House Purchase by "Modern Auction"

RoboCod

RoboCod

RoboCod

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I'm interested in a house that is advertised for sale by modern auction. Here is the detail on the site:

This property is for sale by the modern auction method of sale also known as an "conditional auction". This process is similar to a normal property purchase but on acceptance of an offer the purchaser will pay a non refundable reservation fee to secure the property. The buyer then has 28 days to exchange contracts and a further 28 days to complete the purchase. Terms and conditions apply to the modern auction method of sale.
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So it is yet to go to auction and is currently advertised to build interest.

Now, the crux of this method of sale is the buyer must stump up a non refundable fee of 5% sale price OR at least £5000 + VAT!! This is separate to the price of the house, is added on and goes direct to the auctioneer not the seller. It's pretty much a bit of a swizz really.

I just called the Estate Agent and asked whether I can make an offer by "private treaty" before it goes to auction i.e. sell the property, one party to another without the help of an auction. They said yes, however, I would still have to pay the reservation fee of £5k.

Is this correct? Anyone with experience?
 
sounds incredibly dodgy, so the buyer is paying the estate agent's fees at an inflated rate instead of the seller, even if the sale doesn't go through... :s
 
Correct. Normally this would happen at an auction, so the buyer would win the house and thus own it (no gazumping etc). Now I see how this method would be ok for a developer/cash buyer but it looks like danger for mortgage buyers, hence I'm wanting to avoid the whole auction process completely.

I just want to know if the EA is obliged to tell the vendor a buyer is willing to put up a deposit and purchase the house now without auction (it isn't guaranteed to sell at auction.). It has been on the market for around 30 weeks now. The auction is run by the Estate Agents own auction team.
 
Sounds like a good way for them to make a 6k without doing anything and then hope it all goes wrong so they can make another 6k for doing nothing.
 
Captain Planet said:
I'm interested in a house that is advertised for sale by modern auction. Here is the detail on the site:



So it is yet to go to auction and is currently advertised to build interest.

Now, the crux of this method of sale is the buyer must stump up a non refundable fee of 5% sale price OR at least £5000 + VAT!! This is separate to the price of the house, is added on and goes direct to the auctioneer not the seller. It's pretty much a bit of a swizz really.

I just called the Estate Agent and asked whether I can make an offer by "private treaty" before it goes to auction i.e. sell the property, one party to another without the help of an auction. They said yes, however, I would still have to pay the reservation fee of £5k.

Is this correct? Anyone with experience?
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reservation fee is just a deposit, it means that if you don't pay the rest of the agreed price they keep it, if you do it should get deducted from the full price that you agreed before you pay the reservation fee.
 
matdom said:
reservation fee is just a deposit, it means that if you don't pay the rest of the agreed price they keep it, if you do it should get deducted from the full price that you agreed before you pay the reservation fee.
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Incorrect. It is a fee paid directly to the EA Auction team that is not deducted from the house price and is non refundable.
 
So back to the question, does anyone know if you can bypass the whole auction palava (and that daft fee)? Maybe it is acceptable to search for the owner through the land registry and contact them directly.
 
It's very much in the estate agents interest to do the auction, so they're not going to cancel it. It's in the owners interest to bypass it and sell normally. Sadly, you're dealing with an estate agent. Given they're running the auction themselves and want 5k non-refundable even if the sale falls through, they're particularly dodgy estate agents. Given it's been on the market for that long, they're also incompetent.

Do you want the house so much that you're willing to deal with the worst estate agents you're likely to find?
 
To answer your question. There is nothing stopping you contacting the owners directly and trying to do business with them. If they send you back to the estate agents though you will be back to square one. Unless this is THE ONLY house that you ever want to live in then it might be worth it but in all honestly you'd probably be better off walking away.
 
Captain Planet said:
Incorrect. It is a fee paid directly to the EA Auction team that is not deducted from the house price and is non refundable.
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not doubting you but are you 100% sure that is correct??

So the auction team sell 20 houses that day and they net £6k per house - 120k ?

that's can't be right. Sounds a total con.
 
booyaka said:
not doubting you but are you 100% sure that is correct??

So the auction team sell 20 houses that day and they net £6k per house - 120k ?

that's can't be right. Sounds a total con.
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Yup, it's ludicrous really. They must make a fortune this way.
 
After discussing with the EA my situation and desire to purchase the house in an open market I have been told that this is fine and that the vendor is willing to go that route and pay fees.

As expected, this means the vendor is looking for a higher asking price than the guide price on the auction. Still, it isn't much more and is a lot less than she purchased it for 4 years ago. However, in a turn of events, I found out today I am deploying at short notice again so will be in no position to buy a house until my return anyway! What a waste of time.
 
booyaka said:
not doubting you but are you 100% sure that is correct??

So the auction team sell 20 houses that day and they net £6k per house - 120k ?

that's can't be right. Sounds a total con.
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surely everyone but the winner gets their deposit back
 
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