Buying a Property at Auction-What’s the Difference from Private Treaty?
Articles Blog

Buying a Property at Auction-What’s the Difference from Private Treaty?

November 29, 2019

somebody contacted me there about buying
the property at auction versus buying by private treaty what’s the big difference the huge and critical and significant
difference between buying our auction and buying by private treaty is that all
of the checks that you need to carry out all of the due diligence all of the
research all of the checking of title all of the checking of planning all the
usual things that you’re gonna do before you buy a property and it’s sort of a
properties must be carried out before the auction so the option contract is
drafted by the vendor or vendors solicitor all the documents are
available beforehand for the auction everybody has the same chance you can
raise your inquiries you can make inquiries you can carry out as much due
diligence as you are capable of but the bottom line is when the rubber hits the
road you go into the auction you are faced with a contract that is at that
point non-negotiable and so if you are successful you buy the property on the
fall of the hammer in other words you sign the contract you’re obliged to sign
the contract and you’re obliged to pay the 10% deposit when you sign the
contract you need to be absolutely crystal clear about that before you go
to the auction because you could be in for a rude awakening if you think
otherwise in the normal course of events in a private treaty situation that is a
non-action purchase your solicitor can engage with the other solicitor with the
vendor solicitor can ask questions raise queries and indeed try to negotiate some
additional contract terms or special conditions in the contract and they may
be acceptable to the vendors solicitor and if they are well and good
they’ll be included and you will have where your solicitor will have to a
certain extent shaped terms and conditions of the contract but
the one at the auction you know in advance a number of weeks in advance all
of the information is available to you it’s non-negotiable the papers are there
the title documents are there you need to carry out your checks and balances as
I say and you may need to be absolutely clear that if the hammer Falls and if
you’re the highest bidder and you’ve met the reserve then you’re gonna be the
origin of the property and you could be sued for specific performance to
complete the contract if your own able to complete so if you get a rush of
blood to the head you buy a property you haven’t had finance arranged
you know you’ve basically made a fundamental mistake the bottom line is
you need to sign the contract you’re obliged to you must pay 10% and it can’t
pay the 90% in order to complete the sale then you’re on the hook first you
can be sued first and you can be sued for specific performance and you can be
sued for damages and the vendor can actually sell the property to the under
bidder for a lower price and sue you for the difference so that is the
significant difference between buying by private treaty in the normal way and
buying an option now that is the legal position and that is some factors that
you need to consider when it comes to the legalities and title and so on
there’s another aspect though that you need to consider if you’re going to an
option my advice is actually to stay away don’t
go to the auction because of the human element the human element is something
that I have observed over a number of years I’ve been a good few options down
to the years and say 1986 when I started buying property and selling property
first and I’ve been both a purchaser and a bitter and the vendor at auctions and
I have seen some stuff at auctions but the bottom line is this and won’t take
where you should take from this video is that the matter what you decide
beforehand no matter what you decide in terms of your bidding limit the
likelihood is that in the white of battle in an auction room it is
incredibly easy to get carried away and therefore you’re probably going to
exceed whatever you decided beforehand in fact you would be a person of a
remarkable fortitude and discipline if you didn’t get carried away so my advice
to you is if you’re interested in a property that’s going for public auction
you should send along either a solicitor or an accountant or an estate agent or
some professional who is familiar with the situation to whom you’re going to
give instructions beforehand and you will give specific instructions as to
the top paid that you can afford to go and that’s it don’t change your mind so
you have the benefit of making your mind up valuing the property well in advance
of the auction and you then have the further benefit of having somebody who
is going to bid on your behalf who are not caught up emotionally I’m not going
to get carried away they’re going to act on your instructions and they’re going
to make the bid it’s easy as I say to watch the TV programs and you see people
at auctions and the pot in the hand of putting the paddle up and so on and
doing all sorts of stuff but the bottom line is it is incredibly easy to get
carried away human nature is human nature and if you
have your heart set on a particular property it’s very easy to simply slap
in another bid and before you know you’ve gone 20 or 30 grand over your
limit and the property could well be knocked down to you I hope you find this
video useful and if you do give it a thumbs up down below and thank you for
your support on my youtube channel

Only registered users can comment.

Leave a Reply

Your email address will not be published. Required fields are marked *