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Private Treaty Public Auction Associated Costs Signing Contract

A public auction involves two or more parties competing for the property. Each party makes an offer (bid) and the property is sold to the highest bidder. Notice of the date and time of the auction is usually given by advertisement in a local newspaper or by a sign on the property. A reserve figure is set for the property, usually by the owner or auctioneer. The reserve figure is the value the property must achieve; anything below this and the property will be withdrawn from the market. The reserve figure often reflects the level of interest from buyers for the property. When the reserve price has been reached, the vendor usually sells to the highest bidder. At all times during the auction, however, the vendor has the right to withdraw the property from the market, even if it has achieved the reserve figure. Property auctions are conducted under standard Law Society conditions of sale. These conditions stipulate that unless otherwise stated, all auctions have a reserve price, which is rarely disclosed. On occasions where a reserve price is stated, this means that the highest offer on the day that matches or exceeds the reserve price will secure the property. It is important to remember that in almost all cases, the vendor (seller) reserves the right to sell the property before the auction. There are two representative bodies for professional auctioneers and valuers in Ireland.

In advance of the auction, your solicitor should check the contract for the property (issued by the seller's solicitor) and all title documents that are referred to in that contract. Important issues to consider at this stage are whether there are any restrictions on extending, sub-letting or developing the property; conditions that are attached to the sale; information about service charges and local services; boundaries; rights of way; items included (if any) with the property, etc. When the purchaser's solicitor has satisfied his or her enquiries, the purchaser organises a survey of the property to ensure it is sound.

It is important at this stage to honestly evaluate all costs associated with the purchase of property (i.e., mortgage costs, legal fees, registering deeds, stamp duty, etc.). If you have determined that you can afford to purchase the property taking into account all of these costs, then you are ready to attend the auction.

The successful bidder is the person who makes an offer of at least the reserve price. The successful bidder immediately pays a deposit (10% of the asking price) and signs the contract.

 

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