A company operating the controversial Modern Method of Auction says it is trying to improve the sector’s image after a series of criticisms.
The MMA allows prospective buyers to place bids on a property within a strict timetable. At the end of the auction, the highest bidder is required to pay a reservation fee to secure the property; the buyer then has 28 days to exchange and a further 28 days to complete.
The sector has been sharply criticised by the consumer group HomeOwners’ Alliance and by some estate agents because of an alleged lack of transparency over the non-refundable reservation fees paid by purchasers, which cost cost £5,000 plus VAT or around five per cent of the agreed purchase price.
From June this year the Property Ombudsman tightened its membership criteria to ensure agents disclose all referral fees and explain the pros and cons of their recommended method of transaction at market appraisal stage.
Now one player in the sector - LetsBid Property - says that it is attempting to combat the negative image.
"The Property Ombudsman's recent intervention was welcomed as it will help to improve transparency. As long as buyers and sellers are aware of how the Modern Method of Auction works, as well as the costs they will be required to pay, they'll then be able to decide if it is the right option for them” says Milton Rodosthenous, Lets Bid Property director.
"The costs levied on buyers and sellers by agents and auctioneers should also be fair and reasonable. We've taken steps to address this, for example, by taking the buyer's reservation fee off the agreed sale price as long as the exchange happens within the agreed timescale.
"We have therefore eliminated buyers’ fees after feedback we received from agents who identified them as the biggest obstacle to selling this way" he adds.
LetsBid - which has over 100 agents registered which have so far sold over £30m via the site - says MMA cuts transaction times and fall-throughs, provides more certainty to movers and creates additional revenue opportunities for estate agents in a challenging market.
Government figures show an average property sale taking 18 weeks with up to 33 per cent of transactions falling through, but LetsBid says the MMA process helps agents beat these figures.
"Our estate agents control the duration of each listing. Most transactions will agree the reservation within 48 hours of agreeing a price, but we give agents the opportunity to come to a suitable agreement of their choosing with buyers and sellers" explains Rodosthenous.
The company has Winkworth’s Hendon branch in London as one client and cites branch manager Daniel Levine as saying: "With the Modern Method of Auction, vendors are able to achieve a great price for their property in a much quicker timeframe with less hassle.
"Legal packs are prepared in advance by registered solicitors so buyers are able to have all the information they or their solicitor needs to act fast and move to an exchange within 28 days.”
.png)
.jpg){kind=logo}
.jpg)
%20-%20IMAGE%20Client%20Accounting%20%E2%80%93%20what%20are%20your%20options.jpg)
.png)
.png)
.png)
%20(002).png)
%20(002).jpg)
.png)
Join the conversation
Jump to latest comment and add your reply
This is a good start to clean up the system. There is definitely a place for conditional auctions as an effective method of sale and eliminating buyers' fees when exchange happens within the agreed timescale in a big step in the right direction. How this will affect companies like I am Sold who need the high fees to split between themselves and their marketing agents remains to be seen.
The non-returnable up-front reservation fee has earned this 'modern auction method' the nickname of I Am Fucked, and rightly so.
If they've eliminated buyer's fees (the dreaded minimum £5000 + VAT) can they still offer 0% commission i.e. sell for free?
Probably not. There will still be money in the pot from the 15%ish buyers who don't exchange. The interesting thing is going to be how they do their marketing. Many of the existing outfits rely on their sub agents, who are experienced estate agents, although not usually auctioneers to carry out the marketing for them. If they want to carry on using this model, they'll have to charge the vendors something. Most of them are not geared up to do it all themselves.
Hi I bought a property at auction stupidly without viewing it first. I bid £28,000 for it and it went for £29,500. At the end of the auction the Auctioneer came to me and said that the winning bidder's card was denied so would I like it for £29,500. I said yes and when I came to pay for it the auctioneer pointed out that I would have to pay £6,000 in Auction fees on top. Again stupidly I paid that and the deposit with my credit card. Now my solicitor has informed me that I have bought an 'Underlease' Is there anyway that I can stop the purchase of this and get my monies back please or will I have to go through with it and loose my monies? I was sent a legal pack before the auction to read but I did not realise I was buying an underlease, but if I had shown the legal pack to the solicitor they may have pointed this out and I would not have bid. More fool me! Please help with any comments.
Please login to comment