Going … going … but definitely not gone. Putting a home under the hammer is becoming more and more popular in today’s sticky housing market.
A Post Office Money study recently showed that 44 per cent of conventional sales — called ‘private treaty’ deals — collapse within four weeks of a seller receiving an acceptable offer.
This is because some buyers get cold feet, or find it hard to obtain a mortgage, or are deterred by problems shown up on a survey.
It now takes an average 102 days to sell a home in the UK, whereas doing so in an auction room is usually far quicker.
MMA means a home is photographed and put online with a strict deadline, often 30 days
But, while selling a home through an online auction is entirely free to sellers, there are usually hefty charges for buyers.
A study by consumer group HomeOwners Alliance says many online auctions insist that to secure a property, successful bidders must pay a non-refundable reservation fee that is usually at least 2.5 per cent of the sale price, plus VAT.
So on a £225,000 property a buyer could pay an additional fee of £6,750. If for some reason the buyer doesn’t go through with the purchase, they lose that sum.
To rub salt into the wound, the HomeOwners Alliance says stamp duty must be paid on the reservation fee as well as the overall purchase price.
Online auction firms defend their charges by saying they are upfront and transparent.
Advocates of MMA says only 5 per cent of sales fall through, whereas almost half of ‘private treaty’ transactions collapse.
Auctions are a speedy alternative. But remember, they can come at a price.
What’s it like to buy at auction?
When you’ve never bought anything at auction and suddenly you’re in a packed room with a man standing behind the bar with his hammer, nerves kick in.
Bar? Yes, a proper bar in a pub called The Bell in the pretty village of Ramsbury in Wiltshire.
This was a chance for the whole village to check out who might be moving in, and an opportunity for tradesmen to offer their services.
The lot I was interested in comprised a bungalow on a parcel of land by a stream that feeds the River Kennet, with views across a water meadow.
Local agent Alastair Kidson-Trigg explained that ‘the contract is binding at the fall of the hammer’, and we had already agreed with the seller that if successful, I would have three months (rather than the usual three to four weeks) to come up with the money.
I had my upper limit firmly in my head and beads of sweat on the outside of it. Three people were bidding, one of whom, clearly, was a developer. I played it cool, staying out of it at first. Two of the bidders soon dropped out. Then my index finger shot up.
Back and forth we went, myself and the developer. There were gasps from the audience as the price reached certain peaks. Finally I heard Alastair say: ‘The bid is against you, sir.’ And he wasn’t looking at me.
As the hammer went down and my agony ended, the audience applauded. Before long I was being offered a pint by an architect and then another by a surveyor and a third by a man who specialised in demolition.
By Mark Palmer