A company operating the controversial Modern Method of Auction says it is trying to improve the sector’s image after a series of criticisms.
The MMA allows prospective buyers to place bids on a property within a strict timetable. 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 sector has been sharply criticised by the consumer group HomeOwners’ Alliance and by some estate agents because of an alleged lack of transparency over the non-refundable reservation fees paid by purchasers, which cost cost £5,000 plus VAT or around five per cent of the agreed purchase price.
From June this year the Property Ombudsman tightened 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.
Now one player in the sector - LetsBid Property - says that it is attempting to combat the negative image.
"The Property Ombudsman's recent intervention was welcomed as it will help to improve transparency. As long as buyers and sellers are aware of how the Modern Method of Auction works, as well as the costs they will be required to pay, they'll then be able to decide if it is the right option for them” says Milton Rodosthenous, Lets Bid Property director.
"The costs levied on buyers and sellers by agents and auctioneers should also be fair and reasonable. We've taken steps to address this, for example, by taking the buyer's reservation fee off the agreed sale price as long as the exchange happens within the agreed timescale.
"We have therefore eliminated buyers’ fees after feedback we received from agents who identified them as the biggest obstacle to selling this way" he adds.
LetsBid - which has over 100 agents registered which have so far sold over £30m via the site - says MMA cuts transaction times and fall-throughs, provides more certainty to movers and creates additional revenue opportunities for estate agents in a challenging market.
Government figures show an average property sale taking 18 weeks with up to 33 per cent of transactions falling through, but LetsBid says the MMA process helps agents beat these figures.
"Our estate agents control the duration of each listing. Most transactions will agree the reservation within 48 hours of agreeing a price, but we give agents the opportunity to come to a suitable agreement of their choosing with buyers and sellers" explains Rodosthenous.
The company has Winkworth’s Hendon branch in London as one client and cites branch manager Daniel Levine as saying: "With the Modern Method of Auction, vendors are able to achieve a great price for their property in a much quicker timeframe with less hassle.
"Legal packs are prepared in advance by registered solicitors so buyers are able to have all the information they or their solicitor needs to act fast and move to an exchange within 28 days.”