Looking to buy first home with DP and so many of the houses around here are for sale by modern auction method. It's not an expensive area around here so most of the houses we're looking at are less than £100,000.
Modern auction method isn't really an auction here per se. It means that if we put an offer on for a house and it is accepted by the seller we pay either 3.5% + VAT of the property price or £5,000 + VAT up front to the estate agent, depending on which is the higher price. This money does not go towards paying off the house, it is non refundable if the sale goes through, and the house seller doesn't see a penny. We then have 28 days to cough up the rest of the money, whether on finance or in cash.
Say we had a 15% deposit on a house of £100,000 and we tried to buy through modern auction method - we'd actually need £21k before any other mortgage fees etc. Surely this doesn't benefit the seller in any way, as a buyer would be more likely to offer a lower price? It certainly gets the buyer's back up?
Have any of you bought or sold through this method? What were your experiences?