#21: How to buy and sell property at auction, with guest Bushra Mohammed

In the second of four summer special episodes, Richard Jackson and Suzanne Smith speak to Bushra Mohammed, who guides us through how to buy and sell properties successfully at auction. Not only is Bushra a property solicitor with particular expertise advising clients who buy and sell at auction, but she is also a property developer and landlord. This enables her to understand the perspective of property investors, and what the key issues are to look out for. Suzanne first met Bushra after following her Instagram account @bushra_propertyinterest. You can also connect with Bushra on LinkedIn and find out more information on her website. >> Ask a question: Click here for question form What we cover in this episodeWhy do people sell property at auction?Why do property investors buy at auction?Difference between buying property at auction and by private treatyWhy the auction legal pack is important for biddersPractical tips for buying property successfully at auctionPractical tips for selling property successfully at auctionBushra's Golden NuggetsCredits Why do people sell property at auction? People usually decide to sell a property at auction, instead of the usual "private treaty" are usually looking for speed and/or certainty, With speed, the seller knows they will have a legally binding exchange, which is highly likely to complete within two weeks or 28 days. The certainty comes from knowing that the winning bidder will exchange on the day of the auction and will pay a 10% deposit, which they will lose if they don't complete on the purchase. Typically the sellers are those who wish to sell quickly and efficiently, eg to raise money to pay debts, a probate sale when the owner has died or the property may have structural issues. Bushra advises that it is important for potential bidders to find out the reason for the sale, and then decide whether the circumstances pose a risk for them as bidders, and what they can do to mitigate the risk. Why do property investors buy at auction? Programmes such as Homes under the Hammer have taken some of the mystery out of buying property at auction, and increased its popularity. Property investors usually decide to buy at auction in the hope they will be able to buy a property below market value. If they the highest bid, they have the certainty that purchase will complete. There will be no gazumping and no stressful chains. Difference between buying property at auction and by private treaty Whereas with a normal sale by private treaty (buyer makes offer, does searches, exchanges and then completes), when a bid wins at auction, the bidder is legally obliged to pay the deposit, with contracts "exchanging" straight away. There is no cooling off period and the bidder will lose the deposit if they con't complete the purchase within the specified time period, ie 2 weeks or 28 days. This means that someone buying a property at auction needs to do all of their searches and due diligence before the auction. Unlike a purchase by private treaty, they cannot pull out once the bid is accepted. Why the auction legal pack is important for bidders As bidders need to do their due diligence up front, it's really important to study the auction legal pack carefully to make sure there is nothing noted that might affect your decision to buy the property. Bushra advises instructing a solicitor to review it so that they can flag any risks and ask for further information. If the seller provides more information in response to a question, that will potentially put a bidder in a better position as the seller won't automatically send information to all bidders, as is the case with public procurement. >> Blog post: 7 ways to screen your property investments Practical tips for buying property successfully at auction Bushra gives the following tips to help investors buy property successfully at auction: