My Yopa Scam!

Kreeba

OK, the title is meant to be satire, at least I hope it is, and meant to highlight the anti-consumerist structure that 'modern method' auction sites will eventually encourage.

Step 1) Represent a house that has structural issues that will fail a mortgage application
Step 2) Put it on an auction site and a good price
Step 3) 'Buyer' wins and pays the non-refundable 7-10k in fees.
Step 4) Purchase then doesn't go through.
Step 5) Repeat

Forgive my naivety, but what is preventing that from happening?

hazyjo

They are now legally obliged to disclose major known issues (to the best of my knowledge) 

But we all agree with you generally and we always discourage people from selling this way or offering on a modern auction property for pretty much these reasons.

They're usually for the desperate. Awful things.

Scotbot

There are 2 reasons it could fail to complete. 1) Buyer pulls out after survey. Unlikely a buyer would put down 7 to 10k in non refundable fees without having a suvey first. ii) Buyer fails to get mortgage. Since there is no guarantee of getting a mortgage in the 56 days before completion I assume most of the buyers are cash buyers. And account for the 7 to 10k in the fees the price they offer

A quick look at the terms and conditions and most buyers won't touch them with a barge pole. People in the UK don't put down money up front.

GDB2222

Scotbot said:

There are 2 reasons it could fail to complete. 1) Buyer pulls out after survey. Unlikely a buyer would put down 7 to 10k in non refundable fees without having a suvey first. ii) Buyer fails to get mortgage. Since there is no guarantee of getting a mortgage in the 56 days before completion I assume most of the buyers are cash buyers. And account for the 7 to 10k in the fees the price they offer

A quick look at the terms and conditions and most buyers won't touch them with a barge pole. People in the UK don't put down money up front.

The trouble with modern auctions is that people do pay money before getting the survey. It’s daft, I know, but there are daft folk around. 

There have been several threads on this forum from people asking how to get their money back. Well, of course, it’s gone, hasn’t it, into the pockets of the well deserving agents. 

FreeBear

Scotbot said: A quick look at the terms and conditions and most buyers won't touch them with a barge pole. People in the UK don't put down money up front.

Looking at just one MMoA provider (IAM Sold Ltd), they did some 3,768 sales in 2020 and achieved a turnover of just over £24million. According to HMRC, there were 1174360 property transactions in the UK during 2019/20. So the number of sales claimed by IAMSold is not an insignificant chunk. Now that they have signed agreements with both Zoopla and Rightmove, we can see the number of MMoA listings to increase.

Interesting to note that from the IAMSold accounts is that they had 6,413 auction instructions in 2020 (down from 7,022 in 2019) to achieve the claimed number of sales - So some 40% of the properties they are pushing, fail to sell.

Both Trading Standards and the Property Ombudsman are monitoring the MMoA market, so we can expect to see a few changes in consumer protection eventually. Certainly, the OP's little scheme would fail, as a structural defect would need to be declared in the information pack and the PO could intervene to make sure the (failed) buyers got their money back.

SpiderLegs

FreeBear said:

Scotbot said: A quick look at the terms and conditions and most buyers won't touch them with a barge pole. People in the UK don't put down money up front.

Looking at just one MMoA provider (IAM Sold Ltd), they did some 3,768 sales in 2020 and achieved a turnover of just over £24million. According to HM.gov, there were ~53,000 property transactions in England, Scotland, & Wales in 2020. So the number of sales claimed by IAMSold is quite a sizable chunk. Now that they have signed agreements with both Zoopla and Rightmove, so we can see the number of MMoA listings to increase.

Interesting to note that from the IAMSold accounts is that they had 6,413 auction instructions in 2020 (down from 7,022 in 2019) to achieve the claimed number of sales - So some 40% of the properties they are pushing, fail to sell.

Both Trading Standards and the Property Ombudsman are monitoring the MMoA market, so we can expect to see a few changes in consumer protection eventually. Certainly, the OP's little scheme would fail, as a structural defect would need to be declared in the information pack and the PO could intervene to make sure the (failed) buyers got their money back.

I think your property sales numbers might be a bit little out.

FreeBear

SpiderLegs said:

FreeBear said:

Scotbot said: A quick look at the terms and conditions and most buyers won't touch them with a barge pole. People in the UK don't put down money up front.

Looking at just one MMoA provider (IAM Sold Ltd), they did some 3,768 sales in 2020 and achieved a turnover of just over £24million. According to HM.gov, there were ~53,000 property transactions in England, Scotland, & Wales in 2020. So the number of sales claimed by IAMSold is quite a sizable chunk. Now that they have signed agreements with both Zoopla and Rightmove, so we can see the number of MMoA listings to increase.

Interesting to note that from the IAMSold accounts is that they had 6,413 auction instructions in 2020 (down from 7,022 in 2019) to achieve the claimed number of sales - So some 40% of the properties they are pushing, fail to sell.

Both Trading Standards and the Property Ombudsman are monitoring the MMoA market, so we can expect to see a few changes in consumer protection eventually. Certainly, the OP's little scheme would fail, as a structural defect would need to be declared in the information pack and the PO could intervene to make sure the (failed) buyers got their money back.

I think your property sales numbers might be a bit little out.

You're right - I was looking at figures for July 2020.... The total number of completed transactions for the whole of the UK for 2019-20 was 1174360 (HMRC figures - https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/994893/MPT_Tab_Jun_21_V2.ods )

Need to re-evaluate my opinion and edit my post.... [done]

Still... 40% of IAMSold instructions failing to convert to sales says something about their business model - Whilst there are quite a few suckers buyers willing to go down the MMoA route, others are avoiding it and buying the properties via alternative routes.