Festive Greetings
Mike Sutherland
December 20, 2023
Going, going, gone! Property programmes like “Homes Under the Hammer” glamourise buying property at auction then renovating and selling on or letting out. If it were only as simple as turning up, placing the winning bid and walking away with a property for a cut-down price. But what about the failures or the losses or the unexpected problems? We do not hear so much about them, do we? If buying a property at auction were simple and straightforward and free of risk, we would all be doing it!
Let’s look at the positives of buying property at auction. Price is clearly an attraction. Properties that are put to auction generally have a lower price than equivalent properties on the open market. If you want some clarity on the bidding process, at auction, you know what others are bidding. In a traditional closing date, you need to contend with blind bidding and being unaware of what others are offering.
Another benefit is speed. Most properties sold at auction complete in 28 days after the hammer falls. If you are looking to move quickly, this type of purchase might be for you.
However, when something looks too good to be true, it usually is!
There are many challenges buyers face when buying property at auction.
You should not simply turn up on auction day and expect everything to fall into your lap. There are many steps you need to take before the auction day to ensure you do not buy a pup.
Once you have identified a suitable property from the auction list, make sure you visit the property. You need to satisfy yourself about the condition of the property and what repairs and renovations may be needed. Importantly, make sure you have a survey carried out on the property. Properties which are put to auction do not need to provide a Home Report of Energy Performance Certificate. This means the caveat of “buyer beware” applies. You must take steps to protect yourself from buying a property that could quickly become a money pit because of structural problems and the high cost of repairs.
If there are any suggestions of structural, rot or dampness problems, make sure you thoroughly investigate these and get estimates for the cost of resolving these.
Importantly, check out the prices of equivalent properties in the locality. You can easily do this using the ScotLIS service provided by the Registers of Scotland. You can check the prices locally and, if the property you are interested in is registered in the Land Register, you will be able to view the price history and can purchase the Title for £3 (plus VAT). All you need is the postcode.
To find out about property coming to auction, get on the auctioneers’ property lists. These will provide you with a list of properties and the dates of forthcoming auctions. The earlier you gather this information, the sooner you can focus and do your homework on properties that interest you.
Have your solicitor check out the title to the property and conduct all relevant searches. At the auction, you take the property “warts and all”. That means if there is a title defect or a charge over the property, you will inherit the problems when you buy. You do not want to be faced with title problems you only find out about after your successful bid! Remember, too, that you will need to meet your solicitor’s fees for checking out the title whether you are successful at auction or not.
If you are not a cash buyer, it is essential you have your mortgage finance arranged and your lender knows you are buying at auction. The purchase will usually complete within 28 days so it is important your mortgage is available to allow you to settle within that timescale.
Whilst the purchase must complete, usually, within 28 days, you will need to pay a non-refundable deposit (normally 10% of the bid price) on the day of the auction. This is a deposit towards the purchase price with the balance being payable, normally within 28 days. If you fail to complete the purchase, you will lose the deposit.
However, in addition to a deposit, you will also need to pay an administration fee. This is normally 1% of the successful bid (plus VAT) and will usually be subject to a minimum charge. Check this out in the auction particulars. This is a fee you pay to the auction house and it does not come off the price you pay for the property.
You need to fully cost any renovations or improvements you wish to carry out to the property. There is no point in buying property at auction that is in a state of disrepair only to discover that you have run out of money to carry out the repairs or improvements.
Prepare a budget in advance and this will allow you to decide on the ceiling for your bid on the auction day.
Finally, once your bid has been accepted, the risk in the property passes to you. That means you must insure the property to protect it from insured risks.
When the bidding opens, you will quickly find out what others are prepared to bid for the property. The open bidding allows you to decide when to enter the bidding and, importantly, when to withdraw. It is easy to get carried away so please make sure you have a fixed ceiling because exceeding it might lead to problems with any renovations.
When your bid is accepted, you need to sign the “Articles of Roup”. These form the contract of sale and purchase and will specify the completion date. Unlike the traditional method of house purchase where solicitors exchange formal letter (called “missives”), the Articles of Roup set out the entire contract and are signed immediately on conclusion of the bidding process.
