'Modern auction method'

tubbyewe

Interesting read. 
I have come across a little twist to this on a property I'm interested in. It is being sold as a "Unconditional auction with reservation fee" Appears to be a traditional auction...contracts exchanged when bid accepted, vendor legally contracted to complete, deposit put down....plus a reservation fee of 2.4%. What you are "reserving" is not clear as contracts will already have been exchanged.   I asked the agents (Pattersons) what fees would be due to them if the vendor withdrew from the auction and sold by private treaty.(I might like a bit longer to survey/search etc) They told me the vendor would owe them (which is to be expected because they will have a contract) and also the buyer will owe them the fees as well for "introducing them to the property".   Hmmmm

eddddy

tubbyewe said:

Interesting read. 
I have come across a little twist to this on a property I'm interested in. It is being sold as a "Unconditional auction with reservation fee" Appears to be a traditional auction...contracts exchanged when bid accepted, vendor legally contracted to complete, deposit put down....plus a reservation fee of 2.4%. What you are "reserving" is not clear as contracts will already have been exchanged.   I asked the agents (Pattersons) what fees would be due to them if the vendor withdrew from the auction and sold by private treaty.(I might like a bit longer to survey/search etc) They told me the vendor would owe them (which is to be expected because they will have a contract) and also the buyer will owe them the fees as well for "introducing them to the property".   Hmmmm

That's very similar to any other unconditional (traditional) auction. There's normally a combination of seller's fees and buyer's fees. Except that they seem to call the buyer's fee a "reservation fee", and it's very high at 2.4%.

If you make a pre-auction offer, and it's accepted, it's normal for auction seller's fees and buyer's fees to apply.

But the anomaly is that you want to make a conditional offer, when the buyer presumably wants unconditional offers - because they're using an unconditional auction. Most unconditional auction sellers wouldn't consider a conditional offer. 

The risk to the seller is that they withdraw the property from auction because of your offer, then you withdraw your offer after the auction date has passed.

tubbyewe

Yep, edddy, I think you have it right. It's a traditional auction with a very high buyers fee.

viviennerose67

I have a property that has been up for sale since September last year (had a buyer but it fell through just before lock down). The property needs to be sold as quickly as possible as it is a probate property and there is no money in the Estate to pay the properties bills, so i am having to pay these out of my own money i am really tempted to go down this modern auction way it sounds really good when the guy from Pattersons explained it but now reading this thread i am really concerned. 
I have contacted my estate agent for their views. Worrying and hard times 

hazyjo

Have you read all the thread? Most of us wouldn't touch it with a bargepole.

Try a normal auction maybe, or just reduce the price significantly.

NameUnavailable

viviennerose67 said:

I have a property that has been up for sale since September last year (had a buyer but it fell through just before lock down). The property needs to be sold as quickly as possible as it is a probate property and there is no money in the Estate to pay the properties bills, so i am having to pay these out of my own money i am really tempted to go down this modern auction way it sounds really good when the guy from Pattersons explained it but now reading this thread i am really concerned. 
I have contacted my estate agent for their views. Worrying and hard times 

Is the property overpriced? What has your agent said about the lack of interest?

From a friends experience with 'modern auction' I wouldn't advise it if you want a quick sale. Buyers seem confused by the process and the high up front agents fee (they have to pay as well as you) puts many off.

I wanted a quick sale and took my chances at auction - the traditional type where people bid against each other and when the hammer falls your property is sold and contracts exchanged.

Be aware that the auctioneers will want you to agree to a realistic reserve and guide price, which will be much lower than what you might think your property is worth.

rash.m2k

Hate these dodgy auctions, I simply avoid them, if a vendor wants to put lots of people off buying their property it's a great way to do it.

AuctionSmorkshun

viviennerose67 said:

I have a property that has been up for sale since September last year (had a buyer but it fell through just before lock down). The property needs to be sold as quickly as possible as it is a probate property and there is no money in the Estate to pay the properties bills, so i am having to pay these out of my own money i am really tempted to go down this modern auction way it sounds really good when the guy from Pattersons explained it but now reading this thread i am really concerned. 
I have contacted my estate agent for their views. Worrying and hard times 

Be really careful and go in with your eyes wide open - the only people who seem to benefit from modern auctions are the agents. I can't remember all the exact specifics but about 8 years ago my wife and I attempted to buy a house at a modern auction; due to the way the fees are calculated and timings involved we had to stop bidding on the night, and it went for less than we could have afforded in a regular auction - a lot less than we had already offered via a 'normal' sale. 
Try another agent? 

[Deleted User]

If its a probate house with no mortgage and you want a quick sale, surely you can afford to put it on sale for a low price whether at usual auction or through an EA.  

NameUnavailable

viviennerose67 said:

I have a property that has been up for sale since September last year (had a buyer but it fell through just before lock down). The property needs to be sold as quickly as possible as it is a probate property and there is no money in the Estate to pay the properties bills, so i am having to pay these out of my own money i am really tempted to go down this modern auction way it sounds really good when the guy from Pattersons explained it but now reading this thread i am really concerned. 
I have contacted my estate agent for their views. Worrying and hard times 

Sorry but it sounds like it's overpriced. There was a 'Boris bounce' after the last election and the market seemed to go a bit crazy for a bit but that's well and truly over.

Your options for a quick/er sale would be to reduce the current asking price signficantly (not just a 5 or 10K reduction) or go to auction. Speak to an auction house, they will give you an idea of what they think the guide/reserve prices should be.

I wouldn't consider 'modern auction' which just seems to put people off, myself included!