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What you are looking for is what the auctioneer is going to charge you the buyer if you are successful in the bidding war or even if you buy pre-or post-auction.
This fee is payable on the fall of the hammer when you pay the “10% of bid” deposit so, for cash flow purposes, this fee will come out of your bank the day after the auction. To move on to the other costs which you may be liable for as the dare I say “happy” bidder, these are generally buried in the Legal Pack in one of possibly 3 different documents. 1, The Contract. 2, Special Conditions. 3, Important Notices and all the costs can be in one of these documents or spread across all three. What are you looking for and I will start with the oldest costs historically which sellers look to recover from buyers which are the Search Fees which the seller has obtained for the benefit of the buyer and are included in the Legal Pack. These fees can be the actual amount spent or a sum on account of, generally the latter and generally a £200/£500. Next on the list are the Sellers Disbursements which, to my annoyance, are generally not quantified and can include everything from Money Transfer Charges to Office Photocopying, maybe even the Sellers coffee! Anyway, if they are not quantified you need to allow £100-£200 if you are working to a tight budget. Next on the list, and this is where we start to stack up serious amounts of money, are the Seller’s Legal Fees which, most often, are quoted as a fixed fee but with VAT to be added. For your budget £1,000? Seldom less and by the time you’ve added the VAT almost always more than. Now I started by saying that I’m not talking about Auctioneers offering a “Sell for Free” service and yet next on the list are the Auctioneer’s Lot Listing Fees.
AUCTIONS
This cost is variously described are referred to as a Premium or Administration fee and is generally a fixed fee, as against a percentage of your successful bid, of generally between £500 & £1,000 and always plus VAT. When a Seller instructs an Auctioneer the Seller pays the Auctioneer a fee for catalogue listing & marketing regardless of whether the property is subsequently sold under the hammer. This fee can range from a few hundred pounds to between £1,000 & £2,000 plus to which again is added the VAT. Often when this fee is described a note is added to the effect that it should not be confused with the Buyer’s Premium/Administrative Fee. For budget purposes allow £1,500. Next on the list, and remember we are talking about auctioneers not promoting a “Sell for Free” service are the Seller’s costs if they are successful and you buy. Now these costs/fees can either be a fixed sum £1,000-£2,500 on account of, or a percentage of the successful bid which may be subject to a minimum fixed sum to which again, don’t forget, you have to add the VAT. Yes, if everything in this list applies to any of the Lots you’re interested in then you are going to pay all the Seller’s costs associated with that sale in an auction that does not promote its services as “Free to Seller”. With auctions it has always been a case of caveat emptor, buyer beware, but the practice now being adopted by some sellers of recovering all their disposal costs, possibly even including a small margin, make it very difficult for a buyer to be certain that they have accurately totted up their liability. Novice/amateur/first-time buyers at auction are in a much more invidious position because they don’t know what they’re looking for and don’t know if anything is missing from the Legal Pack. You may be looking for a Contract and find one but not note that there aren’t any Special Conditions, sorry about all negatives.
May 2016
LANDLORD INVESTOR