Selling using modern method of auction

CaptainWales

I have a property in need of renovating which im looking to sell. 

My estate agent has recommended i use the modern method of auction. Apparently there would be no legal costs for me to pay or estate agent fees to pay, as the buyer would pay these as part of the "reservation fee".

From my position as a seller this sounds slightly too good to be true. There must be a catch?

Also financially is the modern method better than a traditional auction?

I am a bit confused!

TonyMMM

The catch is that many/most buyers won't even consider your property.

daveyjp

The catch is any buyer who sees "sold through modern method of auction" will probably run a mile.

Use the normal method of sale, priced sensibly, pay the agent fees and the property will sell.

GDB2222

There's an obvious catch. If buyers have to pay say £10-20k in modern auction fees (on top of all their other fees and stamp duty), that will put an awful lot of potential buyers off completely.   

Modern auctions have a dreadful rep, and that will put many buyers off.

Those buyers who remain won't face an awful lot of competition, so they'll bid low. 

Plus, buyers are not stupid, and they will deduct any fees from what they offer. So, you won't win.

GDB2222

Personally, I wouldn't use an estate agent who even suggests a modern auction.

propertyrental

GDB2222 said:

Personally, I wouldn't use an estate agent who even suggests a modern auction.

Yes. You need a different agent with a sensible approach to selling.

CaptainWales

You say that any buyer would run a mile, but wouldnt they still bid but taking into account the additional fees? i.e people would still want to buy. i would get a slightly lower price but then ive saved on selling costs. Or am i missing something?

Jami74

As a first time buyer, when I first started looking I would see properties advertised at a price almost too good to be true, then once I realised they were modern method auction properties I would disregard them. I read the terms very carefully and from my understanding I would have to pay £6k whether or not I ended up with the property. I got the impression that they would be properties that maybe investors with cash and experience in the process would buy, rather than people looking for a home to live in. 

GDB2222

CaptainWales said:

You say that any buyer would run a mile, but wouldnt they still bid but taking into account the additional fees? i.e people would still want to buy. i would get a slightly lower price but then ive saved on selling costs. Or am i missing something?

The additional fees the buyers will pay are more than the estate agent fees you are saving. 

Plus modern auctions have a terrible rep. The buyer has to pay the auction fee when he wins, but that's before he gets a survey and before his solicitor looks at the house. If there's a problem, the buyer loses his fee. That's good for the estate agent, because he relists the property and gets another fee.  Meanwhile, you get nothing.

Dustyevsky

When I see 'modern method' I assume there's some dark reason why the vendor was persuaded to take that route. Right or wrong, I just don't want to go there.

loubel

Modern method of auction will restrict your pool of buyers considerably. It only benefits the agents.