How to… buy a smallholding at auction

Going once, going twice... here's what you need to know if you're thinking of buying a smallholding at auction

Auctions are a popular way to buy houses with land, especially those that are run-down or unusual and difficult to value. They are the fairest and most transparent kind of transaction - the price achieved is the market price of the property on that day, regardless of what you, the agent or the vendor thought it was worth. If successful, you have the security of knowing that the vendor can't pull out, and that you might be able to move in four weeks later. On the down side, you have to spend time and money before the sale takes place and you might come away with nothing.

 

Don't make the mistake of assuming that "auction" means "bargain". The idea of an auction is to maximise the selling price for the vendor. On the other hand, if no-one else turns up to bid against you, you could well get a good deal - it's down to your luck on the day. Remember that the vendor will set a confidential reserve price, based on what the agent thinks the property is worth, and the auctioneer won't let the hammer fall until it has been reached.

 

Find out about upcoming auctions. Get to know the agents and auctioneers in your area that deal in properties with land. Advertising campaigns tend to be short and concentrated - study the local press, as well as farming magazines such as Farmers Weekly and Farmers Guardian, and web-based search agencies such as www.farmsearch.co.uk.

 

Do your homework. Visit the property and find out everything you can about it. The selling agent should provide a detailed brochure and a legal pack containing such information as rights of way. Get an independent valuation from another agent as well as a structural survey - this is vital as many properties need renovation - and instruct a solicitor to get the title deeds and carry out legal searches.

 

Be open about your interest. Many properties are sold "prior to auction" and you don't want to lose out to another buyer because you held your cards too close to your chest. Declare your interest to the agent, but not the price you're willing to pay.

 

Make sure you have the money to pay for the property. If you are the successful bidder, you'll need a 10 per cent deposit on the day of the sale (usually only cash or UK cheques are accepted) and you'll have to pay the balance within a few weeks.

 

Decide how much you are prepared to pay and stick to it. Auctioneers have a few tricks up their sleeve to tempt naïve bidders higher than they want to go, and once the hammer comes down there's no turning back.

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