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TODAY'S OTHER NEWS

Industry bodies back Modern Method of Auction best practice guide

Three key industry organisations have endorsed a best practice guide for the controversial Modern Method of Auction.

The iamsold guide is aimed at agents offering or considering offering MMA and is backed by The Property Ombudsman (TPO), NAEA Propertymark and Essential Information Group.

The Modern Method of Auction, also known as a conditional auction, allows prospective buyers to place bids on a property within a given timeframe. At the end of the auction, the highest bidder is required to pay a reservation fee to secure the property.

The buyer then has 28 days to exchange and a further 28 days to complete.

The fledgling sector has been criticised for an alleged lack of transparency over the non-refundable reservation fees paid by purchasers, which often cost around £5,000 plus VAT or 5% of the agreed purchase price.

This led to the Property Ombudsman taking action in June, updating its membership criteria to ensure agents disclose all referral fees and explain the pros and cons of their recommended method of transaction at market appraisal stage.

The new guide outlines a code of conduct for agents offering the MMA service to clients.

iamsold is calling for other MMA providers to adopt the guide as a minimum industry-wide standard and is working to ensure its own agent network adopts the framework it sets out.

"MMA is on an exciting upward trajectory as many are turning to it as an alternative to the unreliable status quo," says Ben Ridgway, group managing director of iamsold's parent company iamproperty.

"Setting a benchmark for our industry with robust and transparent guidelines is vital to engage our consumers’ trust, and adherence to this guide will safeguard their needs and ensure they are at the forefront of engagement."

"No one provider owns the space, but we believe all should comply to minimum standards, so all parties involved can make informed decisions," he says.

Peter Habert, TPO's director of policy, adds: "Our focus is not just on resolving complaints but assisting the industry in raising standards and helping consumers to better understand the different ways they can buy and sell homes."

"The Best Practice guide is a step in that direction and mirrors The Property Ombudsman’s Code of Practice by emphasising the need to explain the differences, benefits and potential disadvantages of the method of sale to ensure consumers can make an informed decision," he says.

iamsold says it is keen to speak with agents and MMA providers who would like to use the best practice guide for their own client base.

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    So MMA providers will, from now on, be explaining to prospective vendor clients that a minimum buying fee of £5000 + VAT might impact the amount the seller receives compared to them selling, say for 1% + VAT, via Auction House?

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    The I Am Sold guide is a watered down version of what agents should be saying. It is full of holes which the lawyers will doubtless have great fun filling in as time progresses. The most important thing that they do not emphasise is that the seller's home will almost definitely sell for materially less than it would otherwise because of the high buyer's premium.
    Sad to see well respected auctioneer portal EIG supporting this. Understandably a money-spinner for them.

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    Let’s be clear - this is NOT the modern AUCTION method - it is the modern TENDER process. The whole purpose of an auction is that when the hammer falls the deal is done - not 28 days to give the highest bidder time to get hs act together!

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