auction fees

FFHillbilly

pinkshoes said:

FFHillbilly said:

Just looking at a house I see recently listed for sale in my area. it's below market rate, although it's got not kitchen and bathroom and is mid renovation so I think that may be why. It's £55,000 but they normally sell for £80,000-£100,000 

the auction fees are

• £5000+VAT (£6000) reservation fee
• £720 to the sellers solicitors
• £120 transfer fee
• £6840 total

the fees seem a little high! round here estate agents will sell a property for £1300 if you pay upfront
I know someone else that recently got one at auction and was stung with the fees, in the brochure it listed 2 separate fees that were very similar around £3k and they assumed it was the same fee, but it was not and they paid £6k in fees

what's the attraction with sellers with these auction companies? that same house I'm looking at could be listed at £80k if the seller just agreed to pay £1300 to the EA before the sale.... 

If it's got no kitchen and bathroom then you will probably need to be a cash buyer for starters... 

I was planning on getting a loan from the family so have this covered thanks, but can someone clarify the actual rules for getting a mortgage? I was think that it would go in my favour as I'm effectively a cash buyer and there would be less competition but someone I was talking to about this said to be classed as habitable for a mortgage it only needs to be watertight?
I'm still interested in the property but am going to have to speak to the auctioneers and discuss the terms and conditions, specifically what happens if the seller doesn't sell for some reason.
on the Pattinson site it states :

"In order to secure the purchase a buyer will pay a deposit of 5% which contributes towards the overall purchase price of the property. The deposit is non-refundable." 

but in the legal pack it does state the deposit is actually refundable if the seller pulls out

"14. In the event of a rescission of the BUYER CONTRACT by virtue of a default of the SELLER (but for the avoidance of doubt not in relation to a termination effected as a result of the default of the BUYER) the BUYER shall be entitled to a refund of the DEPOSIT in full."

so I just need to get them to clarify what would happen to the £6,000 reservation fee in that case

SDLT_Geek

FFHillbilly said:

pinkshoes said:

FFHillbilly said:

Just looking at a house I see recently listed for sale in my area. it's below market rate, although it's got not kitchen and bathroom and is mid renovation so I think that may be why. It's £55,000 but they normally sell for £80,000-£100,000 

the auction fees are

• £5000+VAT (£6000) reservation fee
• £720 to the sellers solicitors
• £120 transfer fee
• £6840 total

the fees seem a little high! round here estate agents will sell a property for £1300 if you pay upfront
I know someone else that recently got one at auction and was stung with the fees, in the brochure it listed 2 separate fees that were very similar around £3k and they assumed it was the same fee, but it was not and they paid £6k in fees

what's the attraction with sellers with these auction companies? that same house I'm looking at could be listed at £80k if the seller just agreed to pay £1300 to the EA before the sale.... 

If it's got no kitchen and bathroom then you will probably need to be a cash buyer for starters... 

I was planning on getting a loan from the family so have this covered thanks, but can someone clarify the actual rules for getting a mortgage? I was think that it would go in my favour as I'm effectively a cash buyer and there would be less competition but someone I was talking to about this said to be classed as habitable for a mortgage it only needs to be watertight?
I'm still interested in the property but am going to have to speak to the auctioneers and discuss the terms and conditions, specifically what happens if the seller doesn't sell for some reason.
on the Pattinson site it states :

"In order to secure the purchase a buyer will pay a deposit of 5% which contributes towards the overall purchase price of the property. The deposit is non-refundable." 

but in the legal pack it does state the deposit is actually refundable if the seller pulls out

"14. In the event of a rescission of the BUYER CONTRACT by virtue of a default of the SELLER (but for the avoidance of doubt not in relation to a termination effected as a result of the default of the BUYER) the BUYER shall be entitled to a refund of the DEPOSIT in full."

so I just need to get them to clarify what would happen to the £6,000 reservation fee in that case

As others have said: RUN!

eddddy

It sounds like you're confusing 2 different things:

• In your first post you were talking about a "Reservation Fee" - which is for the auctioneer
  

• You are now talking about a "Deposit" - which is for the seller

• They are completely different things.

If a reservation fee is payable, the auctioneer's summary on their website says:

Auction Lots - a Reservation Fee* is applicable

Conditional Lot’s Reservation Fee*

Upon the fall of the hammer, the buyer shall...

Pay a non-refundable Reservation Fee of up to 5% plus VAT (to a minimum of £5,000 plus VAT)
Exchange contracts within 28 days and pay a 5% non refundable deposit (unless the Legal Pack indicates differently)
Complete the purchase within an additional 28 days of the exchange

 

Unconditional Lots Reservation Fee*

Upon the fall of the hammer, the buyer shall...

Pay a 5% non-refundable Deposit and a Reservation Fee of up to 5% plus VAT (to a minimum of £5,000 plus VAT)
Be legally bound to buy the property/lot and the vendor is legally bound to sell
The sale must complete within 28 days

I like to believe that most sellers are decent and honest people, and wouldn't attempt to 'scam' you. But, if you're unlucky, you might come across a seller who is prepared to 'scam' you...

FFHillbilly said:

but in the legal pack it does state the deposit is actually refundable if the seller pulls out

"14. In the event of a rescission of the BUYER CONTRACT by virtue of a default of the SELLER (but for the avoidance of doubt not in relation to a termination effected as a result of the default of the BUYER) the BUYER shall be entitled to a refund of the DEPOSIT in full."

In the situation I described an my previous post...

• The seller says "I was ready to exchange contracts - but the buyer defaulted because they didn't exchange contracts." 

