mean obtaining a formal mortgage offer in advance. Great care should be taken as penalty charges apply if you do not complete on the completion date and it can lead to you loosing your deposit or worse;
When buying at auction, you purchase the property in the state it is in at the auction, with any defects there may be. You should arrange a detailed inspection of the property and ideally a survey before bidding at the auction. Once you have bought the property and find there are hidden problems it will be too late;
Check carefully the auction pack to see if any expenses e.g. the seller’s solicitors fees, searches fees and auction expenses, will be payable by you in addition to the purchase price as this is often the case. It is also wise to get your Solicitor to check the Contract pack before the auction to make sure that the title and searches are in order.
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We did have concerns to start with, due to you not being on our door step so to speak.
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Frequently Asked Questions
This is by far one of the most frequently asked questions. In most cases the conveyancing process for the purchase of a home can take between eight and twelve weeks. These time frames can and will alter depending on the circumstances that surround the purchase.
There can be many unknowns associated with conveyancing and this makes it particularly hard for a Solicitor to pinpoint an exact time and date for the house purchase to complete.
The team at L P Law will endeavour to ensure there are no unnecessary delays to the process and if there is, they guarantee to keep you informed of any such development with their transaction.
As soon as you have had an offer accepted on your property you are ready to appoint a Solicitor.
Usually not. There are certain rules in place that prevent the buyer and seller appointing the same Solicitor. This is because of what is known as a ‘conflict of interest’.
There are exceptions but if you are marketing the property you will require an EPC.
Your Solicitor will be able to advise you on the implications but there are 2 ways in which a property can be held. You can hold as tenants in common which is where you hold a share of the property, say 50%, and upon the death of that person he or she can pass it to another person. The other method by which one can hold a property is beneficial joint tenants. This is where a property is held jointly. Upon the death of one of them the other automatically becomes the owner.
Alternatively a Deed of Trust can be drawn up setting out the terms on which you hold the property. We are able to advise you on this and prepare the Deed for your approval.
This is another one of the most frequently asked questions that we get asked. In most cases, the process is no different than using a local solicitor. Everything can now be dealt with by post, e mail and telephone. The process has changed over the last 15 or so years enabling you to appoint a Solicitor with whom you have no face to face contact.
A disbursement is a payment in relation to the process and is payable to a third party. For example, if you are buying a land registry fee will need to be paid to the land registry. This is their fee for registering the property.
More information can be found on our conveyancing expenses page.
It is advisable to obtain a survey. If you are taking out a mortgage your lender may wish to procure one. It is worth checking what type of survey they will be completing as this may not be a full structural survey.
If you are taking out a mortgage your lender will require various searches to be purchased. These are usually a local search and a water & drainage search however, if you are buying in a coal or tin mining area an additional search would be required. There are other searches which may be relevant depending on the area in which you are buying. If you are not taking a mortgage to buy the property they are optional and it is therefore your choice as to whether you have them. We of course do strongly advise that they are purchased as they may reveal matters that will impact on your ownership of the property.
More information on searches can be found on our conveyancing expenses page.
If you are purchasing a property for over £125,000 then yes. How much you will have to pay will depend on how much you are paying for the property. Stamp Duty is worked out as a percentage of the property purchase price.
The rates of Stamp Duty payable on the property as as follows:
Property or lease premium or transfer value – SDLT Rate
Up to £125,000 – Zero
The next £125,000 (the portion from £125,001 to £250,000) – 2%
The next £675,000 (the portion from £250,001 to £925,000) – 5%
The next £575,000 (the portion from £925,001 to £1.5 million) – 10%
The remaining amount (the portion above £1.5 million) – 12%
If the property you are buying will not be the only property you own after completion, such as Buy to Let properties, then an additional 3% is payable on all purchases over £40,000.
For more information on Stamp Duty Land Tax, please see our conveyancing expenses page or visit the Governments guidance pages on Stamp Duty: https://www.gov.uk/stamp-duty-land-tax/residential-property-rates
Exchange of contracts is when the date for completion is fixed. The process of exchanging contracts is usually a telephone call between both sets of Solicitors.
Completion is the date when the money transfers occur and the keys are given to the buyer. As with exchange of contracts you do not need to attend the Solicitor’s office.