'Modern Method of Auction'

[Missproportionate]

I am looking for houses - ours is under offer. For various reasons the house I really want (my forever home :-() may be fallen through. We have a mortgage offer on this house but it would only need a valuation survey on an alternative house to transfer the offer.

I am looking at an alternative house which is for sale under 'the modern method of auction'. I am wondering if anyone has done this before and has experiences?

the agent site quotes
"The Modern Method of Auction is a flexible buyer friendly method of purchase. We do not require the purchaser to exchange contracts immediately, but grant 28 days to achieve exchange of contracts from the date the buyer's solicitor is in receipt of the draft contracts and a further 28 days thereafter to complete. Allowing the additional time to exchange on the property means interested parties can proceed with traditional residential finance. Upon close of a successful auction or if the vendor accepts an offer during the auction, the buyer will be required to put down a non-refundable Reservation Fee of 3.6% including VAT subject to a minimum of £6,000 including VAT which secures the transaction and takes the property off the market. The buyer will be required to sign an Acknowledgment of Reservation form to confirm acceptance of terms prior to solicitors being instructed. "

It's pretty much a scam whereby you need to pay loads of non-refundable money to the agency when you put in the offer.

Really? It’s a very reputable agency.

It's not a scam per se but it's very much geared in the sellers/agents favour. Around here very few houses are sold like this and those that are tend to have a problem that will get revealed with a survey after the potential purchaser has paid their non-refundable deposit. I would be questioning why they have resorted to this method of sale over the traditional.

I would steer very clear, there will be other houses.

I can't see how a reputable agency would do it. Also, the 'deposit' is not a deposit but agent's fees and you still need to pay the full amount for the property on top. As pp poster says, what will you do if a big problem is revealed in the survey? You will have already paid the 6k+ that's non-refundable.

It sounds horrible.

I like the sound of the system and think all homes should be sold more like that, but would only work if the survey had already been done.

I've seen a few like this, but not nice enough to warrant looking into

Hmmm. Without too much detail, I have had this house on my radar before. It’s fits the bill in many ways for what I’m looking for. It’s not a cheap house and not a typical house- but it’s peculiarities are also what I am looking for - location, age, size, and amount of land. The particular houses I’m looking for tend to take a while to sell (there are a couple I’m still interested in that have been on the market for 18 months plus.)

God knows we need to find ‘some’ way of sorting the property system out. It’s art of the reason my ‘dream’ house is falling through is because they can’t wait for our buyers to get finance and do contracts. If our buyers had put down a 6k deposit I imagine the vendors of the house -we want would be more confident in the chain.

It's a bit more like that in Scotland - I think the deposit is actually a deposit and not agency's fees, though. But nothing goes on the market until it has had a survey and a valuation. So you know what state the property is in and can be confident that the bank will lend the expected LTV.

It's not a scam but you are locked in when you pay the fee. There is not backing out unless the seller and agency have lied or unless they pull out and you would get the fee paid back. Any other reason and if you choose to back out then you lose thousand of pounds.

It does bring certainty to the transaction as its unlikely anyone will pull out, so there is none of the pre exchange of contracts nervousness.

However it should only be used like in Scotland after a survey has been done as otherwise it really is not a fair way of buying a house.

Also if the house is cheaper including the fee then you may get a bargain. I have used modern auction once and the house needed a full refurbishment.

It was the type of house usually sold at traditional auction. The house price plus the fee was still 40 to 50k lower than the area and street average. Therefore it was a win win for me.