You will also pay the deposit and the administration fee. Your solicitor then needs to carry out the conveyancing to transfer ownership of the property to you in readiness for completion, usually, around twenty-eight days after the auction date.
The financial consequences of failing to complete can be severe to it is essential you have you finance arranged to enable you to complete within the twenty-eight-day timescale.
You should also be aware that whilst a property has been listed for auction, you can still make an offer to buy it before the auction date. If your offer is accepted, you will need to pay the deposit, enter into the contract to buy and the property will be withdrawn from the auction. For this reason, be prepared to spend money having a property checked out in the knowledge that if someone makes an acceptable offer before the auction date, you might not get a chance to bid for it because it will be withdrawn.
There are two other points worthy of note. Properties that are put to auction represent only a small percentage of all the properties available on the market. Also, the standard or condition of properties put to auction is unlikely to be good.
We strongly recommend that you speak to us before embarking on your bidding journey. Our solicitors have a wealth of experience of dealing with properties purchased at auction. They will guide you through the process and explain the benefits and pitfalls. It is important to make sure the title is in order and there are no “surprises” that might prove expensive.
Contact us today if you are considering buying property at auction.
One of the key features of the Scottish property market is the blind bidding challenge you have in an offers over closing date. When there is competition to buy a property, the selling agent will invariably set a closing date. They then invite prospective buyers to submit their best offer. Any buyer who is interested then must consider how much over the asking price they are willing to pay. Buyers always face challenges in an offers over closing date.
When a selling agent takes on a property for a client, they will always look to sell it for the highest value they can achieve. In a busy property market, in Scotland, the property is exposed to the market on an “offers over” basis. This means buyers must consider how much to offer the seller to buy the house.
Invariably, in an offers over situation, there is competition between buyers. To make the competition fair, the selling agent sets a closing date. This allows prospective buyers to submit their best offer. It is a blind bidding situation where none of the buyers who are offering know what the competing buyers are prepared to offer.
It is important to ensure your solicitor “notes your interest” in the property with the selling agents. By doing that, your solicitor will be kept advised of when the closing date is fixed. Your solicitor will also be able to advise you on your offer when the selling agent fixes a closing date.
The selling agent will discuss all offers received with the seller and recommend which offer should be accepted. You should always be aware, though, that it is not always the highest offer that will be accepted.
If only there was an answer to that very simple question!
There are several things you need to consider when trying to decide how much to offer. Four of the most important things to consider are:
When you have considered these factors and, usually, a lot more, you will reach a conclusion on what to offer. At this point, the only advice we can give you on price is to offer as much as you can comfortably afford.
We look after our clients’ estate agency and legal needs in Dunfermline, throughout Fife and across Scotland. Our solicitors speak to clients who are faced with offers over situations every day. They can help and support you when you are ready to submit your offer.
If you would like to speak to us or seek out help and advice, please contact us.
We know we don’t look it but we are celebrating 30 years in business!
We thank all our loyal clients who have entrusted us with their business over the last 30 years. Also our fantastic staff. We can’t do it without them. To allow our staff time to celebrate in style we are closing for the Easter weekend (closing 5pm on Thursday 6th and re-opening 9am Tuesday 11th).
Here’s to the next 30 years….
We are seeking a Conveyancing Legal Secretary/Administrator to join our team.
Ideally a full-time position but would consider some flexibility with hours.
The role will include the following:
Provide direct support to our busy Conveyancing Department
Diary Management
Making and answering calls
Dealing directly with clients
Typing of documents, scanning, copying and filing
The successful candidate will have:
Excellent organisational skills
Fast and accurate audio typing skills
Experience of a Case Management system(s)
Good communication skills both written and verbal
Accuracy and good attention to detail
Good Numeracy and Literacy skills
A positive attitude with a willingness to be flexible and a team player
Recent relevant experience in a Conveyancing Legal Secretary/Administrator role is essential.
Job Type: Full-time
Salary: £19,000.00-£20,000.00 per year
Schedule:
Experience:
Please email your CV to nicolasneddon@morganlaw.co.uk
Everyone at Morgans would like to wish our clients a very Merry Christmas and a Happy 2023!
