Many sellers are unsure of how modern auctioneers charge for their services. This can be different from how estate agents operate.
Modern methods of auctions claim they are free, so are they really free & is it worth it?
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Modern Method of Auction Fee Structures
The fee structure will depend on the auction house service you use:
- Buyer Pays
Some auctioneers only charge the buyer a fee, often called a ‘reservation fee.’ Though this may look like a good deal for the seller, buyers may factor this cost into their purchase price.
If a property is priced incorrectly, buyers may be put off from submitting bids.
Buyers will need to pay stamp duty on the net purchase price, which is the cost of the property plus the reservation fee. This extra expense may be off-putting. This is because the buyer’s premium is added to the purchase for stamp duty consideration.
- Seller Pays
This fee structure is inherited from the traditional estate agency model. With this, the vendor pays the fee, and buyers only need to pay for the property itself, legal costs and stamp duty (based on the property price).
Most modern methods of property auctioneers avoid using this fee structure, as it eliminates the financial commitment of the buyer.
- Buyer and Seller Pays
Under this structure, the buyer and the seller are both charged individual fees. The buyer pays at the close of the auction, and the seller pays upon completion.
This creates an even playing field, which is why many modern auctioneers are likely to use this fee structure in the future.
Are Modern Method of Auction Fees Worth It for Sellers?
- Solicitors Draft Legal Contracts and Undertake Conveyancing Work Before Selling – The security offered at a modern auction is supported by the legal work before the event. This ensures that all necessary steps have been taken to make the sale as secure as possible.
- More Work Required Compared to a Standard Estate Agency Sale (With Shorter Timeframes for Viewings, Handling Prospective Buyer Enquiries and Preparing for Auction) – The auctioneer is often required to significantly increase the amount of work they must do, as well as collaborate with conveyancers to guarantee the legal pack is delivered on time.
- Modern Online Auctions Need a Responsive Sales Team to Manage the Sale Property –Auctioneers must be extra vigilant when managing the sales process. Buyer inquiries should be responded to promptly, as auctions are usually held on a strict timeline.
- Potential Buyers Are Checked Before the Competitive Bidding Process – Every potential buyer needs to go through a full vetting process before the auction. This includes verifying their identity, conducting anti-money laundering (AML) checks, and confirming they have the necessary funds.
- Detailed Anti-Fraud Checks Before the Auction Online auctioneers have additional legal and financial responsibilities associated with managing a secure online platform. It is essential, for instance, to have cyber-security and anti-fraud measures in place. As a result, the seller is more protected.
- Marketing Modern Auction Properties Can Often Cost More- Subscriptions to property advertising portals, such as Rightmove, Zoopla and Prime Location, can be costly. The auction house must ensure that the bidding process runs smoothly and that any questions from both buyers and sellers are answered.
- Post-Sale Processes Are Fully Handled by the Auction House (Ranging from Taking the Deposit on Exchange Through to Completion) – After the auction, the modern auctioneer must draft a sales memorandum and send it to the conveyancers. It is also essential that they ensure that everything is moving in the right direction so that all legally-binding deadlines are met.
Are Modern Method of Auction Fees Worth It for Buyers?
Many buyers may be unhappy about having to pay auction fees and the extra Stamp Duty, but it is worth noting the following:
- Modern properties are usually competitively priced.
- The properties we sell often have great potential for capital growth.
- Much of the fee is tax-deductible.
- Auctioneers’ buyer fees are way higher than what professional property sourcers charge.
- The fee can result in buyer’s remorse, resulting in the sale collapsing.
- Auctions aren’t fast, as the buyer has up to 56 days to complete after the end. You will need to allow 28 days of marketing prior to the auction. Would you rather sell in 10 days, have £1,500 paid towards your legal fees and be in control of your sale?
We Offer a Real Alternative To Modern Method Of Auction
Are you looking to sell your home? We’re here to help 24/7!
Our Property Saviour team is always available and happy to answer any questions you may have.
Please don’t hesitate to reach out. We look forward to hearing from you.
Property Saviour Price Promise
- The price we’ll offer is the price that you will receive with no hidden deductions.
- Be careful with ‘cash buyers’ who require a valuation needed for a mortgage or bridging loan.
- These valuations or surveys result in delays and price reductions later on.
- We are cash buyers. There are no surveys.
- We always provide proof of funds with every formal offer issued.
We'll Pay £1,500 Towards Your Legal Fees
- No long exclusivity agreement to sign because we are the buyers.
- You are welcome to use your own solicitor.
- If you don’t have one, we can ask our solicitors for recommendations.
- We share our solicitor’s details and issue a Memorandum of Sale.
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- Our approach is transparent and ethical, which is why sellers trust us.
- 100% Discretion guaranteed.
- If you have another buyer, you can put us in a contracts race to see who completes first.
- Complete in 10 days or at a timescale that works for you. You are in control.
