Modern Auction House Sale

That's how it should work Keeper1 but the auction house I used said my buyer 'had to check with his underwriters' - he didn't pay the deposit or sign the contract until four days later. He also asked for eight weeks to complete, rather than the four weeks I'd specified, so I ended up ordering more oil, plus paying two more months council tax. I wasn't a happy bunny but he was horrible when I dealt with him through the estate agent, still playing games when he bought through the auction house.

If my understanding is correct the traditional auction the successful bidder has to be prepared to exchange contracts straight away whereas the modern auction gives time for finance to be put in place. I guess if you have sold your property and perhaps renting while looking for your next purchase it could work but it must narrow down the number of potential buyers for a property.

I sold by traditional auction, but as it was during lockdown it was on line, so no competition within the room.

I had to ensure my solicitor did all searches in advance of the auction and include them in the Legal pack which had to be on-line and accessible to registered bidders. Only one of the thirty three viewers had a full structural survey on my property and they didn't bid. I was annoyed to be told by the auction agent that one of the viewers said 'they were going straight home to put their house on the market' - my understanding was that all viewers were proceedable.

Although eye wateringly expensive, I am glad I finally offloaded the house at auction and received just enough to buy this bungalow, once I've gone my kids won't have any trouble selling it.

How does this differ from the standard system of asking for all bids for the house by a certain date, including information on the buyers position to advance - is it dependent on the sale of their property, mortgage etc?

ON the day, at the specified time the bids are open and the best bid is accepted. Then there is the usual selling process of searches etc.

We took part in a house sale this way and came second with quite a lot of bidders behind us. I discovered quite recently that the winner bid over £20K more than us. It cheered me up no end as there was no possibility we could have afforded to pay that much for the house. DS did it and was successful with a bid only £100 more than the second bid.

Presumably you need to have searches and surveys done before you even put in a bid. Or risk losing your deposit if a post bid survey throws up expensive problems.

With the modern method do you know what other people are bidding? Or do you just take a shot at what you think a winnng bid will be? You could end up paying thousands more than the next lowest bid?

And you have to pay stamp duty on the non-refundable deposit, even though it’s just to pay costs, not a deposit that comes off the purchase price.

I wouldn’t go anywhere near it if I was a purchaser. You could lose so much money.

We tried to buy a house at an auction many years. The auctioneers provide searches and, if you are successful at the auction, you pay a deposit that day an have (usually) a month to complete. If you are unable to complete within the specified time the you lose your deposit. That happened to someone in our village several years ago. He wanted to buy the village pub and had the deposit. A friend of his had agreed to lend him the money but it was dependent upon the friend selling something else. A picture I think. That sale didn't happen and the purchaser lot his deposit.

The unfortunate thing was that the villagers had got together to form a company to buy the pub but when we realised that this man (who was a restaurateur) wanted it, we backed off.

My brother and sister in law brought their house via modern auction 4 years ago. They had to put down a non refundable £6,000 deposit. The vendor doesn't pay any fees the buyer has to pay all those. The good thing was once the vendor accepted their offer he couldn't back out. And it all had to be completed within 6 weeks. The deposit covered the estate agent / auction fees but then there was solicitor to pay on top of that. But they got the house cheaper than on the open market. And it was theirs quicker .

Thanks for your replies that has pretty much been my understanding of the system. Our neighbours have put their house on the market to be sold this way and I just cannot understand why they have done it. I know they really need to be ,over by July/August time but if I was a prospective buyer I wouldn’t entertain trying to purchase through this method, I understand it differs from traditional auctions in that it gives time for finance to be arranged but most people with a property to sell would find the reservation “fee” too much to risk losing. I can’t see developers going for it either as it isn’t the type of house seen in traditional auctions either and there is nothing to develop. I have seen a number of properties locally attempting to be sold this way and a year or so later they are still for sale. I wondered if I was missing something or had incorrect information.

It is becoming more popular and although I think it’s a mad method, l can see why it’s come about.
The whole house purchase system in the UK needs an overhaul.
The searches and survey could be provided by the vendor with a shelf life of let’s say 12 months, prospective purchasers then pay to see the information.
This process would hopefully prevent time wasters putting their homes on the market, speed the process up and prevent chains from breaking down.

There is a lot of discussion on MSE involving barge poles and running regarding the 'Modern auctions'.

It seems that it is an arrangement between the auction house and the estate agent where they get a guaranteed amount from the guileless, the non refundable deposit, which is split between them.

I would avoid the so called Modern Auction,Shandy57 will have far more knowledge of this than all the rest of us put together!

From what I’ve read it’s just your Estate Agent ‘Auctioning’ the property.

Far better to go with a reputable Property Auction House IMO.where the buyer pays a deposit on winning the bid and is tied into completing in a specified number of weeks and Always put a reserve price on the property.

Not here but in Oz. When I was on holiday D and I used to go to auctions for a nosy and we were stunned at some of the prices for the pokiest little bungalow-type houses going for silly money. You were invited to look around the property as with their clement weather people gathered outside the places.
I wouldn't know how it works here.