Is It Safe to Buy Auction Property?

Buying property at auction – whether it’s for the first time or not – can be quite nerve-racking. After all, you’ll be making a considerable investment, and bidding may seem to be over in a flash.

Even if you’ve done as much research as possible, it’s natural to be concerned that you could be letting yourself in for something unexpected.

In this article, the team at auction house Property Solvers explains how to buy property at auction in a manner that is as safe and straightforward as possible.

We’ll examine the potential risks inherent in buying auction property and explore the concept of seller fraud. Then we’ll provide you with a number of ways in which you can protect yourself from potential pitfalls in order to have a safe and stress-free experience.

Risks of Buying Auction Property

There are a number of reasons why many prospective homeowners and property investors seek out auction property for sale. One major benefit of buying at auction is that it’s often possible to find cheaper properties than you might via an estate agent.

However, it is always best to take great care when looking into particular property houses and auction lots when seeking a property on which to bid. There are a number of risks involved that could see you seriously out of pocket – including:

• Accidentally buying a condemned property that you then need to pay to demolish
• Purchasing a property with hidden structural issues, damage, invasive weeds or infestations that will cost a great deal to resolve
• Misguidedly paying way more than a property is really worth
• Legal issues such as a restrictive covenant, negative easement or liability that could restrict your use of the property or cause major practical issues (this could include tenancy issues)
• Purchasing a property with a legal pack containing forged documentation
• “Settling” on a sub-par auction lot after losing out on your preferred property
• The misrepresentation of property or land
• The inability to raise requisitions from the Land Registry.

Property Auction Fraud

Property auctions do present a greater possibility of fraud than methods such as estate agent sale. But what is auction fraud?

In some extreme cases, the purported “sellers” of a property have had no legal claim to it whatsoever – having stolen the identity of its true owner in order to make money fraudulently.

In other cases, a property can be misrepresented or its attached “legal pack” may omit certain vital information to dupe buyers into forking out for something that is unfit. A fraudulent seller could even ask for a deposit, receive it, then illegally sell the property to someone else.

While instances of this kind are relatively rare, a property auction environment does provide greater opportunity for con artists to profit.

Safeguarding Against Auction Fraud

While many property auctions undertake checks on sellers’ fraud related issues – such as identity and money laundering.

If you are planning on purchasing a property at auction, it’s always worth investigating the steps that your chosen auctioneers take to prevent fraud.

Beyond this, the below steps will help you understand how to buy property at auction in a safe manner:

• Read reviews of others’ experiences of using the auction house you are considering
• Hire a conveyancing solicitor with extensive experience in dealing with property auction sales
• Arrange to view any property you want to bid on and ask plenty of questions
• Check whether searches are included in the auction pack. If they aren’t, make sure you arrange them yourself
• Arrange for a thorough property survey
• Check out property prices in the local area to make sure the guide price of your chosen property is sensible
• Go through the property’s legal pack with a fine tooth comb, and ensure that your solicitor does the same
• Consider bidding only on property sold by a bank or other official or public body

So is it safer to buy bank auction property? Usually, an establishment such as a bank is required to undertake fairly in-depth due diligence. This means there is a much lower risk of fraud. What’s more, banks regularly sell foreclosed property at auction, so it’s less likely that mistakes will be made – and the process will probably be more transparent.

Stay Safe

More often than not, a property auction experience will be wholly positive. There is a strong possibility that you’ll find your ideal property at auction, and for an excellent price – so don’t let the potential risks put you off entirely.

However, in order to avoid buyer’s remorse or any nasty surprises, it’s best to take as much care as possible.

Follow the steps listed above for an easy and safe bidding experience.

If you require further help or advice when buying property at auction, or if you are looking for a fuss-free estate agency or fast home sale service, get in touch with Property Solvers today. Our experienced team of property specialists will be very happy to help you.