House Auction Fee Confusion?

Jaydotr

Hi all,
So, i have seen a property on auction in November 2020. Company: savills UK
I am slightly confused about the fee's and i was even more confused when i spoke to 1 of their advisors who said the fee is 10% of the house and £1250!?!
So it states:  "You will also be required to pay a non-refundable 10% deposit of the selling price and an auction administration fee of either £1,000(London)"
So let's say i won the auction for a whopping £200,000 at auction... I have a 20% deposit of £40,000 available and a mortgage in principle to say i can get a mortgage for £160,000 (£40,000 deposit - totalling to £200,000)
According to my understanding, i pay Savills £1250 as a fee. And the 10% deposit (£20,000) goes towards the house?  So my deposit is still £40,000 towards the £200,000 property? So my fee for winning the auction would be £1250 and not £21,250? 

If i follow the advisors answer, i pay Savills a 10% deposit fee of £20,000 and another £1250! So i pay £21,250.00 fee to Savill, and i still need another £40,000 deposit which
sounds Ludacris as Savills charge a reasonable 2.5% fee to the seller? So the total cost for the house would be £221,250? And that doesnt include any other fees for surveying etc?

Comms69

Modern method auction; and you're inexperienced. Just buy like 95% of people

theartfullodger

Dunno if you've heard of Google but I found this quiet easily & quickly... Might be worth trying??

https://auctions.savills.co.uk/buying

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Have the deposit ready

If you are successful at bidding then you will be required to pay a 10% deposit on the property and our buyers fee (£250 inc VAT below £20,000 and £1250 inc VAT at and above £20,000).

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Cheers! 

If thinking of buying at auction, go to another property auction before the one where you want to buy.  Then you'll have an idea of what happens & the charming people who congregate at such events.

Yes, I've bought at auction. Without seeing inside of property 1st: Children do not do this!

bpj

From the wording in bold the 10% is a deposit towards the full amount, and the £1000 is a fee. It seems most likely that the advisor you spoke to misspoke slightly and was trying to convey the same information, but I assume there is some sort of auction pack which should have these details set out explicitly. This will be what you are agreeing.

If you are relying on a mortgage I would be quite careful. Should you win and your lender does not want to lend on the property you may have no option but to say goodbye to your deposit. I expect properties being auctioned are more likely to have these kinds of problems.

You will probably also be agreeing to complete in quite short order which you might find difficult if you need to arrange a mortgage, especially under the current circumstances.

Jaydotr

Thanks All A lot of people also said "dont do auctions" And reading the forums it looks like it isn't a good idea haha! 

lincroft1710

I think you have completely misunderstood this

https://auctions.savills.co.uk/buying

You pay the £1250 buyer's premium to Savills and also the Deposit of 10% of the sale price, but this 10% deposit is passed to the vendor, so you now only need to find 90% of the selling price to complete the transaction. Using your example of winning the auction at £200,000, you pay the vendor via Savills £20,000 and on completion day, you pay the remaining £180,000.

Buyer's premiums are now almost universal at most auctions.

Finally a word to the wise, auctions are not for the faint hearted!

Jaydotr

i see, ill be attending the auction online so i guess i wont be able to experience it all like a car auction. 

Jaydotr

guys, whats so wrong with a auction? Is it as crazy as a car auction? I'll be attending an online auction

lincroft1710

theartfullodger said:

Yes, I've bought at auction. Without seeing inside of property 1st: Children do not do this!

My parents effectively did this nearly 60 yrs ago. Fortunately house was OK and was their home for many years. but as you say  Children do not do this!

Scotbot

Jaydotr said:

Thanks All A lot of people also said "dont do auctions" And reading the forums it looks like it isn't a good idea haha! 

Auctions are fine provided you are a cash buyer and it is a traditional auction not the modern method of auction.

 The modern method charges the buyer a hefty fee, basically they shift the auctioneer and estate agent fees from the seller to the buyer and they charge premium  rates.  The minimum fee is typically 6k.  Just don't even think about it. Usually the sellers are in financial difficulties and the agents market this type of auction as having 28 or 56 days to complete allowing the buyer to arrange finance. But if your finance falls through or the survey shows a problem then you lose the 6k fee if you pull out.

A traditional  auction has lower fees but you have to pay the deposit on the day of the auction or the day after and you lose it if you decide to pull out. So if you need a mortgage too risky as the lender may say no then you have lost the deposit. The other disadvantage is that you have to do a survey before hand or accept the risk of nasties in the woodwork. Hence why auction properties usually sell for a good price.
 

[Deleted User]

Jaydotr said:

i see, ill be attending the auction online so i guess i wont be able to experience it all like a car auction. 

Are you on the wind up? You weren’t even able to find the fees on Savilles’s website yourself. 

Are you intending to be a cash buyer at auction or will you require a mortgage to help fund the purchase?