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Do I need to pay any money on the day if buying at auction?
If you are buying a property at auction and your bid is successful, you are then legally contracted once the gavel hits the table. This means that there are financial commitments on the day that you will need to meet.
1. Mortgage - As with other property purchases, you can buy a property at auction either with a mortgage or as a cash buyer. If you do need to buy with a mortgage, then we would advise you to receive a mortgage offer before you proceed to the auction.
2. Deposit - Once you have bought the property, as mentioned above, you cannot change your mind. You will be required to pay a deposit, which is usually 10% of the purchase price. At this stage, you will also need to present the appropriate identification and documentation.
3. Outstanding balance of the property – After paying the deposit, you will normally only have 20 workings days to pay the remaining 90% and complete the purchase. There is no backing out once you have bought the property and you must pay the full amount within the time limit; if you can’t, you could still be liable for the cost of re-selling it, you risk losing the 10% deposit you paid and could face further financial consequences, as well as legal action from the seller.
4. Auction fees – As well as the cost of the property you will also be required to pay fees to the auction house; when this payment is needed will be determined by the auction house and will be clarified in their terms and conditions, which you should read prior to the auction.
5. Solicitors’ fees – There will also be Solicitors’ fees to pay; while the exchange of contracts is done on the day, Solicitors will then be required to carry out the completion.
There will be other costs that could be incurred prior to the auction, for example if you wish to carry out a survey on the property, and there will be future costs to consider, such as Stamp Duty Land Tax, renovations costs that may be needed and Land Registry fees.
If you are considering buying a property at auction and would like more information about the costs involved, contact our Auctions team today on 023 9277 6569 or email email@example.com. Alternatively, you can find out more about buying a property at auction here.