The Modern Method of Auction is becoming a popular way to sell and purchase property as it gives more time and more flexibility than traditional house auctions.
At Express Conveyancing, we specialise in working efficiently to meet the deadlines imposed by modern method auction conveyancing. We have specialist solicitors geared to provide specialist auction conveyancing and fast legal advice.
In a traditional auction, even one held online, contracts are exchanged when the hammer falls or final bid is accepted. It is also often referred to as an unconditional auction. There is then a set timeframe, usually between 14 days and 6 weeks to complete the purchase. With modern method of auction, when a bid is accepted the buyer pays a reservation fee and they have 56 days to exchange and complete the property. The specialist conveyancing solicitor acting for the buyer can raise enquiries on the property and there is more time to arrange finance such as mortgages. Whilst the reservation fee is usually non-refundable, you are not required to pay the exchange deposit straight away on having a bid accepted and this is not payable until exchange, partway through the 56 days
As modern method of auction requires a different skill set from traditional auction, you need a specialist auction property solicitor to guide you through the process with their specialist legal advice.
An experience auction solicitor understands the modern method of auction fully so can act with a balance of skilled knowledge and also speed. Your auction property solicitor needs to act quickly to comprehensively understand the property and direct relevant enquiries in the time allowed by the method.
At Express Conveyancing, one of things we specialise in is auctions. We provide a range of services for properties being bought and sold via the modern method of auction from our auction legal pack review service to fast completions within the auction timeframe.
We have experience of working with different mortgage and bridging lenders, limited companies or SPV’s purchasing properties via modern method auction so are best place to provide the advice required both pre- and post-bid
We get many clients asking us if they should still carry out an auction legal pack review before bidding on a property sold by modern method auction and this is a really important question.
The short answer is yes, we would highly recommend that you do. The reason being is that in most cases, the reservation deposit is non-refundable and is still a significant amount of money. There are often reasons why properties are sold by auction including modern method which you should be fully aware of so you can make an informed decision.
Contact one of our team today to chat through our auction legal pack review to understand what the review will contain for your specific property
As modern method of auction requires a different skill set from traditional auction, you need a specialist auction property solicitor to guide you through the process with their specialist legal advice.
An experience auction solicitor understands the modern method of auction fully so can act with a balance of skilled knowledge and also speed. Your auction property solicitor needs to act quickly to comprehensively understand the property and direct relevant enquiries in the time allowed by the method.
Carry out your research with an auction legal pack review before you bid
Place your successful bid with confidence and pay the reservation fee to the auctioneer
Instruct your specialist auction property solicitor to carry out the post-bid conveyancing and complete the AML processes
Your expert auction lawyer completes a further review of the title, raises enquiries and deals with all the funding matters
When ready and with your instructions, your auction conveyancing solicitor will exchange contracts with the sellers solicitor
On the agreed completion date, funds are transferred from the buyers solicitor to the sellers solicitor then keys are released by the auctioneer.
Traditional property auctions are those typically where the property is being sold-as-seen. They are also interchangeably known as ‘unconditional auctions’. They may be held in a physical location therefore you will be buying at auction house, in the true sense of the word. More recently we have seen an increase in a new style of auction, an online house auction. Whilst this method appears more convenient in that you can bid from the comfort of your own home, they still come with all the strict completion terms of a traditional auction. Exchange of contract usually happens immediately after the buyer has won the bid and completion will be within 14-28 days, although in some cases it can be up to 6 weeks.
With the Modern Method of Auction however, buyers bid online as with an online house auction. Once a bid is accepted, the seller and buyer enter an exclusive reservation period. The buyer will pay a reservation fee which is often a percentage of the purchase price although each auctioneer sets their own charging basis. The reservation fee is in addition to the purchase price.
Unlike a traditional auction, when you are the successful bidder on a property being sold under the modern method of auction, you do not enter into a legally binding contract to purchase the property with the seller immediately. Once your bid has been accepted, the seller’s conveyancer will issue contract papers to your auction solicitor who will deal with the property transaction similar to a non-auction property. Exchange of contract however is typically required by the seller within 28 days of the conveyancer’s receipt of contracts and completion is within 40-56 days. Again, it is important to remember that the reservation fee is non-refundable if you withdraw from the purchase after discovering any title issues once contracts have been issued, or you do not meet the timeframes.
The preliminary steps you follow as a seller, looking to sell a property through auction is quite similar to when selling a property in the usual manner. You first contact an auctioneer or estate agent offering this type of auction sale. They will usually offer a free initial valuation and walk you through the process of setting a reserve price and starting bid. Examples of such auctioneers include I am Sold auction and SDL auctions.
Once you are happy with the valuation and have assessed the merits of several auctioneers, you will instruct them by signing a contract with the auctioneer to market your property. The agent will then commence the marketing process.
Whilst the agent carries out their part, you must then instruct an auction conveyancing solicitor who must prepare an auction title information pack, ready for inspection by potential bidders. You can find more details of what an auction information pack usually contain and how Express Conveyancing and our solicitors can help you with this aspect by visiting our property auctions page on this website.
Once the legal pack has been prepared and supplied to the selling agent by your auction conveyancing solicitor, the auctioneer will then agree a date with you for when the auction will go live, together with your instructions on how long you wish for it to run. Typically, this is around two to three weeks. Under today’s challenging market conditions, this period could be a lot longer so be prepared.
At the end of the auction period, the winning bidder will instruct their conveyancer to begin formalities. Exchange and Completion will then usually take place in 4 to 8 weeks, depending on the specific auction terms.
Although property auctions have been traditionally a lucrative source of properties for seasoned Buy-to-Let Property investors, who were often cash rich, a door has been opened for a wide spectrum of property buyers including First Time Buyers and those buying with a mortgage by way of the Modern Method of Auction.
Primarily, this is due to more relaxed time expectations from reservation, set by the auctioneers in comparison to traditional property auctions. As we have explained earlier in this article, it is common to see properties sold under Modern Method of Auction requiring completion, anywhere between 28-56 days in contrast to 14-28 days with traditional auctions.
Further, you will actually not be exchanging contracts immediately when the auction ends. What you are in fact doing is reserving it. You will be required to pay a reservation fee which is non-refundable, immediately on the virtual gavel falling. You will now have a set time period to arrange a suitable mortgage to enable your purchase to complete. This does not, however, mean that you should wait until you are successful at auction to speak to your bank or your broker!
Your conveyancing lawyer will explain in detail, any other conditions specific to your purchase in greater detail once you instruct us.
Work with our specialist auction conveyancing solicitors for fast legal advice for your modern method of auction property
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