An auction house that's made a transition from ballroom operations to online streaming is to publish all fees for all lots - and is urging other operators to follow suit.
SDL Property Auctions is to include the information in each property’s legal pack, with details of exactly what fees are payable by the buyer, so they have a clear understanding of costs before bidding and helping to avoid any surprises upon completion.
In 2018 the HomeOwners Alliance, a consumer group, investigated what it called “the murky world” of online auctions and urged greater transparency.
And last year a conveyancing firm in the Bold Legal Group warned buyers and conveyancers to be ”wary” of the so-called Modern Method of Auction because of the fees attached to the process. At the time the conveyancer said: “We are coming across more and more properties being dealt with in this manner and there are a few well known estate agencies where this is becoming the norm. Clients and their lawyers really need to be wary as buyers pay a non-refundable ‘reservation fee’ – usually a percentage of the purchase price. Many clients do not realise this is an extra payment on top of what they have agreed to pay for the property and I suspect nearly all will not realise that this sum will need to be taken into account in the calculation of the stamp duty payable.”
Now SDL Property Auctions appears to be addressing this issue head-on and its managing director and auctioneer Andrew Parker says: “We have made it our mission to ensure our auctions are accessible to everyone. Auctions are no longer the preserve of investors and developers. We are seeing a growing number of private individuals buying and selling in this way – particularly in the uncertainty of 2020 – so we consider it our duty to ensure the process is as straightforward as possible, with no hidden costs.
“Lots listed on our website already include information about buyer fees but the introduction of the summary sheet within the legal pack makes this even clearer, spelling out exactly what costs the winning bidder will be expected to pay.
“We are proud to be leading the way with this unrivalled level of transparency and would urge the rest of the auctions market to follow suit.”
Earlier this month Iamsold, the largest company involved in the Modern Method of Auction sector, announced it was producing a “disruptive digital market campaign to address the common misconceptions” surrounding the process.
Iamsold claims the MMA market is growing and could double in size again if people were not under what it calls “myths and misconceptions” surrounding such auctions.
SDL’s Andrew Parker adds: “As a long-standing RICS-regulated auctioneer and, more recently, as an industry supplier for NAEA Propertymark, we strive to meet the highest ethical standards. We insist on clarity with our fees structure, explaining all our fees in property listings for buyers and explaining them in person to our sellers.
“This clarity extends to our guide prices, too. All of our property listings make it plain that the reserve will be no more than 10 per cent higher or lower than the guide price, which means guide prices cannot be set artificially low. Some lots will exceed all expectations but that’s just the nature of auctions and competitive bidding.”