Modern method of Auction

[SPPLtd]

Hi, I’m a moderately experience BTL investor & interested in anyone’s buying experience of Modern Method of Auction? I’m rather sceptical / early of this process but really interested in a particular property on the market. Should I run a mile or persevere, I don’t want to fall into any traps! 
Thanks I’m advance for advice and experiences…

[Darren McNeill]

Hi SSPltd,

I personally love them but I have a large number of clients who run a mile when they see that they are modern auctions.  From my personal experience I find that these types of sales usually sit on the market far longer than the usual sales, and they rarely ever go to an "online auction."  I just factor in their additional fees into my spreadsheet, so if the house is £80k + £6k fees then I class it as an £86k purchase.  Worth remembering that with the example, you actually have to pay stamp duty on the sale price PLUS the auction house fees, so you would pay SDLT on £86k, not £80k.

I have bought 4 of these and every one has been under market price, even including the fees.  The initial higher cash outlay puts off at least 90% of buyers, so as long as you are happy with the initial cash outlay they usually stack up really well.

One thing I have found is that the legal packs are usually missing something.  As I buy a lot of houses my solicitor always reviews the legal pack for me before I make  firm offer, so it is definitely worth having someone go through the fine detail with you.  You can usually ALWAYS get the purchase time frame extended.  The actual "auction agent" doesnt really care how long it takes, they are getting their money anyway as soon as you put the deposit down.  Sellers solicitors are usually pants as well as they will be these cheap large companies so it will drag on longer than you expect.

Sellers are also tied into fairly LONG contracts with the agents as well, I think its usually 6 months, so if you can find a property that has been on the market for 3-4 months you can usually negotiate well on them.  The auction agents also accept "pre-auction offers," so you can either offer as you would on any other property or you could find out if it is actually "going to auction online" and then bid that way.

Hope this helps.

 

Darren

 

                   www.fmp.group   

       Whatsapp Direct By Clicking Here                     

                       01706 507202

             

[SPPLtd]

Thanks so much for your response Darren. Really helpful.

In fact in this instance there were no buyers fees (odd I thought?) Just a 1% deposit which comes off the purchase price. Unfortunately the property was so ‘hot’ that an offer was accepted within days and I’ve missed out this time. 
But while I have your wisdom, can you advise how / where I can get legal packs looked at for a reasonable price? All my quotes have been upwards of £500 for the pleasure and no reduction in fee if I win the bidding. At that rate I won’t be able to afford to use auctions with the sort of due diligence I’m used to employing? It seems risky to dive in without a pro reading the small print?!

 

Thanks again for taking the time to reply, much appreciated :)) 

[Darren McNeill]

On 1/24/2023 at 6:42 PM, SPPLtd said:

But while I have your wisdom, can you advise how / where I can get legal packs looked at for a reasonable price? All my quotes have been upwards of £500 for the pleasure and no reduction in fee if I win the bidding.

My solicitor does this for me for free as I buy so many through him, and £500 is just a complete pi$$ take as it takes 30 mins to review if that!

If you have decided on a certain area then it may well be worth contacting a few solicitors and explaining that you are looking for properties and that you will use their services if you have an offer accepted.  It may well be worth agreeing an initial price with them to review, and then you get a discount on their services if you then use them for your purchase.  Just negotiate as you would do when buying a house.  You would probably find smaller firms more open to this that the larger ones.

Darren

 

                   www.fmp.group   

       Whatsapp Direct By Clicking Here                     

                       01706 507202