14:25 PM, 23rd September 2014, About 8 years ago 25
More and more sales are being conducted by what is termed “Modern Method of Auction”.
It is sold as a buyer friendly method of purchase but from what I can see, a non refundable reservation fee of 3.5% subject to a minimum of £5,000 plus VAT needs to be placed which then “secures” the transaction and takes the property off the market. Other than that it basically looks like a normal estate agent transaction. The terms go on to grant 28 days to exchange contract and then a further 28 days to complete. That is pretty standard anyway and unlike traditional auctions I assume these dates are arbitrary and unenforceable?
As far as I can see this simply looks like the estate agent fees are passed from the vendor to buyer. When looking closer at some of these deals, at best one bid is in place but for the vast majority no bids at all are in place.
Knowing a reservation fee of £5,000 needs to be paid would surely lead to a lower offer to account for this.
In that case who benefits?
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