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By Charlie Lancaster

Managing Director, MyBid4it

OTHER FEATURES

Modern method of auction - the online bidding process explained

The modern method of auction is proving to revolutionise the way properties are bought and sold across the UK. 

By putting the process in the public domain, buying and selling properties becomes accessible, quick and easy, with no fear of gazumping.

As an ex-estate agency owner, I have experienced the frustrations of the sales process through many buyers and sellers and I have since got involved because I am determined to improve the process for the industry as a whole.

The overarching aim of online auction platforms is to combine the best aspects of property auctions and the services of estate agents for both buyers and sellers.

How does the modern method of auction benefit agents?

By partnering with estate agents, online auction platforms allow that agency to extend their service offering, thereby providing a more comprehensive product range to suit the needs of all their clients, while maintaining the personal touch. 

It is a win, win situation that is completely transparent, efficient and reduces dreaded fall-though rates, while still aiming to achieve the best possible sale price. 

Agents who use online platforms can experience a great range of benefits:

• Ability to compete with online agency fees – you can offer the seller 0% commission.

• Reduced fall-through rates – buyers will have undertaken extensive property checks and paid a 2.5% non-refundable reservation fee (min £4,000).

• Staff time reduction, due to multiple party negotiations.

• All instructions deliver 1.5% fee of the sale price (minimum £2,500).

• Best market price achieved.

What are the advantages for buyers?

The online auction process is designed to be quick and easy and is fast becoming one of the most popular methods of buying and selling property. 

It is a transparent sales process where upfront information about the property allows informed decisions to be made on the purchase. 

Firstly, once a buyer has identified a property they are interested in, they must register online before placing a bid. The starting bid is published for each property and is for guidance only; it is not the price the property is being sold for. 

The reserve price for a property is not published, but as a rule it is usually no more or less than 10% in excess of the starting bid. 

Once you a prospective buyer has placed their bid, they will be notified via email. When counter-bidding on a property, buyers must increase by a minimum of £500 on the previous bid.

If a bid is successful after the auction, the buyer will be required to pay the reservation fee 2.5% of the purchase price (minimum £4000) and sign an acknowledgement form. All properties will be offered until the end of the auction period unless instructed by the seller to accept an offer prior to this.

Then, once this is sorted, Memorandums of Sale will be issued to the buyer, the buyer’s solicitor, the vendor and the vendor’s solicitor. 

The seller’s solicitor will then issue a draft contract to the buyer’s solicitor. When this is received, the 42 days in which to complete the purchase begins before the purchaser gets their hands on a new property.

Below are some of the advantages of buying a property this way:

• Transparency – all offers are negotiated in the open, nothing is hidden from public view.

• Security – win the bid, pay the fee and the property is secured.

• Speed – complete within 42 days.

• Open market values – the final price is set by the market, not by the agent or vendor.

Are there positives for sellers too? 

Those selling their property through an online auction platform, will benefit from not only lower selling rates, but also an efficient way to achieve a quick and secure sale. Here are some of the key advantages:

• 0% commission – no estate agency fees.

• Best market price achieved – competitive bidding will ensure the best possible price is achieved.

• An undisclosed reserve price – this is set separately to the marketing price so the seller will reach a sale value they’re happy with.

• Funds received quickly – buyer deadline 42 days to complete.

• Reduced fall-through rate – buyers will have undertaken more extensive property checks and committed to a non-refundable reservation fee.

Interested? Curious? I’m happy to answer any questions you may have regarding online auction platforms - email me on: charlie.lancaster@mybid4it.com

*Charlie Lancaster is managing director of MyBid4it

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