> Barry: Selling or buying a property from auction? This guide explains all you need to know including the auction and modern auction processes & important aspects to consider.

Selling a property at auction 
There is additional risk when buying and selling a property at auction, so it is important that you instruct an experienced consultant or lawyer experienced in handling property auction and sale transactions. 
A seller may have difficulty selling a property on the open market and will turn to an auction as a quick fix, exiting their investment in the property without resolving issues which may exist. 
A buyer needs to be aware of this and approach an auction with caution. They should have an experienced agents report on the marketability of the title (we always adobe a title status check) prior to auction, and also instruct a surveyor to undertake a survey.
This guide shall explain the auction process and provide a summary of the important considerations for both seller and buyer when selling and buying property at auction.

What are the advantages of selling property at auction?
There are advantages and disadvantages of selling property at auction. If the property attracts bids and sells, the main advantages of selling property at auction are certainty and speed. Upon the fall of the hammer, the buyer is obliged to complete on the date stated in the sale contract. However, if the title of the property requires consent, the contract may be conditional on obtaining consent. As the buyer cannot withdraw without penalty, they cannot enter into post auction negotiations, or raise enquiries. 
There are various other reasons a seller may be selling their property at auction, and these include:
Price
Contractual certainty
Wanting/needing a quick sale
The property is a repossession
The property is difficult to value
The exchange happens when the hammer falls
The seller may achieve a higher or lower price at auction
Complexities (legal issues and/or structural issues)
The property needs refurbishment or redevelopment
There is limited opportunity for a buyer to negotiate or withdraw
A lender will be under a duty to get the best price. At auction, the property will find its value and they will be able to evidence that they have discharged their duty to the registered proprietor

What are the disadvantages of selling a property at auction?
The main disadvantage of an auction is the cost. The seller may have to pay the auctioneer’s fees even if the property does not sell. In addition, the commission payable if the property does sell, may likely be greater than would normally be charged on a sale by private tender. The Seller will need to provide a conditions of sale legal pack which will be upfront in advance of the auction.

3. Which way to sell with agency or auction or try with both should I choose to sell my property quickly for a lower price.
If you are intending to sell your property at auction, then you should consider the quicker way is suitable for the property you are intending to sell If the auction lots are, for example, predominantly a mixture or distressed or subject to other issues or a repossession sales, it may appropriate auction for the seller to sell garden or land with development potential.
Importantly and firstly, check the date of the auction. The seller should check how much notice the auctioneers require to include the property in a forthcoming sale. This is to allow time for the auction catalogue to be processed and all conditions must be declared for the property to be properly marketed to optimise the chances of your property being seen by prospective buyers. Placing property in an auction where there must be opportunity to market the property via the catalogue would increase the chances of the property selling, whilst the auction fees would still be payable including the global marketing we use intensively.
You will also need to allow sufficient time for you to prepare the legal conditions of sale pack. > Barry: For example, it may be necessary to obtain a search from the authority before the pack can be completed.

Approving the property listing and estimate price pre auction.
The auction catalogue lots is prepared by the auctioneers and contains the particulars of each property (or “lot”) that will be offered for sale at the auction.
The information in the auction catalogue may include:
A photograph of the property
The full address of the property
The tenure of the property (freehold or leasehold) hard or soft title etc conditions musy be declared prior the auction
The guide price for the property. The seller and buyer can obtain professional valuation advice on the guide price
details of any loans or leases to which the property is subject, including annual rents and unexpired lease terms
The seller’s legal advisor’s contact details in the catalogue. These details, together with a file reference, are usually included in the catalogue to ensure that any correspondence is correctly directed
It should also state the energy performance indicator from the energy performance document should be included in the legal pack.
Either the seller or their legal advisor will be asked to provide the above information. If the information is provided directly by the seller, the seller’s is responsible to honestly give all details to the auction for any legal advisor to view this should be asked by the seller to check the particulars against the title documents. If a mistake is found in the auction catalogue, the auctioneers should be notified as soon as possible. If it is not possible to correct the mistake before the catalogue is printed, the correction will be printed in an addendum the auctioneer and SEAPS shall not be liable in any part before or after the auction and exchange and completions
 
