Modern Method Of Auction Popular With Motivated Vendors
Modern Method of Auction (MMoA) is becoming popular across the UK as a more buyer friendly option, especially with motivated sellers who want to achieve a quick sale.
North East based, iamsold is aiming to revolutionise the way properties are bought and sold across the UK, boasting over 16,500 residential property transactions since it launched.
Founders, Ben Ridgway and Jamie Cooke set up the business over a decade ago to deal with the inherent problems of the UK property market due to its unreliable, opaque and slow-moving nature.
Determined to improve the process for the industry as a whole, MMoA was borne to address these failings and was designed to provide an alternative for vendors that need to sell and complete a property sale quickly due to changing life circumstances such as death, debt and divorce.
However, this system has been put under the spotlight recently and has been criticised due to alleged lack of transparency over the fees.
In a Q&A, founders of iamsold explain how the MMoA system works, how the new method assists with selling properties, the impact on conveyancers, and the transparency claims issue.
How does the Modern Method of Auction (MMoA) work?
The Modern Method of Auction (MMoA) is designed for vendors who need to sell quickly and securely. It offers 3 key benefits:
We outline fixed completion timescales of within 56 days from when the contract is signed following an auction. This means both vendors and buyers are working towards fixed timeframes, allowing them to proceed confidently with all other aspects of moving.
Properties sold through iamsold have a completion rate of 95%, compared to the current 70% rate of private treaty sales. Our fee structure ensures commitment from the buying party, which in turn boosts the completion rate for properties sold. Furthermore, for the buyer, this structure removes the fear of gazumping – one of the biggest issues associated with Private Treaty.
The auction process is transparent for both the vendor and buyer. We provide a detailed Auction Pack in advance so that buyers can proceed with confidence. All parties have full clarity at all times through a transparent bidding process.
How does MMoA differ from a traditional auction?
In a traditional auction, which we also offer, contracts are exchanged immediately, and completion is usually within 28 days. A 10% deposit is also usually paid immediately.
With MMoA the timescales are extended with exchange and completion taking place within a fixed 56-day timescale. With the buyer paying a non-refundable Reservation Fee or deposit within 2 hours of the auction closing.
This opens up auction as an accessible route as the MMoA can accommodate residential sellers and buyers looking for the time to arrange mortgage/finances and complete any due diligence, whilst still offering significantly less chance of the sale falling through in the lead up to exchange of contracts as the buyer is financially committed and reserved the property. This provides reassurance to both the buyer and seller.
80% of iamsold MMoA transactions are online vs. in a live auction event, which again opens up the method to attract a higher volume of potential buyers who can bid online 24/7 from the comfort of their own home.
How will this new online property auction method assist with selling probate properties?
Probate properties represent 30% of our transactions. MMoA isn’t for everyone, it’s designed to work for motivated sellers that have a circumstance which means they are looking to sell and complete a property sale quickly and securely. Probate is such a circumstance and it provides probate sellers the speed, transparency and security they need coupled with an exceptional end to end service team who guide and support the sale process from start to finish.
MMoA grants a much longer completion timescale, how will this impact on conveyancers’ transaction process?
We see the main issue with the traditional auction for a conveyancer is that they are immediately put into a situation where their client has exchanged contracts. This means that they are unable to advise their clients fully and are in a race against time to carry out all necessary due diligence. Further, if there is mortgage involved then this may run the risk of putting the buyer into breach of contract. As such the MMoA allows for these aspects of the conveyancing transaction to flow while still providing the certainty and speed of a traditional auction.
The MMoA system has been criticised in the past due to alleged lack of transparency over fees, how have you combated this issue?
Iamsold is fully transparent and discloses all the fees involved for both parties at every step of the process. We are proactively working to educate the market and consumers on MMoA and to that end recently launched our Best Practice Guide, which promotes a Code of Conduct for providers and Agents offering the MMoA and has its roots in transparency and full disclosure of information to all parties throughout the process. The guide has been supported by NAEA, TPO and EIG. Industry adoption of MMoA continues to grow and consumer feedback is hugely positive.
What are your future aspirations for MMoA?
For the MMoA to be seen as a viable and widely offered alternative to Private Treaty, for those motivated vendors who need to sell and complete quickly and securely due to life circumstances. For all MMoA providers and Estate Agents to adhere to the Code of Conduct outlined in our Best Practice Guide to ensure consumers get the service and transparency and have a positive experience of buying and selling through MMoA.