The Theatre Of The Auction Room

4th March 2014

MOHAMMED MAHROOF BSC (HONS) MRICS - CONSULTANT - MARK JENKINSON AND SON

Auction Room

The popularity of the auction room is becoming quite infectious. There are daytime programmes which follow auction rooms up and down the country, with interest from lay purchasers wanting to buy in the auction room becoming extremely popular.

What is it about buying at auction? It is like a theatre, with so many people in one room from many backgrounds and circumstances, all with a story to tell and all wanting to tell a story once they have been successful or not. The auctioneer is the star of the show giving lead to audience participation. The room anxiously anticipates the first bid. Once this begins the show is in full flow, with bidders bidding in their own style. Some twitch, others nod and wink, all the time keeping a eye on who else is bidding against them. A temporary rivalry begins with a opponent that they have probably never met or can't even see. Others watch on as competition for the property warms up. As bidding continues, audience participation generally begins to increase. Once the bidders hear the words "I am selling and for the first time" from the auctioneer, the successful bidder will have many emotions running through their mind – euphoria, trepidation,victory. I am sure it is like scoring a century in cricket or scoring a winning goal in football. There will be a huge gasp of breathe from the watching audience and a huge smile on the the face of the victor. When the winning card is handed to the successful bidder, the walk to the signing quarter begins, with the audience watching sometimes in amazement or in awe of the winner. I am told by many people that the theatre of buying at auction is adrenaline inducing.

Before the theatre of the auction room begins, the open viewings are also an exciting time for a buyer. Many people will visit a property on the same designated day. There they will meet competitors yet unknown, all with a special reason for buying the property. Some will be looking to buy a family home, others a project, a development, business premises.

The drama of preparing for the auction then begins with the process of organising surveys, checking the legal documentation and getting the finance in place. All in anticipation of the fall of the hammer. So you can imagine why the euphoria kicks in, after the culmination of many weeks of preparation, when the auctioneer says the property is yours. And the winning bidder begins another chapter of realising their ambitions for the property they have just acquired.

So in terms of buying at auction what are the key issues you should have considered and organised before bidding in the theatre of potential:

Preparing to buy at auction?

  • Carefully read the documents and conditions of sale.
  • Ensure you have a 10% deposit in place and means to complete within 28 days.
  • Ensure you have a mortgage in place. If you do not then you may lose the 10% deposit.
  • Have any surveys or land searches carried out and take advice from a solicitor around possible legal issues.
  • Basically you need to have all the necessary arrangements in place before bidding at auction. Do not bid blind or on a whim.

Can I buy before the property goes into the auction room?

  • Offers can be made prior to the property going to auction but you may not always succeed. If many people want to do this then sellers will sell through the room to create competition.~
  • On the other hand, sellers may decide to sell the property before auction if the offer is acceptable.

What if I change my mind?

  • Once the hammer falls you are in a binding contract and if you change your mind the 10% deposit will be lost.
  • The seller may pursue you if they sell it again and there is a difference for the shortfall.
  • Changing your mind can be quite expensive, so go in with a clear understanding of what you are bidding for. Believe me, people do bid for lots they are not interested in without realising.

What should I bid?

  • You should always have a maximum amount you want to bid. Sometimes in the excitement of the auction room people do get carried away and bid more than their budget. You should never do this.

What are the benefits of selling at auction?

  • Intensive marketing period
  • When the hammer falls a binding contract is in place - the buyer cannot back out.
  • All interested parties have an opportunity to bid and are in the room.
  • A 10% deposit is paid and completion is normally within 28 days.

What are the benefits of buying at auction?

  • When the hammer falls the property is yours.
  • Completion is normally within 28 days.
  • No gazumping or back word

What is the role of the auctioneer?

  • The auctioneer is the seller's agent.
  • The auctioneer will take bids from people in the room or sometimes by telephone. They will continue taking bids until there are no more bids.
  • In some cases when there are no further bids, the auctioneer may say this lot is "withdrawn, see me after the auction". This basically means that bids have not reached the reserve which is set by the auctioneer and the seller, and you can make a further offer which may or may not be accepted.
  • The auctioneer is the main person in the room. They have the authority to refuse a bid, without explanation, and also resolve any problems which may occur as a result of the bidding. Their decision is absolute and final.
  • Auctioneers are quite entertaining which adds to the buzz of the room.

The theatre of auctions has been around for centuries with people returning again and again. The popularity of the auction room has increased and this centuries old method of buying and selling will, in my opinion, continue for many generations to come. There will be an auction near you so go along and see the theatre for your self.

This article is merely a guide and you should always consult with an auction specialist and solicitors if you are considering buying or selling at auction.

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