Just recently, a colleague was advised to sell an empty former home at a modern method of auction. (MMoA).
It’s a growing market, not least in part because of the travails of transacting in the current one.
The idea has been around for decades, but its popularity is increasing as property owners recognise its appeal – selling and curtailing otherwise often lengthening sale periods and additional expense.
The appointed estate agent promotes the property and conducts viewings as they would in more mainstream business, but prospective buyers then make an offer and place a bid for the property online.
There is a fundamental shift here as the sale process is no longer controlled by the buyer. There is no time or ability to revisit the price post-survey or a few days before exchange which is a frequent feature of conventional sales.
If anything, the seller hopes that any dispute about price arises because of demand so the final price only goes one way – north. In addition, the risk of any fall through recedes as the buyer, or more accurately the bidder, is financially committed.
Of course, to truncate the process as a modern auction does also requires more upfront information.
Part of the process is ensuring that as much information about the property is collected in advance to provide buyers with a detailed Buyers Information Pack which includes the local authority search data, Title register, Title plan, property information form.
This will doubtless evolve to include other information such as the EPC rating. If it’s sounding unerringly familiar, it may be because this process reminds you of the very stuff suggested in the old Home Information Pack!
Either way it inserts transparency and circumvents delays. The speed gained is important because conveyancing delays are impacting so many other transactions.
Personal circumstances and financial commitments can also change during this time, as well as problems being uncovered that were unknown to the buyer at the point of placing their offer.
Is it all too good to be true? Well, there are criticisms. Some remain wary that the Reservation Fees due from the winning bidder may not have been made clear to those submitting bids but this not an insurmountable issue. There are clearly some other downsides.
For a start, a pool of buyers is eliminated on the grounds of affordability. This is more a method for cash buyers or those not requiring difficult lending decisions. Perhaps, closer to home, it also creates an interesting valuation dilemma as sealed bids or a bidding war reflect the method of sale as much as the potential real value of the property.
Nevertheless, the state of the current market has driven the growth and interest in the modern auction method and while other processes shift to accommodate it, I wonder if we may see lenders change their processes to ‘fast-track’ this sort of business. The property market has always had the capacity to evolve. It is doing so again.
James Ginley is technical surveying director at e.surv
