The Covid-19 pandemic is having a drastic impact on all parts of life, and that includes the auction process, Sam Fongho, Business Development Director of Midas Property Group has put together his 7 top tips for anyone buying at auction. Enjoy this read.
The Property auction industry has had to change quite dramatically to cope with the COVID19 pandemic. All Auctions have had to move online due to social distancing rules and the ban on gatherings.
Apart from the Auctions going online, another major challenge facing Auction buyers is the inability to view properties which are occupied.
The government has lifted the ban on viewings, viewing can now be conducted but with strict social distancing rules being observed. Viewings of tenanted properties cannot take place at the discretion of the tenants.
Our top 7 tips to anyone looking at buying at Auction during the Covid19 period are:
Check if Viewing is possible:
Buying without viewing is for everyone. We advise you check the Auction listing or call / email to ask if viewing is allowed for the LOT your are interested. Auction companies are not allowed to have walking in open houses at moment, everyone viewing has to be booked in. This will allow the auction company to have social distancing strategy in place based on numbers of viewers expected.
Check if your lender accepts desk top valuation:
Not all auction buyers are cash buyers, you are using a mortgage product or bridging, please ensure your lender accepts desk top valuation since most valuation companies are not risking sending their employees into properties at the current time and not all lenders accept desktop valuation.
Check on completion Time scales on special conditions:
The common auction terms usually require a 28 days completion. Most solicitors are working at 50% capacity, creating a bottle neck in transactions. Most sellers are now giving buyers eight weeks or longer completion periods to facilitate transactions.
Don’t by shy to request longer completion period if not offered. We have managed to arrange longer completion periods only for our clients if they won the bid.
Check on the professions of the tenants:
There are many properties being sold on Auctions based on the Yields or Cash flow. The buyers expects to start having an income from the property immediately on completion.
Following months of lockdown, many might not be able to return to work because their jobs will no longer be there! If you are buying a property mainly for the cash flow, we strongly recommend you request employment references or summary of the employment profile of the tenants. Never before have social tenants been so valuable as now. Tenants on benefit are not likely to be affected.
Register to bid at least 24 hours before the Auction starts:
Bidders are required to preregister and pay a 10% deposit and go through an AML and KYC ( Anti Money Laundry and Know Your Client) process before being allowed to bid.
Most bidders leave this to the last minute, with Auction workers all working from different locations in their own homes, this process can take much longer than usual. We know of many potential buyers who have missed out on deals because their registration process could not be completed in time for them to bid.
For those bodding on multiple LOTs, some Auctioneers accept on deposit to allow you to bid for multiple LOTs but other require a 10% deposit per LOTs. This can be very tricky if you intent on bidding for the next LOT only if you didn’t win the first one. Having to put down two deposits can be a pain. You really must contact your Auctioneers.
Make sure you have a good internet connection on the day. Login early enough and
Auction Online Bidding and Home schooling:
We have heard stories of people bidding while home schooling! Please, we advise not to bid on the same table where you are home schooling. Your bid is as binding as a bid in the an auction room, your require 100% attention to this.