Auction sales: Sellers give yourselves the best chance to sell

• They require a quick sale (as the traditional route could take months to complete)
• They have inherited the property and have little to no information about it
• There are issues with the property (for example, it has fallen into a bad state of repair and condition or there is a title problem) that a traditional buyer would not be willing to take a risk on
• They wish to cast their net wider than the potential buyers in the area local to the property
• They want a bidding war between potential buyers.

However, merely putting a property up for sale at auction does not guarantee any bids or a sale! Putting no effort into the auction sale process can also be costly.

Unlike a sale through a traditional property agent, an auction house’s fees are payable whether or not the property is sold in that specific auction. Here we highlight some of the actions to take and points to consider if you want to sell at auction

Prepare an information pack – Gather as much paperwork (for example, planning permissions and building regulation certificates, notices from third parties, insurance documents, energy performance certificates etc.) about the property and answer all the standard property enquiries that a buyer would expect to see as fully as possible.

Potential buyers will be put off bidding if little to no information about the property is available. If you have time, obtain usual local authority and other standard searches.

Check the title to the property – Have a solicitor review the title for the property to make sure there are no issues before listing it for auction. Examples of potential issues include missing documents on the title, ransom strips affecting the property and requiring a third-party consent to the sale.
Additionally, if the property is residential with fewer than 75 years left to run on the lease then this could mean a potentially long and costly lease extension may be required which could affect the price obtained at auction.

Check compliance with legislation – If the property is the freehold or long leasehold interest in a block of flats, the tenants of the flats may be entitled under legislation to make an offer for the interest prior to the auction and specific provisions must be met in order for notice to be given to the tenants. Legal advice should be sought. Selling in breach of the legislation is a criminal offence.

Disclose any problems or issues – Be upfront about any issues to do with the property. The presumption is ‘buyer beware’ and auction house terms are usually protective of the seller in relation to matters affecting the property. However, failing to provide information or deliberately concealing something may result in an action against the seller for misrepresentation which could result in the contract being set aside and/or claim for damages.

Third parties – If information is required from a third party in order to sell (for example a residential landlord or management company providing service charge account information for a building) then approach them as soon as possible as it could take a significant amount of time before they respond to a request for information.

Leases – Leases may require a buyer to enter into a direct deed of covenant with the landlord - try to obtain a copy of the standard form to include in the information pack.

If landlord’s consent is required for any buyer of a lease, ensure that the auction conditions of sale provide for landlord’s consent to be a pre-condition of completion, with a right to determine the contract if it isn’t provided within a specified time.

Attend the auction and answer questions – if possible, be on hand to answer any additional enquiries from potential buyers; answering these quickly and succinctly could well be the difference between a buyer bidding and not bidding.

• Greenwoods Legal LLP’s property team acts for household names and institutions selling properties at auction, and also for individuals, investors and developers hoping to purchase. We also regularly prepare and review auction legal packs so please contact the Real Estate team if you have any queries.

For more information you can call Harry on +44 (0)20 3691 2097 or email him at: hprudolf@greenwoods.co.uk