Modern Auction (House Purchase)

[John N]

I am looking to but a Flat/Retirement Apartment for my mother, I have come across a very nice Flat that would suit her and us very well!

Problem is it's only available in what is called a 'Modern Auction'

As far as I can tell once deciphering the 'Solicitor Speak Jargon' The Price that the Vendor actauly wants is held in a sealed envelope, if you show a serious interest in the Flat you give a non returnable deposit of 4.20% of the asking Price (85,000 in this case) but a minimum of 6,000.

The Estate Agent couldn't (or wouldn't) tell me how many had bid and lost their 6,000, or how many folk were really interested in the Flat!

It seems madness to me, that you could give away 6,000 on the off chance that you MAY be the successful bidder!

Anyone have any experiances with 'Modern Auction'?

 

[JHS]

I am very sure that it is not the way it works.
A quick and dirty Google found this:Modern Method of Auction: A Step-By-Step Guide To Success | HomeSellingExpert.

 

[Harrythedog]

Never heard of that before. If you can track down the owner and see if you can deal with them direct. Not a fan of estate agents

 

[clk320x]

I always skip the ads where it’s a modern auction

 

[fourwheels]

I would walk away from it. I doubt it’s a scam but it certainly favours everyone else but you and you stand to lose 6k.
Never heard of that but we have been unsuccessful several times over the last couple of years because of sealed bids which raise prices unrealisticall.

 

[leef44]

I always skip the ads where it’s a modern auction

Me too.

It's a horrible way to look to buy a house. The vendor employs the service of an estate agent. The agent recommends that the most effective way to sell the property is to use Modern Method of Auction (normally having failed on other avenues or to try to bump up a higher bid in a clandestine way).

The vendor pays the agent fee but the agent hopes to get a higher bid for more commission.

The buyer pays a commission to the auction company with a minimum £6000 price. I think the agreed buyer is the only one who pays the fee but it is non-refundable even if they decide not to proceed. This gives more security for the vendor so that the buyer must be pretty sure they want to go ahead.

So now there are two "middle-men" with two commissions to pay.

The buyer now has a buyer's fee to pay on top of the stamp duty and unsure whether they have overbid if they win.

 

[Riva811]

First time i heard about a modern auction. Sounds like let me know what you are willing to pay so that i can adjust my opening price to something higher.
Estate agents are trash.

 

[John N]

I have discovered another problem in buying Property via "Modern Auction" the three Conveyancing/Solicitors I got Quotes from when told that I was using a Auction told me they don't get involved with "Modern Auction"

 

[Charliecloud]

We bought a bungalow on the south coast in 2018 using 'modern auction' IAM SOLD . From memory we only had to prove we had the funds or an agreed mortgage . The deposit had to be paid within a few hours of auction ending. Just like a car auction really.
Copy of the T&C attached. R3 & R4 were the main sections regarding payment.
IAM SOLD use a progress chaser so no solicitors sitting around doing nothing for weeks on end.

https://www.iamsold.co.uk/wp-content/uploads/2022/11/iamsold-Modern-Method-Terms-Conditions_A4P-8P-1044-22-10-V1.pdf

 

[John N]

We bought a bungalow on the south coast in 2018 using 'modern auction' IAM SOLD . From memory we only had to prove we had the funds or an agreed mortgage . The deposit had to be paid within a few hours of auction ending. Just like a car auction really.
Copy of the T&C attached. R3 & R4 were the main sections regarding payment.
IAM SOLD use a progress chaser so no solicitors sitting around doing nothing for weeks on end.

https://www.iamsold.co.uk/wp-content/uploads/2022/11/iamsold-Modern-Method-Terms-Conditions_A4P-8P-1044-22-10-V1.pdf

Charliecloud.

Thanks for you input but:

R3. R3 Payment of reservation deposit R3.1 This condition applies where a reservation deposit must be paid by you on winning a conditional auction for a Property. Payment is to be made within 2 hours of the winning bid being accepted and the auction ending. R3.2 The reservation deposit is to be held by us and, following formal exchange of contracts for the sale and purchase of the Property, transferred to the Seller’s solicitors as part payment of the purchase price under the contract for the purchase of the Property.

I spoke to the IAMSOLD bloke this morning and asked him what happens to the £6,000, he told me it went to IAMSOLD to cover the Costs of setting up the Auction, ,not that it was regarded as Part Payment for the Flat!