'Modern auction method'

eddddy

agrinnall wrote: »

While browsing through Right Move I came across this property for sale this way.

http://www.rightmove.co.uk/property-for-sale/property-33207036.html

I've certainly been put off by the information in this thread, but I wondered if anyone had tried approaching the seller to simply make an offer outside of the auction process and its unacceptable charges?

Hi agrinall

Unfortunately, the EA will have covered themselves, if that happens.

The EA's contract will be for 'Sole Selling Rights' and say that if the seller sells outside the auction, then the seller has to pay the EA's fee (instead of the buyer).

To illustrate this, here's some extracts from the iam-sold contract, which their sellers will have signed:

SOLE SELLING RIGHTS & CANCELLATION: On signing this contract you agree for the auction coordinator and partner agents to market your property for sale by auction for a minimum period of 8 weeks, This agreement may be cancelled by either party on giving 21 days notice in writing to each other.

Should you enter into direct negotiations leading to exchange of contracts with a purchaser (even if the purchaser was not introduced by us) whilst under this agreement a fee will become payable directly by you. The fee will be calculated at 3.5% of the final negotiated selling price subject to a minimum of £3,500 plus VAT. Should the auction coordinator not be aware of the purchase price the fee will be calculated against the contracted reserve price.

rosie383

agrinnall wrote: »

While browsing through Right Move I came across this property for sale this way.

http://www.rightmove.co.uk/property-for-sale/property-33207036.html

I've certainly been put off by the information in this thread, but I wondered if anyone had tried approaching the seller to simply make an offer outside of the auction process and its unacceptable charges?

I bet most of us took the time to read every word of the small print on that one! Definitely misleading. Most people wouldn't assume from reading that that the reservation fee is extra on top of the purchase. We are so used to reservation fees being a part of the overall price that I think many people will get caught out. How are they managing to get away with this? I know it says that you have to agree with the Ts and Cs but I doubt that the friendly agents will be highlighting the bit where it says that the reservation does not form part of the purchase price.

Amara

I bought a flat using this method. No problems, other then sale hasn't been complete until two months, instead 28 days, as stated. Price was cheap and I was a cash buyer.

rosie383

Good to know that it can work for some. I'd still run a mile though.

Errata

If this was a first class method of property buying and selling every EA would be doing it. They're not.

stator

Errata wrote: »

If this was a first class method of property buying and selling every EA would be doing it. They're not.

Estate agents will do anything for money, whether it's first class or not

FancyFaith7

I have found a house that i love but it is being sold via this new method and after reading all of the reviews and the small print at the end of the listing i will not be touching it, i think its disgusting they are basically getting money for nothing, £5k for what exactly, 10 minutes work, this is what they posted in the add so i'm assuming its all through same con artists.

"This property is for sale by the Modern Method of Auction which is not to be confused with traditional auction. The Modern Method of Auction is a flexible buyer friendly method of purchase. We do not require the purchaser to exchange contracts immediately, but grant 28 days to achieve exchange of contracts from the date the buyer’s solicitor is in receipt of the draft contracts and a further 28 days thereafter to complete. Allowing the additional time to exchange on the property means interested parties can proceed with traditional residential finance. Upon close of a successful auction or if the vendor accepts an offer during the auction, the buyer will be required to put down a
non-refundable Reservation Fee of 3.5%
subject to a minimum of £5,000 plus VAT
which secures the transaction and takes the property off the market. The buyer will be required to sign an Acknowledgment of Reservation form to confirm acceptance of terms prior to solicitors being instructed. Copies of the Reservation from and all terms and conditions can be found in the Legal Pack which can be downloaded for free from the auction section of our website or requested from our Auction Department.
Please note this property is subject to an undisclosed reserve price which is generally no more than 10% in excess of the Starting Bid, both the Starting Bid and reserve price can be subject to change. Terms and conditions apply to the Modern Method of Auction, which is operated by The Midlands Property Auction powered by iam-sold Ltd.

Racer52

Well after the long and fruitless task of going through the property ombudsman our local estate agents just washed their hands of it as the contract was with the auction company.

Fortunately for us the seller of the property was able to confirm that they were also given misleading information and so the auction company refunded our money less the originally agreed amount for a chain collapse, which to be honest we were really relieved to receive.

So, although the local estate agents were disgusting in just ignoring us completely, eventually one of the directors of the auction company settled fairly.

It did take over a year though and at every turn we were responded to with "No Sorry" it was very stressful and not something I would want anyone else to go through.

Credit card company said that because the purchase price was over £35k we were not covered either.

Basically, like a usual auction, I would say only suits cash buyers or investors not residential sales as too much to risk.

Can't stress enough though, you have to get everything from the auction company in writing because it is completely irrelevant what the estate agents tell you or agree to as the contract, although will have their logo on etc, is not with that agent.

I hope our experience helps cover any future buyers.

CynicalBiscuits

Digging up an old thread after having spent this week trying to find information about the so-called "Modern Method of Auction".

My wife and I, both first-time-buyers, have been looking for a house for a while and finally spotted something we liked the look of a few weeks ago. The property had gone on the market at the start of the year for £180K, reduced to £160K, now down to £150K, but with the concerning note that it would be sold via the 'Modern Method of Auction' and that price was a 'starting bid'. We resolved to have a go--after all, if we get out-bid, we get out-bid, we thought. But here's the kicker: even if you 'bid' the £150K asking price and it's accepted by the seller, the buyer must then cough up an additional 10 PERCENT of the total sale value to pay "fees" to the auction house, and it transpires that a great many mortgage lenders will not lend more than the price of the house proper, meaning that we'd have had to somehow find another £15,000 on top of the cost of the property--money we'd have otherwise used for necessary repairs to the property and paying solicitors' fees etc.

In short, this is a horrible, greedy method of selling a house and a sneaky way to shift house-selling fees to the buyer. The pros of the Modern Method that estate agents will cite are negligible compared to the cons--as far as I can see, it's little more than a way to squeeze buyers for more. It's a shame because we really were quite taken with the house, not to mention in a perfect position to buy quickly as first-time buyers, but thanks to the method of sale we're not touching it. I hope the Modern Method dies off soon because it's only making buying a house even harder and financially draining, and I almost wonder how it can be allowed to be so commonplace.

peter_we

You have to question the vendors motivation. The advantage from the sellers point of view is to get a fast sale, seven months on the market and two price cuts indicates that they don't want to sell it.

This method is an Auction with the auctioneer claiming a fee even though the sale hasn't proceeded. If you don't have cash, do not get involved. Its a scam.

Legally it is NOT an auction,what you pay is a non refundable fee