Buying at Auction
Buying a property at auction provides a fast and exciting opportunity to acquire a new home or investment, however, there are multiple legal and financial differences to purchasing on the open market that you need to be aware of. If you are considering buying at auction, the McCarthy + Co team can assist you throughout the process and help you avoid any legal complications.
Helping You to Navigate the Process of Buying at Auction
One of the key differences between buying at auction and buying on the open market is the fact that you must complete the legal work and surveys prior to the auction. If the auction concludes and you are the highest bidder, you will be asked to sign a contract and pay a non-refundable deposit to the auctioneer. As such, it is vital that you have an experienced conveyancing solicitor on your side before attempting to bid on any properties.
At McCarthy + Co, our conveyancing team has assisted many individuals and investors throughout the process of purchasing at auction. Our legal team will:
- Review the legal pack prior to the auction – Before bidding, it’s essential to obtain and review the legal pack associated with the property. This pack contains essential documents such as title deeds, property searches, conditions of sale, and other pertinent information. Our solicitors will scrutinise these documents for any issues or potential complications.
- Assist with pre-auction enquiries – If there are any ambiguities or concerns after reviewing the legal pack, our solicitors can raise pre-auction enquiries with the seller’s solicitor to clarify matters.
- Provide general guidance and advice prior to bidding – We can provide advice on the auction process, contractual obligations, and any potential risks or liabilities associated with the property.
- Support you at auction – Whilst not always necessary or required, our solicitors can be available during the auction to provide immediate advice, especially if there are last-minute changes to the conditions of sale.
- Handle the legal completion of the sale after the auction – After the auction, there’s usually a set period (often 28 days) to complete the sale. During this time, our solicitors will finalise the conveyancing process, liaise with the seller’s solicitor, ensure all legalities are addressed, and assist in transferring funds and ownership.
Bidding at auction is exciting but is accompanied by higher risks. It’s vital to have the house or property surveyed by a structural engineer to check for any defects before you bid on it, as once you have signed contracts at the auction you will have no recourse against the seller or auctioneer. Properties at auction are not sold “subject to survey” or “subject to finance”, they are sold exactly as they are. So, if you are the successful bidder, you are legally obligated to complete the sale. As such, to avoid making a regrettable mistake at auction, it’s best to consult with experienced conveyancing solicitors as early as possible. You can contact our conveyancing team by completing our confidential Property Consultation Request form.
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Frequently Asked Questions
Questions we are often asked in relation to buying a property.
What are the costs when purchasing a property at auction?
The costs associated with purchasing at auction are not dissimilar to purchasing on the open market. As on the open market, a primary expense is stamp duty, which varies based on the property type, its value, and the buyer's status. Solicitor fees vary, so it's advisable to obtain a quote beforehand. It's essential to hire an engineer or surveyor to assess the property's condition and verify its maps. Depending on the property's title and the scope of enquiries, search fees will be incurred.
Once the property is acquired, the new owner must register the title, either with the Registry of Deeds or the Land Registry, and this incurs a registration fee. Insurance is another vital aspect to consider. After the auction, buyers must ensure that the property's structure is adequately insured. If the purchase involves a mortgage, lending institutions typically require borrowers to have mortgage protection insurance, ensuring the mortgage's remainder is paid off if the borrower dies. Lastly, in some instances, VAT might be applicable to the purchase. Buyers should discuss this with their solicitor or accountant to understand any potential VAT obligations.
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How much will I pay in stamp duty?
Stamp Duty is a tax levied on the paperwork involved in transferring property ownership. As the buyer of the property, you are responsible for paying this tax. The amount you pay will depend on whether the property is residential or non-residential, the purchase price of the property, and specifics about you, such as whether you are a first-time buyer, an owner-occupier, or an investor. The current stamp duty on residential property up to €1 million is 1%. For residential property over €1 million, the rate is 2% on the excess. For non-residential property, the current rate is 7.5%.
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What are the risks of buying at auction?
Buying a house at auction comes with several risks. Firstly, there's limited time for due diligence, which may lead to overlooking potential issues with the property. Often, properties are sold “as-is”, meaning buyers might inherit undisclosed structural problems or legal disputes. Winning bidders are also typically required to pay a deposit immediately, and failure to complete the purchase can result in a loss of that deposit. Furthermore, auctions can be competitive, leading to overbidding and potentially overpaying for the property. Lastly, securing financing on time can be challenging, as traditional mortgage processes might not align with auction timelines.
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Do I need a solicitor when purchasing a property at auction?
While it's not legally required to have a solicitor when purchasing a property at auction, it is essential to consult with one. A solicitor will help you navigate the complexities of the auction process, review the property's legal pack, and identify any potential issues, such as restrictive covenants, outstanding charges, or property disputes. They can also assist with the rapid exchange of contracts, which is common in auction sales. Without a solicitor's expertise, you risk overlooking legal nuances, which can lead to costly mistakes or disputes in the future. In short, a solicitor provides invaluable guidance and protection in the fast-paced environment of property auctions.
Joseph McCarthy
Associate Solicitor
Joseph McCarthy leads the conveynacing department at McCarthy + Co. Joseph has been an integral member of our team since 2013, bringing a unique blend of expertise and dedication to his role. Joseph provides a problem-solving oriented approach to homeowners and prospective homeowners in their property buying or selling journeys.
Joseph can be contacted via email at: joseph@mccarthy.ie
About McCarthy + Co
McCarthy + Co. are a team of solicitors with more than 30 years of experience in providing legal advice, guidance and assistance to clients across Ireland.
We are a family-run business with offices in Dublin and Cork, but we have dealt with clients everywhere from Galway and Limerick to Waterford. We are honest, plain-speaking and thorough – we will work alongside you to ensure your property sale or purchase is as efficient as possible.
Our Awards & Accreditations
We are a multi-award winning firm, accredited by the Law Society of Ireland.
