MMoA the alternative way of buying and selling?

The Modern Method of Auction, also known as Conditional Auction, offers an alternative to both the conventional way of buying and selling homes and the traditional auction route.

Traditional auctions have a (possibly undeserved) bad press as being seen mainly for sales of lender repossessed properties or low value properties in poor condition. The information provided for prospective purchasers can be limited, the final nature of the auction (once the hammer falls, the buyer cannot back out) and the short period of 28 days from auction to completion means that it tends to appeal only to cash buyers. In turn this tends towards lower priced properties.

Having dealt with several within the last few months, it seems MMoAs are picking up fast.

In a traditional auction a binding contract is created, and the buyer pays a 10% deposit and a Reservation fee when the auction ends. There is usually a 28day period afterwards to complete the purchase. If completion does not take place, the deposit is lost and there may be claims for damages.

In contrast, the MMoA online auction is open for usually 30 days or longer. Properties are advertised on the usual property portals and prospective buyers can make bids in a similar way to an eBay purchase. The successful bidder pays a 5% reservation fee at the end of the auction period. There is a 28 + 28day period for exchange and then completion. This period of 56 days makes the purchase more accessible to buyers needing mortgage finance. If the Buyer decides to pull out the 5% fee is lost, but if the Seller changes their mind or there is a fault with the property, the 5% is refunded to the Buyer.

Compared with a conventional sale, for the Seller there is a high likelihood of a sale through the MMoA route and less chance of a Buyer pulling out. The process is also relatively speedy. For the Buyer, the fact that during the 28day reservation period the Seller cannot sell to someone else is a good security and allows time to check the Auction Pack and organise finance.

It must be underlined that you should get the Auction Pack checked by a professional and have the property surveyed before committing to a purchase, whether by the conventional route, a traditional auction or an MMoA.

To speak to a member of our conveyancing team, please contact 01689 887887.