The Modern Method of Auction

THE MODERN METHOD OF AUCTION

I’ve sold a wide range of properties via auction, from a derelict pub in Bishop Auckland to an immaculate penthouse apartment in Cambridge. This article explains what the modern method of auction is and how it works.

Modern method of auctions are a carried out online. The seller appoints an estate agent who markets the property, conducts viewings and provides the full sales service to the buyer and seller. An auction company is appointment to handle the auction; I have worked with Whoobid on this very successfully in the past. The seller sets the reserve price for the auction, start date and the end date of the auction. It is usually 30 days, but this can be faster if the seller requires a fast sale. Buyers can participate in an online auction, much like Ebay, or make a pre auction offer, which the seller has the option to accept.

A major difference in the auction process is that the buyer pays the auctioneer and estate agents sales commission, not the seller.

One a successful bid has been accepted, the buyer pays a non-refundable reservation fee on the day. With the modern method of auction the buyer is then given 28 days to exchange contracts and a further 28 days to complete the purchase. Whilst this is slower than traditional auction conditions, it is much quicker than the conveyancing process in a standard private treaty sale.

The buyer’s reservation can only be refunded if the sale cannot be completed due to a fault from the seller. If the buyer pulls out or is unable to exchange contracts, they will have lost the reservation fee and the seller can resell the property.

ADVANTAGES TO SELLER

? Fast sale where buyer demonstrates commitment from the start – I have only ever had one sale fall through via modern method of auction.

? Buyer pays the sales commission.

? Seller obtains market price, making it a better way to sell than some of the other fast sale options.

ADVANTAGES TO BUYER

? Buyer who is in a position to go ahead is often able to get a good deal on their purchase.

? Fast sale where there is a guaranteed exchange and completion timeframe.

? A pre sales auction pack is created which provides the buyer with information they would not normally have until an offer is accepted on a private treaty sale.

There are disadvantages. For buyers, you must either have cash or have a mortgage lined up and ready to go. My one fall through auction sale was a buyer who couldn’t get his mortgage sorted in the timeframe, so he lost his reservation fee.

For sellers, you sometimes won’t get the same price as you would via private treaty sale because the auction only appeals to cash buyers or seasoned investors – first time buyers or those in complex chains struggle to buy via auction because of the fast timeframe. Buyers can also be discouraged by having to pay the sales commission.

Overall, modern method of auction is a great way to sell a property where the goal is a fast, secure transaction that will achieve market value. Message me if you need any further information and happy to help if you have a property to sell.