Selling using modern method of auction

Debbie9009

I’m another one who wouldn’t even consider a property up for sale by modern method, there is no way I would pay a non refundable deposit on a property that I hadn’t been able to carry out a survey on, it would make me suspicious that there is something very wrong with the property.

As for the estate agent telling you it wouldn’t cost you anything, I’m reminded of the joke, how can you tell if an estate agent is lying ? their lips are moving.  Any savvy buyer will work out the fees and take them into account when deciding how much to bid, so you will end up paying the fees one way or another.

A good estate agent wouldn’t touch modern method, they would tell you the right amount to be asking for it and get to work on marketing it in the normal way.
If you want a quick sale ask a bit less than what a good agent advises the asking price should be, or put it into a standard auction. 

pjs493

When i was house hunting, one of the houses I was initially interested in was being sold via this method. I didn’t realise until I made initial inquiries with the estate agent. It put me off, I didn’t even view the property. When the agent called me for feedback I explained the reason I decided not to view was simply down to the method of sale. I’m not sure if it sold or not, but it hadn’t met its reserve the day before the auction was due to end. I didn’t check again after that. 

youth_leader

I sold my listed building through a local estate agent at traditional auction, unfortunately it was in March 2020 as lockdown was announced so it was on line only.   

I recently asked the same EA to come round to value my bungalow, he said between £250K-£300K.  I queried the large range and he said he would be aiming to have many many viewers and encourage bids to  'achieve' a price within that range.  I wasn't keen on this approach with the older clientele my bungalow sale would attract.  I had clearly stated I would definitely not sell a property at auction again, traditional or otherwise.  

 An estate agent that doesn't have any interests in auctions valued it at £285K and said she thought I'd achieve near to asking price.

I bought it for £237,500 and have spent over £20K having the floors replaced throughout, more expense this summer having the shower replaced.  I'm going to stay here for a bit longer, I think.

cymruchris

Wouldn't touch a modern method of auction with a barge pole.

I'm just about to complete on a property - and discounted many, many MMA properties along the way. Most of which appear to to still be 'for sale' - and interestingly many have been 'reduced' - which means they haven't shifted. At a realistic price listed with a traditional agent, I'm confident many of them would have gone by now. 

tealady

Another vote for avoiding touching these properties with a bargepole.
Selling and buying houses is expensive, tell your agent to foxtrot oscar with that idea and find another agent.

Bigphil1474

I always discard MMoA properties. Pointless to me. If you sell with an EA you are typically looking at 1-2% EA fees. That's a lot less than losing 10% because someone bids low to cover the extra fees.

Just make sure the EA advertises it accurately as needing work doing, and doesn't try to suggest it's almost like a new build. You will then get the right type of buyers viewing and offering. 

saajan_12

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?

Naturally the buyer would deduct the fees from the amount they bid just to break even assuming the purchase goes through. However the fees are non refundable for the buyer, so they might deduct more than the fees, to account for the fact that they might not win and still lose the fees. ie its only worth it to them if they get it at a real bargain. 

So yes, it could be a lot lower selling price than your fees saving. 

CaptainWales said:

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!

What did they say as to the reason why MMA is necessary for this property? Is the property habitable, with running water and working kitchen? If not, it may be unmortgageable and you may need to consider other things like a cash sale or last resort, a traditional auction. However for mostly any other renovation, if you price it accordingly, then it should sell. 

YoungBlueEyes

I wouldn't even touch MMoA with someone elses barge pole.

The last couple of times I've been house hunting and I've seen something I might like on RM, if it says its MMoA I don't even look through the pictures.

I can see why you think it might be a good thing from your side OP, but that sounds like all the things the agents will say to get you to sign up. Have a look through this board at all the threads about it so you can get a few different people's opinions and experience rather than relying on the ea. 

RHemmings

CaptainWales said:

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!

I've spent a lot of time watching MMoA properties. I eventually bought such a property, but I refused to buy it by MMoA and insisted on a private treaty purchase instead. (Which was accepted)

In the areas I have observed properties on MMoA websites, it is only a small minority of those properties that receive even one bid. 

Typically when a property goes up for sale by MMoA, the starting bid is considerably reduced compared to the previous listing price. Among the few properties that sell through MMoA, it appears that many sell for the starting bid.

MMoA is a very buyer-unfriendly environment, in my opinion. Even if it appears 'too good to be true' in terms of you not having to pay to sell and getting a buyer who is financially committed through a reservation fee, that doesn't help you at all if you don't get any buyers. Which it appears to me is the case for the vast majority of houses on sale by MMoA. The catch is the lack of buyers. 

Also, you will be locked in to the selling contract. Even though I bought my house by private treaty, my sellers still had to pay the huge fee out of what they received from me. (Even though I deliberately described my offer as if I was paying that.) 

I strongly suggest that you watch-list every property being sold by MMoA in your area, for a number of different MMoA companies (GOTO Auctions, iamsold, etc.) And, see what is happening. Compare the starting bid to the sold prices of similar houses. You might be surprised by how houses that are 'cheap' compared to comparables don't even get one bid. 

Jami74 said:

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. 

I was very frustrated seeing houses failing to sell by MMoA for prices that I would be prepared to pay, including the fee. But, which I wouldn't buy solely because: MMoA. That's what prompted me to make an offer on a MMoA house contingent on it being sold by private treaty (normal method). I sent my offer over minutes after the house I'm currently in (right this second) yet again failed to receive any bids at all. And, in the end, it worked. Having gone through the purchase process (even if not MMoA) with one of the major firms, I'm even less likely to buy by MMoA than I was before. 

Mattb79

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?

You’re missing the fact that the buyers fee is much bigger than a normal estate agent fee would be. Typically around 4%.

So on a £500k house buyers would bid £20k less to take account of the fee. Meanwhile you’d be saving the normal estate agent fee of around 1% -£5000. 

Overall you’d be £15k down on the deal.