Property auctions have become increasingly popular with both buyers and sellers – whether they’re owners, occupiers, developers or investors.
If you’re selling a property at auction, you may want to use an auctioneer who is an RICS member. If you’re looking to buy a property at auction, an RICS member can ensure the investment you make is a sound one.
Using the services of RICS members offers real peace of mind because:
- they give you clear, impartial and expert advice
- they have strict rules of conduct to protect you – including appropriate insurance
- RICS members have to update their skills and knowledge throughout their careers, so you can rely on their expertise
- you are further protected by their formal complaints service and access to independent redress, for example through an Ombudsman scheme.
The advantages of selling at auction are:
- certainty – properties are not sold ‘subject to contract’ in the same way as through a traditional estate agency sale method. The successful bidder is legally obliged to complete the sale once the gavel falls
- good marketing exposure – many auctioneers advertise in national, local and trade press
- speed – sale is relatively quick and completion usually takes place 20 working days after the auction if the auctioneer is using RICS Common Auction Conditions, which you can download from our website at www.rics.org/cac .
Before the auction
If you want to sell a property at auction, first ask the auctioneer’s advice about its saleability, and what they would recommend as the guide and reserve prices. Once you’ve checked the date and venue of the proposed auction, ask the auctioneer for details of the terms of appointment.
You need to agree these before the auctioneer does anything. Auctioneers have to follow a number of statutory regulations including the Estate Agents Act 1979. RICS members must also follow the RICS Rules of Conduct.
The terms of appointment will include:
- their commission if the property sells at auction, or if it’s withdrawn of sold before the auction, or sold after the auction
- any extra charges and whether you’re liable for them.
The terms of appointment will also include the auctioneer’s right to:
- end or change the appointment
- instruct your solicitor to prepare the legal pack and special conditions of sale, and to attend the auction
- act on your behalf in the auction room, including signing the Memorandum of Sale
- manage things in the auction room, including the bidding increments
- sell the property at the reserve price or above.
You also have to agree procedures for the following with the auctioneer:
- amendments to the reserve and guide price
- putting up sale boards at the property
- exclusive advertising, including cost
- inspections by potential buyers
- proxy, internet and telephone bidding
- identifying the successful bidder, getting the deposit cheque and signing the Memorandum of Sale
- dealing with any unsold lots.
If the lot is sold:
Even though you’ll probably be at the auction, when the hammer comes down it signifies a binding contract, and it’s the auctioneer or clerk who signs and exchanges the Memorandum of Sale with the buyer and collects the deposit. If the auctioneer is using the RICS Common Auction Conditions, completion will be 20 working days after the auction.
If the lot is unsold:
If the lot doesn’t reach your reserve price, you need to know what the auctioneer’s procedure is for dealing with unsold lots.