Modern Method of Auction? I don’t get it.

Modern Method of Auction? I don’t get it.

14:25 PM, 23rd September 2014, About 8 years ago 25

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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?Modern Method of Auction

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?

Regards

Onslow Clough



Comments

Property Typhoon

16:36 PM, 24th September 2014, About 8 years ago

As Guy Charrison points out is is not an auction merely a marketing term.

A system brought in initially by one or two NE estate agents to offer an " auction service" ie another way to market and guarantee a bigger fee.

Often putting a property into a traditional auction is too big a step for someone selling a residential property- you need an attractive ie low guide to stimulate interest and competition which is where an auction and skillful auctioneer come into their own achieving a successful sale.

The method seems popular in the NE & NW of England but not so in the south, where if I were a guessing man, an agent will manage their clients expectations a little better so that they offer the property at a sensible market value which will attract multiple buyers and therefore competition resulting in gaining their client the best possible price within their time frame. Traditional auction does pretty much the same thing for a client who has a greater need for a quicker more transparent completion.

I am sure Guy will agree, it is often not the property that makes an auction lot, but the sellers circumstance

Onslow Clough

16:59 PM, 24th September 2014, About 8 years ago

Reply to the comment left by "Property Typhoon" at "24/09/2014 - 16:36":

I don't know about the NE or NW but in Yorkshire it seems to be increasing in popularity with one of the big Estate Agents selling a large proportion of their properties this way.

I can only assume it must work, but I don't see how.

Property Typhoon

17:16 PM, 24th September 2014, About 8 years ago

Reply to the comment left by "Onslow Clough" at "24/09/2014 - 16:59":

I think good sales patter from the agent suggestion that its the vendors " best option" has something to do with it long with the assumptive suggestion that " is an auction so when its sold its sold" - but its not because they have just put down a non refundable deposit which means agents earn fees even if its not sold.

I get the impression from within the 'auction world' that it is perhaps a little misleading calling it an "auction" when for 100's of yrs an auction means highest bid on the day= gavel down= bang its sold= actually contractually exchanged with completion terms within that contract and if you fail to complete you lose 10% plus interest plus can be sued for any shortfall if it then has to be sold for less...that's an auction...perhaps it should be renamed as "modern method of auction " seems inappropriate.

What do any of you Auctioneers think?

Onslow Clough

19:41 PM, 24th September 2014, About 8 years ago

Reply to the comment left by "Property Typhoon" at "24/09/2014 - 17:16":

I think the whole thing is very misleading. I have looked on Rightmove using the criteria "auction property" " Yorkshrie" "0-£250k" and it brought up over 300 properties.

of these 300 "auction" properties i would say roughly 50% are nothing of the kind and were in fact this "modern method of auction" For some you have to dig quite deeply before you find it is not a traditional auction.

The only clear way to know is when they name a venue and date of the auction in the advert.Less experienced buyers would probably not realise this.

Mark Alexander - Founder of Property118 View Profile

20:14 PM, 24th September 2014, About 8 years ago

Reply to the comment left by "Onslow Clough" at "24/09/2014 - 19:41":

From what has been said above, I agree, it's very misleading. I wonder what the OFT have to say about this?
.

Onslow Clough

21:11 PM, 24th September 2014, About 8 years ago

Reply to the comment left by "Mark Alexander" at "24/09/2014 - 20:14":

I would like to know when this "Modern Method" started . I have only been aware of it in the last 6 months but then I haven't been tracking auctions prior to this.

It seems to be concentrated in the North unless people down south can say differently,
I find it very annoying because I am looking for genuine auction property and i am wasting time trawling through all the misleading "Modern Method Auctions"

Guy Charrison

21:14 PM, 24th September 2014, About 8 years ago

Reply to the comment left by "Mark Alexander" at "24/09/2014 - 15:22":

sorry Mark for putting the webite address
regards
Guy

Mark Alexander - Founder of Property118 View Profile

21:17 PM, 24th September 2014, About 8 years ago

Reply to the comment left by "Onslow Clough" at "24/09/2014 - 21:11":

Hi Onslow

Get yourself a subscription to EIG, it will save you loads of time and it's well worth the investment for any serious auction purchaser. Have a chat with David Sanderson, he's the owner. Tell him I referred you and he will probably give you a free one month trial. See >>> https://www.eigroup.co.uk/property-auction-services.aspx
.

Mark Alexander - Founder of Property118 View Profile

21:28 PM, 24th September 2014, About 8 years ago

Reply to the comment left by "Guy Charrison" at "24/09/2014 - 21:14":

No problem Guy, you are new here 😀

Your contributions to the forum will be highly valued, we need more auctioneers here.

Here are some other threads on Property118 regarding auctions which you may wish to contribute to >>> http://goo.gl/3g7Fzj
.

Onslow Clough

21:33 PM, 24th September 2014, About 8 years ago

Reply to the comment left by "Mark Alexander" at "24/09/2014 - 21:17":

Thank you Mark, I think you know what my plans are so this could be very useful.

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