Our esteemed auctioneer and sales consultant, Richard Copus (FNAVA FNAEA (Hon’d) CPEA), explains ‘unless sold prior’…
Most properties that are listed for sale by auction also state ‘unless sold prior’. Why is this and what does it mean?
Most auction listings say this for a number of reasons:
Firstly, if this is not stated and the property is sold before the auction, it could leave the auctioneer liable to having legal action taken against them by a disgruntled prospective bidder who had geared themselves up to bid on the day.
Secondly, sometimes there is not a lot of interest when a property is being marketed but there is one person particularly keen to buy it. In this case, the auctioneer might recommend to the seller that a bird in the hand is worth two in the bush and to sell prior to this person would mean a quick sale and would also prevent the stigma of an unsold property if it were to continue to the auction.
Thirdly and importantly, auction conditions still apply to a ‘sold prior’ sale, so ‘sold’ means exactly what it says. It is not ‘sale agreed’ or ‘sold subject to contract’. If someone makes an offer before the auction and the seller chooses to accept it, they must exchange contracts immediately, just as they would in the auction room. They will have read through the exchange-ready legal pack so have no reason for any delay. The buyer signs the sales memorandum just as they would do at the actual auction and pays the 10% of the purchase price likewise to secure the transaction. Completion is usually the date provided for in the contract unless changed by mutual agreement.
Properties that are sold by auction are generally niche, unusual in some way, or in need of renovation or repairs. It is worth noting that a good auctioneer knows their market, they know who has downloaded the legal pack, they may well have spoken with the interested parties, and it is with this knowledge and their experience that they make recommendations.
It is bad practice for an auctioneer to set up an auction sale with the intention to sell the property beforehand. It does happen sometimes and can lead to problems when more than one person wants to buy it – after all, the whole point of an auction is ultimately to encourage people to bid against each other, to achieve a secure sale at the best price.
If you are buyer desperately keen to buy the house of your dreams and have it taken out of the auction, don't be frightened to make an offer via the auctioneer, but don't fall into the trap of thinking that you will then have time to sort out your finances. Sold means sold now!
For more information on selling by auction, see the 'Auctions' page of our website under the 'Services' button. If you have a property that you'd like to discuss selling by auction, give us a call or WhatsApp us on 01392 204800.
