Petition to stop First time buyers being exploited via "modern auctions" and buyers auction fees?

Urttem

Our son is trying to buy his first house and we recently went to view a terraced house in Salford with a guide price of £160K being sold via online auction. The winning buyer had fee of £6k to pay.

A "fee" of £6k in no way reflects the costs of running an online auction its simply price gouging.

Similar methods of online “modern auction” have fees of 5% of the purchase price etc etc.

 This is redolent of the fees that banks, surveyors, solicitors and estate agents were able to charge prior to Thatcher "introducing more competition to the market" -  which the Tories are always banging on about .  These fees in no way reflects the amount of “work” being done to setup the auction process.  

What would force competition is making the vendor pay any such fees!

 We would then see real competition for custom, based on value for money and service and not simple exploitation of the weakest people in the current housing market – the buyers; often young first time buyers where the real desperation for housing lies.

How can we create an effective petition to Government to press for such a change?

Brie

wouldn't the buyer having to pay the fee be due to the vendor not having any money?  I thought that houses went to auction normally when the vendor was broke/bankrupt etc

user1977

Brie said:

wouldn't the buyer having to pay the fee be due to the vendor not having any money?  I thought that houses went to auction normally when the vendor was broke/bankrupt etc

No, those are more likely to go to "normal" auctions, not these "modern method of" auctions.

In any event, effectively the vendors are paying, because buyers with any sense (if they haven't run away) are just going to take account of the fees in the price they offer.

SallyDucati

When I sold my flat in Eccles (Salford) one of the estate agents that came round said they could do it that the buyer paid their fees.  'If they want the flat they'll pay it'.  Put me off using them.

£6k is 3.75% of £160k value, which I think is a high %age even if the seller was paying.

hazyjo

Nothing to do with FTBs, if you search the forum, we advise against modern auction method for ANYONE.

It's selling for the desperate and gullible.

The seller usually pays. In this case, it's the buyer. Extremely flawed system and only seems to benefit the EA.

Section62

Urttem said:

Our son is trying to buy his first house and we recently went to view a terraced house in Salford with a guide price of £160K being sold via online auction. The winning buyer had fee of £6k to pay.

A "fee" of £6k in no way reflects the costs of running an online auction its simply price gouging.

Similar methods of online “modern auction” have fees of 5% of the purchase price etc etc.

 This is redolent of the fees that banks, surveyors, solicitors and estate agents were able to charge prior to Thatcher "introducing more competition to the market" -  which the Tories are always banging on about .  These fees in no way reflects the amount of “work” being done to setup the auction process.  

What would force competition is making the vendor pay any such fees!

 We would then see real competition for custom, based on value for money and service and not simple exploitation of the weakest people in the current housing market – the buyers; often young first time buyers where the real desperation for housing lies.

How can we create an effective petition to Government to press for such a change?

You may have more success with a petition to ban FTBs from buying at any kind of auction.

Sandtree

Urttem said:

Our son is trying to buy his first house and we recently went to view a terraced house in Salford with a guide price of £160K being sold via online auction. The winning buyer had fee of £6k to pay.

A "fee" of £6k in no way reflects the costs of running an online auction its simply price gouging.

Similar methods of online “modern auction” have fees of 5% of the purchase price etc etc.

 This is redolent of the fees that banks, surveyors, solicitors and estate agents were able to charge prior to Thatcher "introducing more competition to the market" -  which the Tories are always banging on about .  These fees in no way reflects the amount of “work” being done to setup the auction process.  

What would force competition is making the vendor pay any such fees!

 We would then see real competition for custom, based on value for money and service and not simple exploitation of the weakest people in the current housing market – the buyers; often young first time buyers where the real desperation for housing lies.

How can we create an effective petition to Government to press for such a change?

Sorry, you mean traditional auctions... in a traditional auction both the seller and the buyer pay an auctioneer fee, its how auction rooms have run for decades or longer. My parents got stung having been silly and not read the legal pack long before I was born.

Its modern auctions where with the likes of eBay the responsibility was moved fully to the buyer and nothing is added to the hammer price. 

This rant is more about people not reading the legal pack before the auction and factoring in the fee it states will apply when bidding. 

As to £6k being reasonable? dont bid as much if you think it isn't and then it'll be less. You are also grossly miss understanding the difference between someone sticking their old TV up on eBay and the effort required to end to end run a monthly auction of 50 properties (or whatever the frequency/volume)

eddddy

Urttem said:

.... "introducing more competition to the market" ....

What barriers to competition do you see in this market?

You are free to set up a modern method of auction website if you wanted - and undercut by only charging £5k or 4%.

Then I might set up a modern method of auction website - and undercut you by only charging £4k or 3%

etc, etc.

I don't think there are any artificial barriers stopping anyone from doing that.  (But estate agencies are regulated - so you'd have to follow the rules.)

user1977

eddddy said:

Urttem said:

.... "introducing more competition to the market" ....

What barriers to competition do you see in this market?

You are free to set up a modern method of auction website if you wanted - and undercut by only charging £5k or 4%.

Then I might set up a modern method of auction website - and undercut you by only charging £4k or 3%

etc, etc.

I don't think there are any artificial barriers stopping anyone from doing that.  (But estate agencies are regulated - so you'd have to follow the rules.)

And buyers are free to go and buy one of the vast majority of properties which aren't being sold via such methods.

Slithery

Sellers can put whatever terms they wish into a contract.
It's always been up to the purchaser to do their due diligence.

Scotbot

It's not just the fees that are the issue. You have to complete within 56 days and if you can’t finalise your mortgage in time you lose  the money. Secondly if you do a survey and find a problem you can't renegotiate or withdraw and good luck getting a survey done before the auction. Modern auction method should be renamed mugs auction method.