AUCTIONS - A GUIDE FOR BUYERS

Over the past year auctions have become a popular way to buy and sell property for individuals, investors, banks and receivers. I have acted for many purchasers at auction in the past year and my advice always is “DO YOUR HOMEWORK” before you place that bid. The property will be sold as is and the onus is on you to ensure that you know exactly what you are buying. 

It is vital that you engage a surveyor to inspect the property and its boundaries and a solicitor to examine the title before attending at auction. Once the hammer falls and your bid is accepted on a property, you will be required to sign contracts at the auction and pay a non-refundable deposit to the auctioneer. This forms a binding contract between you and the seller of the property.

I always recommend my clients to take the following steps before bidding at auction:-

1. Attend at and familiarise yourself with the property;

2. Retain a suitably qualified surveyor/engineer to inspect the property to ensure that there are no structural, planning or boundary issues. Remember, if it’s too good to be true, it usually isn’t true! So if you think you are getting a bargain, ensure that there is no reason for the bargain, for example, a defective property. If a defect or major defects are discovered in a property after you have signed contracts at the auction you will have no recourse against the seller or the auctioneer. Your engineer/surveyor will check that the property is structurally sound, that there have been no extensions/developments to the property other than those that have been disclosed and will also ensure that the property fully corresponds with what is on the map.

3. You should also attend the Local Authorities’ office yourself and investigate if there are any developments planned for the area such as major roads, large housing estates, dumps, etc;

4. If you are relying on a mortgage to fund the purchase, you MUST ensure that you have loan approval in place. 

5. You should also budget for the outlays involved such as legal costs, stamp duty and registration fees. Stamp duty on residential properties is payable at a rate of 1% up to €1,000,000. Stamp duty is payable at a rate of 2% on the balance. Therefore, if the purchase price is €1,200,000 stamp duty is payable at a rate of 1% of €1,000,000 and 2% on the balance €200,000. 

Stamp duty is payable at a rate of 2% on all non-residential properties e.g. commercial premises. 

6. It is crucial to retain a solicitor to review the contracts and title documents. Your solicitor will raise any necessary enquiries prior to the auction and your solicitor should also conduct a planning search. 

Once the auction is in progress you can make a bid by raising your hand. Properties are, unless otherwise stated, offered for sale subject to a reserve price, which is the price below which the seller will not sell the property at auction. If your bid is the highest bid and meets the reserve price and the hammer falls, you are bound to sign contracts and pay a deposit of 10% of the purchase price.

VAT may also be payable and your solicitor or accountant will be able to advise you in this regard. 

For further information or advice please contact Catriona[at]brophysolicitors.ie