With the current high number of buyers and shortage of property in Ireland, many people are looking for various ways to get into the property market. Purchasing property at property auctions, especially through the internet, is now more prevalent than ever before. Despite this being the case, it is important that you become aware of the issues that may arise during property auctions.
With the recent COVID-19 pandemic, online property auctions have grown to be a popular way of buying and selling property in Ireland. What many people do not know is that buying at auction is completely different from buying a property from an agent.
The first thing that could go wrong when buying at auction is that when the hummer falls, you will have to sign the property’s binding contracts and make a deposit of 10 percent of the property’s purchase price. Therefore, if you are getting a mortgage, you have to ensure that you apply, and of course, get a mortgage before the day of the auction. This is sometimes a lengthy process. After making the deposit, you have 28 working days to complete the payment, failure to which you lose the deposit. For this, you need to ensure that your finances are sorted out well because it is always impossible to get approval, valuation, and completion on a property in less than 30 days. The property in auction is always bought as advertised and if you are unlucky to discover a major defect after signing the binding contracts, you cannot pull out. This means that you need to do your homework before the day of auction. Consulting an engineer is important because they help ensure that the property is fully compliant with the Irish planning permission and building regulations.
It is obvious that the properties being auctioned often have planning issues, legal issues, and financial issues. Therefore you need to ensure that you hire a solicitor to undertake a review of the legal reports before the auction.
That said, if you still believe that an auction is the fastest and cheapest way to acquire a property, who am I to disagree! This comes with risks and you always need to know how to be successful. Ensure that you sort out your finances before bidding. Say the amount you can afford and always ensure that you account for extra costs like stamp duty, engineering report fee, and legal costs. Ensure that the property and its standing is vetted. Lastly, never change your mind. Once you sign the binding contract, you cannot go back.