Please click on our video (above) for a special festive treat from the team…
Morgans have raised an amazing amount for Fife Sands in lieu of sending Christmas cards, raffling hampers and wearing Christmas jumpers. Our staff also donated nearly 60kgs to Dunfermline Foodbank for their Christmas appeal.
We hope you enjoy the festivities and look forward to working with you again next year.
Our offices are closed from 1pm on Friday 23rd December and re-open at 9am on Wednesday 4th January 2023.
Morgans are recruiting a Paralegal/Legal Executive/Experienced Legal Secretary to join the team in our Kinross Office
The role will include the following:
Providing direct support to our busy Conveyancing Department
Diary Management
Making and answering telephone calls
Dealing directly with clients
Typing of documents, scanning, copying and filing
The successful candidate will have:
Excellent organisational skills
Fast and accurate audio typing skills
Experience of Case Management systems and Microsoft Office packages (Outlook, Word, Excel etc)
Good communication skills both written and verbal
Accuracy and good attention to detail
Have excellent communication skills both written and verbal
A bright, positive attitude with a willingness to be flexible and help when required
Have a keen eye for detail
Be enthusiastic and keen to learn
Ability to prioritise workload effectively
Recent relevant experience in a similar role is essential.
Job Type: Full-time, Permanent
Salary: £18,000.00-£28,000.00 per year depending upon previous experience
Schedule: Monday to Friday 9am-5pm
Application deadline: 3rd August 2022
Please email your CV to Nicola Sneddon, HR Manager, nicolasneddon@morganlaw.co.uk
On 1 February 2022, new legislation came into place requiring every home in Scotland to have interlinked smoke alarms. The legislation was first introduced in 2019 following the Grenfell Tower fire. The implementation of the legislation was delayed due to the coronavirus pandemic.
The aim of this legislation is to make sure every home in Scotland is protected.
This legislation applies to all homes in Scotland. Homeowners need to install new interlinked smoke alarms in their homes. Tenants living in private rented accommodation need to make sure their landlord install these alarms.
Each home needs a mix of smoke and heat alarms as well as a carbon monoxide detector.
Smoke alarms need to be installed in the main living room – that’s the room used most often during the day by those living in the house. They also need to be installed in all circulation areas. That means a smoke alarm needs to be installed in the hall. If you live in a two (or more) storey house, a smoke alarm needs to be installed on each floor or landing.
A heat alarm must be installed in every kitchen.
The smoke and heat alarms must be interlinked
In addition, a carbon monoxide detector must be installed in the room containing any carbon burning appliance – your central heating boiler, open fire etc. The carbon monoxide detector does not need to be linked to the heat and smoke alarms.
Any “stand alone” smoke or heat alarms no longer comply with the new legislation. In addition, any new battery alarms must be sealed units – that means the batteries cannot be replaced and when the alarm reaches the end of its useful life (usually 10 years), the entire unit must be replaced.
There are also certain standards the new alarms must meet. These are:
You can also opt to have mains power alarms installed. We recommend you have this done by a qualified installation engineer.
It is not a criminal offence if you do not have these new alarms installed. Local Authorities across Scotland are responsible for enforcing the legislation. They will not enter homes and will not issue fines to tenants or householders.
However, if you decide to sell your house, the lack of the new alarms will be mentioned on your Home Report as an essential requirement. In addition, whilst insurers have indicated the lack of the new alarms will not lead to loss of cover, you must check any renewal terms to make sure you are still covered.
There is some limited financial assistance available through Care and Repair Scotland. That organisation has recently received a further £500,000 in funding to help vulnerable older and disabled people with the costs of the installation.
Generally, to access the financial help, you must own and live in your home. The Council Tax Band must be between Bands A and C. You must be of state pension age and in receipt of Guaranteed Pension Credit. Alternatively, you must have a disability and be in a support group for Employment and Support Allowance.
Click here to find out more information.
CASHROOM ASSISTANT
Morgans are seeking a Cash Room Assistant to join our team.
The role will include the following:
The successful candidate will have:
Please apply by email, attaching a copy of your CV to nicolasneddon@morganlaw.co.uk or in writing to Nicola Sneddon, HR Manager, Morgans, 33 East Port, Dunfermline, Fife, KY12 7JE