Thoughts on buying by Modern Auction?

[solario]

A property in an area we really like has just come on and is to be sold by modern auction. We're FTBs, so are unfamiliar this process. Is it particularly high-risk? Can you do a survey before bidding? Or is your bid based solely on the Buyer Information Pack (which costs £300 to receive).

Is there any way to predict how high the price might go above the starting price?

The house is in a great, extremely sought-after area, so I'm guessing it might go well above the start price even though the house will need complete refurbishment/modernisation.

We could go about 10% over asking, but not much further given the costs of the refurbishment.

Would be grateful for any insight/advice anyone could share. Thanks.

My experience, with a LOT of time spent on Zoopla and Right Move over the last 18 months, is (where I am anyway) they put the guide price on at ridiculously low levels. I actually had a conversation with one estate agent about one property, and he was quite open that it had a reserve price that was considerably higher than the advertised guide price.
Then, with my knowledge of the local area, the houses going to modern auction all seem similarly under priced. It is just wasting everybody's time.
I also asked a mortgage advisor and he said my dc (1st time buyer) couldn't buy at modern auction. I didn't really go into why as I'd already concluded it was a whole bunch of lies from the EA anyway.

Yep modern auction you’d be looking at a LOT more than 10% to reserve and no I’d be amazed if they let you do a survey before bidding.
Honestly I think modern auction is a bid of a sham to get too sets of fees for the agent.

When I was selling in 2017 the modern method of auction was pitched to me by one out of four EAs as the answer to my needs. If I recall correctly the big thing as a vendor was that it shortened the time between accepting an offer and exchanging contracts significantly with less room for the buyer to back out, but that it wouldn't secure the highest possible price for the property - probably about 10% below what I might have got on the open market.

I didn't use it in the end.

DD was trying to buy a property this way and it seemed as though there was considerable risk of spending significant money without securing the house. After a lot of being messed around she pulled out.

With modern auction, you have to exchange within a certain period or you forfeit the reservation fee (usually around 4-5%.) A main pitfall is that the terms and conditions around the forfeiture of the reservation fee are often quite one-sided. Agents tend to be reluctant to refund the reservation fee, unless the seller has deliberately scuppered the sale. This can mean the reservation fee is forfeited even where the failure to exchange is not due to the buyer, e.g. insufficient information has been provided to the buyer to enable them to exchange. These types of terms are likely to be unenforceable, but if there was a dispute, the agent might refuse to refund, and the buyer would have to challenge this (e.g. via the Property Ombudsman or ultimately court.)

hoa.org.uk/2021/03/on-line-property-auctions-good-or-bad/

www.propertysolvers.co.uk/blog/modern-method-of-auction/

Don't bother with it

Thanks, everyone. Sounds like we should let this one pass. I know similar properties in the area requiring just as much modernisation are selling for 25% above that auction starting price, so I figured this opportunity was probably too good to be realistic.

I cannot fathom why people sell their house by this method? The ones I have seen have been on the market for months so defeats the object of a quick sale.