Modern Method of Auction

[rockstarshoes]

Has anyone bought a house recently using this scheme?
This is the blurb included by the estate agent.
This property is for sale by the Modern Method of Auction, meaning the buyer and seller are to Complete within 56 days (the "Reservation Period"). Interested parties personal data will be shared with the Auctioneer (iamsold).
If considering buying with a mortgage, inspect and consider the property carefully with your lender before bidding.
A Buyer Information Pack is provided. The winning bidder will pay £349.00 including VAT for this pack which you must view before bidding.
The buyer signs a Reservation Agreement and makes payment of a non-refundable Reservation Fee of 4.5% of the purchase price including VAT, subject to a minimum of £6,600.00 including VAT. This is paid to reserve the property to the buyer during the Reservation Period and is paid in addition to the purchase price. This is considered within calculations for Stamp Duty Land Tax.
Services may be recommended by the Agent or Auctioneer in which they will receive payment from the service provider if the service is taken. Any payment that will be received by the Agent or Auctioneer will be confirmed to you in writing before services are taken. Services are optional.

Wouldnt touch it with a shitty stick.

It’s the same as buying any property except that:

you as buyer are paying the selling agent fee (ie the auction reservation fee) of 4.5% of the agreed purchase price whether or not you proceed

The fee is payable as well as the purchase price on completion plus the legal pack fee

you have a deadline to achieve exchange of contracts and a further deadline to complete

you should proceed only if you are sure you want the property, have had a satisfactory survey, you have had a solicitor review the legal pack and advise you on the contents, you have the finance available to commit to exchange and completion within the deadlines. Be wary if relying on mortgage finance.

with the fees on top of the purchase price the auction method might not be a cheap way of buying a property after all, I guess it depends on how cheap a purchase price you negotiate.

stamp duty is calculated on the purchase price plus the auction fee as HMRC consider both costs are interdependent ie you cant buy the house without paying the fee.

if you pull out after reservation you are stuck with losing the reservation fee, so only proceed to reserve if you can afford to walk away if need be.

In my experience, modern method of auction is where properties go to die. It's a last resort for sellers when they just can't sell. I think it probably can work out quite well for medium to small-scale developers, but they are used to this kind of uncertainty and will have contingency in place. They also have the connections, and cash upfront, so are ready to go, and know what to expect in terms of condition of property. And they can remedy most problems "in house" without having to find trades.

I won't even view modern method properties.

Interesting thank you!
The property is vacant, obvs part of an inheritance, needs updating, in a great location and low priced for the area!

@rockstarshoes yes but when you crunch the figures and add the stamp duty for the lot, it works out expensive, we saw a house on for 310k nice house it was originally on the market for 350k, you are drawn in at the price at 310k bargain but with all fees and stamp duty it worked out at 360 ish, can get a better home for 350k so its deceptive.

Great thank you! Definitely something to think about!