HAMMER HOME AN EASY SALE

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.

The advantage for the seller is that a property goes to the auction on a set date and, if its minimum price is reached or exceeded, the buyer pays 10 per cent immediately and the rest within 28 days. The buyer, therefore, has to have their finance sorted and survey done and dusted before they walk into the auction room.

The cost to sellers of going to auction is similar to selling through an estate agent: they pay the auctioneer about 2 per cent of the sale price (or nothing at all if the property doesn’t sell), plus about £500 for a legal pack and entry fee into the auction event.

For the buyer , there’s nothing to pay except the purchase price of the property.

While newbies to auctions may be understandably nervous on the big day most auctions are relatively quiet affairs.

‘So long as you have a steady nerve, have done your homework and then stick rigidly to your budget, you’ll be fine,’ says Andrew Hammond, a buying agent.

‘Auctions used to be only for properties with problems — subsidence, sitting tenants , or wrecks — but now they’re a legitimate route for any seller,’ he says.

if you are going to an old-school auction in person, there are several golden rules to stick to.

initially, do a few dry-runs — go to other property auctions to see what they’re like. Then get to know the auction jargon (such as the guide price, reserve price and sale price, etc). When you have a property in mind, view it and commission a survey. Then sort your mortgage or loan — remember, the highest bidder pays 10 per cent on the spot and the rest soon afterwards — and line up a solicitor to handle conveyancing. on auction day itself, keep a cool head and don’t allow competitive bidding to coax you above your strict budget limit.

HOWEVER, there’s now a new digital way of auctioning a home, called the Modern Method of A uction. it ’ s quickly becoming a major player and, unlike ‘physical’ auctions, many are run by estate agents. However , they involve high charges to buyers, so are not for everyone.

The Modern Method of Auction (MMA) works like this. A home is photographed and put online with a strict deadline — often 30 days — allowing would-be buyers to bid at any time, 24/7, during that period. As with traditional auctions, potential buyers should get a mortgage and conveyancer sorted in advance and are advised to view the property and arrange a survey. The highest bidder after 30 days then typically has a further 56 days to complete the purchase.

‘For sellers, going online opens their property up to buyers from all over the globe and gives them much wider exposure than a traditional sale. it ’ s also usually cheaper,’ claims richard reed, of John Pye Property, an auction company.

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 Home - owners 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.