Auction fees

McFluze

Hi,

My daughter wants to buy a house which is advertised on Rightmove through William H Brown but advertised as an auction property with ‘I Am Sold’. However, it is not currently on as a lot in any of their advertised auctions. She has made an offer and has been told by a representative òf the auction house that she will have to pay auction fees. Is this right? As I’ve mentioned it is not on any of their auction listings ( it failed to sell at a previous auction apparently) and she is therefore not buying it at an auction. I don’t understand how they can charge her auction fees. Any advice greatly appreciated!

user1977

They can charge her auction fees because those are the terms for bidding, and it's pretty standard whether it's a traditional auction or a "modern method of auction" (which I suspect this might be). She should seek legal advice in advance of handing over substantial sums for what could be a pig in a poke. Or just buy something else.

eddddy

The company you mention 'specialise' in selling using the 'modern method of auction' - so it's likely that's how they're selling this property.

If so, they generally ask that the buyer pay a reservation fee (4.5% of the offer price, or £6.6k - whichever is greater.)

The big problem is that this reservation fee isn't refundable if the sale doesn't complete. So, your daughter could lose a minimum of £6.6k, if the sale doesn't happen.

But your daughter is free to make an offer on different terms (in writing/email, but not by bidding on the website). For example, saying something like:

• 1) I am offering £x, on the understanding that I will not pay the seller or their agents a reservation fee or any other fees of any type. (Which means the seller will end up paying the fee.)

Or

• 2) I am offering £x, on the understanding that I will only pay the reservation fee of £6.6k (or whatever) on completion of the purchase. If the purchase does not complete, I will not pay any fees.

The auctioneers will probably try to resist - and if they find somebody else who is willing to pay the fee up front, they'll probably try to persuade the seller to go with them.

But somebody posted on this forum saying that they succeeded with option 2 above.

Myci85

I would advise extreme caution with this, as others have advised, I am sold deal with modern method auction, which whilst it is advertised as being better as you have time (supposedly) to raise a mortgage if needed etc, the reality is you are liable to pay a hefty fee, which doesn't go towards the property price at all, and if the sale falls through, you lose it. And I can imagine it would be very easy for it to fall through and the auction company to be quids in.

daveyjp

Auction fees are generally only paid following a successful bid, contract exchanged and deposit paid. If there is any suggestion a payment is due prior to that stage run away.

Albermarle

Modern Method Of Auction Explained

McFluze

Thank you for all your replies to my post, very informative and much food for thought!