Producing the legal conditions of sale pack for an auction sale
Your legal advisor or yourself will normally prepare the legal conditions of sale pack, which should include:
Copies of the title deeds or ownership proof
The special conditions of sale
Where applicable, an electric – rubbish bills – water and access recommendation report
Replies to standard form pre-contract enquiries, if these are being provided
Copies of any leases or other legal documents to which the property is subject
Copies of any searches undertaken by the seller. The seller may wish to provide in the special conditions that the buyer will reimburse the seller for the cost of the searches or taxes etc.

Once the legal conditions of sale pack is produced, any additional information or amendments should be provided to the auctioneers and to prospective buyers. This will usually be dealt with by way of an addendum.
The seller should know the auctioneers will provide copies of the legal conditions of sale pack to prospective buyers, or whether the seller’s or agent’s or legal advisor will be expected to agree do this and answer any other questions, as only the auctioneers are providing copies of the legal pack, it is vital that any enquiries from prospective buyers received by the legal advisors are promptly passed the originals on to the auctioneers or lawyers.

The auction sale contract
The sale contract for a lot in an auction sale, can comprise some, or all, of the following documents:
General conditions of sale. The general conditions of sale are the same for all of the lots in the auction and may be printed in the online auction catalogue.
 Extra conditions of sale. The extra conditions of sale, which are produced by the auctioneers, vary the general conditions in relation to all the lots in the auction. As with the general conditions, the extra conditions may be printed in the auction catalogue. Not all auctioneers produce extra conditions of sale.
Special conditions of sale. The special conditions of sale, which are produced by the seller’s legal advisor, set out the conditions that apply to an individual lot.

Addendum
An addendum may be used to:
      Correct the particulars in the auction catalogue
      Correct information in the legal pack; or conditions > Barry:       Provide additional information about a lot.
Any addenda will be available to prospective buyers at the auction.

At the auction
Opening the bidding
Reaching the reserve price
Failing to meet the reserve price
At the auction, any addenda will be made available to prospective buyers and may be announced before the bidding starts on the relevant lots. Some auctioneers require the seller’s representive to attend the auction to deal with any queries that arise on the day. auctioneers provide their own legal advisors to do this online or site
Opening the bidding
The auctioneer will open the bidding for each lot. The seller can set a minimum price that the auctioneer must achieve to sell the property. This is known as the “reserve price” and is normally kept confidential. While any guide price would normally be set at, or above, the reserve price, the seller may not fix the final reserve price until shortly before bidding commences.
Reaching the reserve price
If the bidding reaches the reserve price and the lot is sold, the hammer will be brought down. The successful bidder will usually be required to sign the memorandum of sale and pay the deposit to the auctioneers, before leaving the auction room (the sale contract will specify what methods of payment are accepted and how the deposit will be held). The buyer will also normally be asked to provide contact details for their legal advisor.
Failing to meet the reserve price
If the bidding for the lot fails to meet the reserve price, the seller may still agree to sell the lot at a lower price. This would be negotiated by the seller and prospective buyer after the formal bidding for the lot has closed. The sale would still take place on the terms of the auction sale contract.

After the auction or sale
The auctioneers will send the signed memorandum of sale to the seller’s legal advisor, who should contact the buyer’s legal advisor and confirm the completion date.
The completion date will be stated in the sale contract and is often expressed to be a number of days after the date of the auction. It is helpful for the parties to expressly agree the actual date on which they expect to complete, to avoid any misunderstandings. For example, if the auction takes place on a date with completion 20 days after the date of the auction, is the completion date
This method of selling proves to be popular where an owner knows little about a property, for example a sale of inherited property or a repossession sale.  You should however consider the pro’s and con’s and discuss with a local advising estate agent, or consultants as well as the auction house you are considering, in order for you to make an informed choice as to how you wish to proceed.

