The approach to selling a property via the Modern Method of Auction has been around for around twenty years, with its popularity increasing year on year. It can be particularly beneficial for home sellers when the property market is uncertain or slow.
Modern Method of Auction combines the certainty and speed of a more traditional auction with the marketing know-how and effort of a good local estate agent. With a conventional sale, when an offer is accepted on a property, the estate agent stops actively marketing the property: viewings halt. The property is marked as “sold subject to contract”.
The Modern Method of Auction differs because, rather than having one selected buyer, all potential buyers can make offers and bid against each other. This means that the seller will achieve the best possible price and is not at the mercy of one buyer, who may decide to reduce their offer or walk away from the sale.
How it works
- With the assistance of the estate agent or auctioneer, the seller sets a reserve price (minimum allowable sale price), start date, and duration the auction is to run for. They will also advise setting the Starting Price (the price at which the property is marketed to generate interest).
- The estate agent will then prepare the property particulars, take photos, and arrange the EPC if required.
- The estate agent will begin preparing the Auction Pack, which includes all legal documentation.
- The property will begin to be advertised whilst the Auction Pack is being prepared to generate as much interest in the property as possible. Any viewings will also be arranged.
- Once the Auction Pack is ready, the property auction will go ‘live’, meaning bids can be made online.
- All potential buyers can download the Auction Pack and must accept the terms and conditions before bidding.
- Once the auction ends, the buyer must pay a reservation fee and sign a reservation agreement. The property is then reserved for the buyer.
- The buyer and seller must complete the sale within 56 days.
How quickly will I have to move out?
Once the offer has been accepted and the reservation fee paid by the buyer, you must be prepared to move out upon completion, which must be by 56 days. However, you can move out anytime between 28 and 56 days.
If the potential buyer does not agree to pay the reservation fee, will I lose the offer?
The law requires that every offer made to purchase a property be passed on to the seller by the estate agent. However, suppose the potential buyer does not agree to pay the registration fee. In that case, the estate agent should advise you of the situation to decide whether you still want to accept the offer.
If the buyer refuses to pay the reservation fee, will I have to meet the estate agent’s fees?
It rather depends on the finer details of the contract you have entered into with the estate agent. They should explain this clearly to you before you sign anything. Additionally, the buyer has agreed to pay the fee, so it is up to the estate agent to pursue the buyer.
What if you are the seller?
If you are the seller, then the process of doing so under the Modern Method of Auction over a traditional auction is not that different. Once you have appointed an auctioneer, a complete title information pack which will contain various protocol forms, title deeds, property searches etc., must be put together by a conveyancer. This is to enable any prospective property buyers to review this information before considering bidding on your property. Once this information pack has been prepared, the auctioneer will make it available on their website for public inspection.
Long gone are the days where you could assume that you could quickly sell a property with various title defects simply by finding an unassuming buyer at auction. If the title pack is incomplete or not put together very well, you will find that most prospective buyers will be put off bidding on your property even if they like it or the offer price is attractive. Therefore, you must instruct an expert conveyancer who is experienced in preparing auction legal packs.