LetsBid Property, a company operating the controversial Modern Method of Auction, say they are trying to improve the sector’s image.
Modern Method of Auction (MMA) works like an auction on eBay, where buyers can bid on property online from anywhere in the world. 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.
This method is becoming increasingly popular as a more buyer friendly option. The firm iamproperty report selling 16,500 properties in a decade through these MMAs. Despite this, the sector has been criticised by the consumer group HomeOwners’ Alliance because of an alleged lack of transparency over the non-refundable reservation fees paid by purchasers.
These fees can cost £5,000 plus VAT, or around five per cent of the agreed purchase price. The Property Ombudsman tightened its membership criteria this June, to ensure that agents disclose all referral fees. Agents now must explain the pros and cons of their recommended method of transaction at market appraisal stage. But LetsBid Property is attempting to combat the negative image.
Property Director of LetsBid, Milton Rodosthenous has said:
“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.
“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.”
LetsBid say that MMA cuts transaction times and fall-throughs, provides more certainty to movers, and creates additional revenue opportunities for estate agents in a challenging market. LetsBid have over 100 agents registered which have sold so far over £30m via this site.
As a conveyancer, are you for or against the Modern Method of Auction?
