UKH

Has anyone got any experience of buying a house using the "modern method auction" system?

Thanks,

Gethin

Afraid not.  

I have bought properties at normal auctions where the hammer goes down & you have 28 days to complete.  Very clear what you have to do legally/contractually etc.

Main question would be : Is this 'modern method' legally binding?

I've looked into this as a couple of the local estate agents seem keen on it.

Ir seems like a modern method of the estate agent extracting more money from the buyer to be honest.

Apparently on the winning of the the auction you pay a fee of 4.5% of the sale price and then you have 4-8 weeks to complete. There's nothing legally holding you to the purchase but you have spent a substantial chunk of cash already. The fee is on top of the winning auction bid.

I just can't work out how this can work for people in chains. And also how you can get the conveyancing done in time as my solicitor reckons 8-10 weeks.

We looked at buying a house sold this way.

3 times it was “sold” - which requires payment of the deposit.  Three times the purchaser failed to raise funds in the short window required to complete the sale. (Credit check or Surveyor or valuation > mortgage refusal?) and 3 times the deposit was presumably forfeit according to the terms.

It seemed like a way of taking significant amounts of cash from unprepared prospective buyers without actually making any money for the vendor and keeping the house away from selling to better qualified prospects.

The base price listed was also a clear sandbag, and I’ve seen that many times.

I might buy that way for a special / rare property if I was in the market, but only if I was 100% clear I’d have the funds to proceed after a successful bid under any reasonable circumstances. 

I rather think that’s the point. People who don’t do as much homework as you are drawn in and loose their deposits.

This was the point where estate agents crossed the bridge of sins from simple incompetence to maliciously exploiting some people.

I think I've said it before - any job title containing the word agent or agents - replace with liar or liars as appropriate - it works 😁

I wouldn't count estate agents as simply incompetent, some are so proficient at being incompetent there's no simple way to explain how they manage it. 

The guide price sandbagging is another thing I'm wary of. I really can't see how it would work for the vendor if you have a load of people in an auction with X budget based on the guide price but in reality the vendor wants X + 50%. You either have sensible people and the price doesn't reach what you want or stupid people who bid far more than they can afford and then the house doesn't sell at the end of the allotted period so the vendor doesn't get a sale. 

Does the vendor get anything from the fee in the case of a non sale?