Annual Report: The risk of buying blind at auctions

Annual Report Case Summary: Description of Property at Auction

This case concerns a dispute referred to The Property Ombudsman (TPO) from a buyer concerning the description of the property bought at auction.

The complainant claimed that the agent failed to disclose known changes to the property description and failed to update the sales particulars or issue an addendum, specifically that, although the property was advertised as having two bedrooms, in fact it had only one large bedroom.

The agent explained that they were unaware of the issues regarding the description of the property until the evening before the auction and sought to notify all potential bidders at the earliest opportunity. They said that an announcement was made from the rostrum prior to the auction as soon as they were aware of the anomaly.

Having seen the sales particulars, which clearly noted the property as having two bedrooms, the complainant registered his interest in bidding on the property and completed and signed the required documents. These documents consisted of an authority form to bid on behalf of a non-attending bidder and a signed copy of the agent’s terms and conditions to bid by telephone/letter.  The complainant explained that the guide price for the property was circa £20,000, which he considered to be low as the normal price of 2 bedroomed terraced properties in that locality was upwards of £40,000.

The agent explained that on the evening prior to the auction they were contacted by their client in relation to the description of the property and informed that it was a one bedroom property and not as described.  There was no evidence that the agent was aware of the mis-description prior to that date; they had marketed the property in good faith based on the inaccurate description the seller had given to them.

The agent advised that at the start of the auction they announced that they believed the property had one large bedroom rather than two bedrooms. They also reminded all attending the auction that they were bidding based on their own inspections. A copy of the transcript of this part of the auction was provided to the Ombudsman by both parties and had not been disputed.

A representative of the agent telephoned the complainant prior to the commencement of the sale of the property. While an announcement had been made from the rostrum regarding the mistake in the description of the property, the Ombudsman did not consider it realistic to expect the complainant to have necessarily heard the announcement from the auctioneer.  Rather, in the case of a telephone bid, it was considered to be the role of the representative of the agent who was speaking with the complainant to make sure that he was fully aware of the change in description.

The Ombudsman found that the agent had failed in their obligation to treat the complainant fairly and as a result he had experienced avoidable aggravation, distress and inconvenience when he realised, after the auction where he had been successful in his bid, that he had purchased a one bedroom property rather than the two bedroom property he was expecting.

The Ombudsman did not consider it appropriate to make any judgement or award with regard to the cost of the property or the potential difference in price for a one bedroom compared with a two bedroom. The complainant had an obligation to ensure that he carried out his own investigations to establish that the property was as described and fit for purpose. This was explained to him within the agent’s terms and conditions. In addition, by the complainant’s own admissions, he considered the guide price to be at least £20,000 less than the usual sale price of a two bedroom property in that locality and it was expected that he would have raised some concerns.

The complaint was supported and a compensatory award made of £750.

 

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