• You might say "It's not my fault because..." 
• -       "the reason I didn't exchange was that the seller didn't answer my solicitor's questions adequately." and/or 
• -       "The seller left things so late, I wasn't able to exchange contracts in time" and/or
• -       "The seller suggested after the auction that a violent criminal lived next door."

So the seller refuses to refund your deposit - and blames you. But you blame the seller.

Will you then spend thousands of pounds instructing solicitors to build a court case against the seller - or will you give up?

FFHillbilly said:

so I just need to get them to clarify what would happen to the £6,000 reservation fee in that case

You can certainly ask them - but you really shouldn't rely on what they tell you. You need to read the contracts to understand the true position.


FWIW, the last 2 auctioneers I dealt with seemed to have no problem with telling me nonsense over the phone, in order to try to persuade me to do what they wanted me to do.

And they said things like "Don't worry, we would never do anything like x, y or z." - to which I replied "So why have you written in your contract that you have the right to do x, y or z?"

GDB2222

You could try approaching the sellers and making an offer on the basis that it would not be through the auction. The sellers would still have to pay the auction fee so you would have to factor that into your offer. 

user1977

FFHillbilly said:

pinkshoes said:

FFHillbilly said:

Just looking at a house I see recently listed for sale in my area. it's below market rate, although it's got not kitchen and bathroom and is mid renovation so I think that may be why. It's £55,000 but they normally sell for £80,000-£100,000 

the auction fees are

• £5000+VAT (£6000) reservation fee
• £720 to the sellers solicitors
• £120 transfer fee
• £6840 total

the fees seem a little high! round here estate agents will sell a property for £1300 if you pay upfront
I know someone else that recently got one at auction and was stung with the fees, in the brochure it listed 2 separate fees that were very similar around £3k and they assumed it was the same fee, but it was not and they paid £6k in fees

what's the attraction with sellers with these auction companies? that same house I'm looking at could be listed at £80k if the seller just agreed to pay £1300 to the EA before the sale.... 

If it's got no kitchen and bathroom then you will probably need to be a cash buyer for starters... 

I was planning on getting a loan from the family so have this covered thanks, but can someone clarify the actual rules for getting a mortgage? I was think that it would go in my favour as I'm effectively a cash buyer and there would be less competition but someone I was talking to about this said to be classed as habitable for a mortgage it only needs to be watertight?

I suggest you seek advice from a different someone who knows what they're talking about. Being mortgageable has more to it than merely being watertight.

I'm still interested in the property but am going to have to speak to the auctioneers and discuss the terms and conditions, specifically what happens if the seller doesn't sell for some reason.
on the Pattinson site it states :

"In order to secure the purchase a buyer will pay a deposit of 5% which contributes towards the overall purchase price of the property. The deposit is non-refundable." 

but in the legal pack it does state the deposit is actually refundable if the seller pulls out

"14. In the event of a rescission of the BUYER CONTRACT by virtue of a default of the SELLER (but for the avoidance of doubt not in relation to a termination effected as a result of the default of the BUYER) the BUYER shall be entitled to a refund of the DEPOSIT in full."

But what do you think a "default" is? Presumably after there's a contract. But the risk with the Modern Method of Auction is that you never exchange contracts - because you discover something adverse during your due diligence, or simply fail to reach agreement with the seller about something (such as the completion date). If the transaction falls apart because of something like that, there's no "default" by the seller, but you're not getting your deposit back from the agents.

[Deleted User]

Modern method of auction. It's not really an auction, you bid the reserve price and its yours.

The reserve price will almost certainly be set at asking price plus 10%. You pay fees but the seller pays nothing.

I don't know why anyone would buy or sell a property listed in this way.

SDLT_Geek

matt1976 said:

Modern method of auction. It's not really an auction, you bid the reserve price and its yours.
Me: The bit in bold is not correct.  The property is not "yours".  It is a long way off being "yours" at that stage.

The reserve price will almost certainly be set at asking price plus 10%. You pay fees but the seller pays nothing.
Me: The bit in bold is not my experience.

I don't know why anyone would buy or sell a property listed in this way.

See my comments above after "Me" in bold.

What you "win" by making the highest bid is a form of "reservation agreement".  And you have to pay for that reservation agreement.

RHemmings

[Deleted User] said:

Modern method of auction. It's not really an auction, you bid the reserve price and its yours.

The reserve price will almost certainly be set at asking price plus 10%. You pay fees but the seller pays nothing.

I don't know why anyone would buy or sell a property listed in this way.

I have been watching modern methods of auction around my way. The majority of them finish with no bids at all. 

There are only two cases I can see where a property has gone sold. Both of them sold for the starting bid, as far as I can see from the website. One is a 'bargain', even with the 'reservation fee' added on top, at face value. The other is out of my target price range, and I don't know if that's a bargain price or not. 

However, as pointed out here, there are many worse problems than the reservation fee. I can't see how it would be sensible to have a survey done ahead of time. And, there are plenty of examples online of people who found after purchase that there is incorrect information in the information pack available on the auction website. But, without knowing what the reserve is I have no idea if I'm paying for a survey for something I don't want at the real price or not. And, the reserve can be changed up until the auction starts, meaning that the seller and estate agent would know that someone is interested enough in the property to pay for a survey. 

There is a house around my way which is interesting to me. If it sold at the starting bid and didn't have anything wrong with it, and the seller proceeded, it would be a bargain even with the fees added on. But, working out if there's anything wrong with it and if the seller is prepared to sell at that price (as per previous posts here), too much risk.