Selling a property at auction – Important considerations
If the seller is selling a property at auction due to ‘complexities’, the seller must consider disclosing these in auction pack prior to ensure no allegation of misrepresentation. A seller does does have to disclose structural defects etc. And the principle of ‘caveat emptor’ applies, but the representations the seller may give by replying to pre-contract enquiries may land them in trouble. However, there is a risk of putting off prospective buyers by disclosing known structural issues, but the seller will limit the risk of misrepresentation.
It is important to instruct a lawyer experienced with property transactions to ensure the auction contract is prepared specific to the proposed transaction, providing the seller with bespoke advice.

Buying a property at auction – Important considerations
The buyer has a great number of matters to consider. See below a non-exhaustive list of important considerations: 

The buyer should be aware that they are required to pay a deposit at auction (usually 10%). They should have funds available to facilitate this payment.
 The buyer should be ready to put their buildings insurance or security on risk from the date of the auction. > Barry: It is advisable to make enquiries with insurers prior to auction to ensure that there are no difficulties insuring the property if required
 The contract states that the deposit paid shall be held as agent. The seller will have a right to access and spend the deposit prior to the legal completion date minus agreed fees or commissions.
The completion date is likely to be 20 business days from the auction date. The buyer should be aware of this and be ready to make the balance of funds available for this date. This is relatively a short period of time if the buyer is seeking to obtain a mortgage or other funding
The buyer should inspect the property to ensure there are no persons in occupation, and if there are, that all tenancy agreements have been disclosed in the legal pack/conditions of sale previously
The condition’s in contract may require the buyer to reimburse the seller for their legal costs or taxes
The buyer should instruct a surveyor to conduct a survey prior to auction to establish any structural issues which may exist. They will also be able to advise on market value.
The cost of obtaining a survey will not be recoverable if the buyer does not win the auction.
The seller may not be willing to reply to any enquiries post-auction as the conditions must be obeyed by Cambodian law
10.  The cost of obtaining legal advice will not be recoverable if the buyer does not win the auction, however, the buyer should instruct an experienced lawyer to review and advise on the legal pack prior to auction. There are many legal issues that need to be considered and are often overlooked. The worst thing a buyer can do is to buy blind and not seek professional advice prior to auction.

Why it’s important to instruct an experienced lawyer or consultant to advise on the auction legal pack/conditions of sale prior to auction as the issues below may accrue it’s up to you to check the conditions

As below are the just 14 issues that may arise please be aware

The auction contract may not allow the buyer the right to raise requisitions where title documents are missing. The buyer needs to be advised of the issues this may present.
There may be legal issues which affect the marketability and value of the property.
The buyer or seller may need to raise or pay a mortgage finance and a lawyer will need to advise them that the title and supporting documentation provided in the legal pack is satisfactory and able to comply with a lender’s requirements/instructions. If there are complexities which need to be reported to the lender you may lose your deposit if you are not in a position to complete the transaction on the legal completion date.
If no searches are available, the lawyer will be able to obtain these on the buyer’s behalf if there is time to do so.
Where it is not possible to obtain searches in time, and none are available at auction, the buyer’s lawyer will be able to negotiate on the buyer’s behalf that the contract gives them the right to rescind if the search results are not satisfactory.
The special conditions of the contract may incorporate terms which are not favourable to the buyer.
There may be onerous rights burdening the property such as rights of way and other easements.
The property may need rights over adjoining property which are not reflected in the legal title.
There may be restrictive covenants on the title which will interfere with your proposed use of the land, or that have already been breached.  
Commonly, the seller may not be the current registered proprietor of the land so it will be essential to establish that they actually have the legal right to sell the property.
The property may not be title absolute and in fact be an inferior class of title such as soft or possesionary ownership rights or lease hold or concession etc etc
There may be issues with the boundary.
There may be planning and building regulation issues to consider.
There may be chancel repair liabilities, manorial rights, and other unusual issues to consider or private loans.