The modern method of auction is a relatively new way of buying and selling property that involves an online auction platform. This method combines the best aspects of traditional auctions with the convenience of online property sales.
Under this method, the seller sets a reserve price, which is the minimum price they are willing to accept for the property. Potential buyers can then place bids, and the auction runs for a set period of time, typically around 30 days. If the reserve price is met or exceeded during the auction, the property is sold to the highest bidder.
One of the benefits of the modern method of auction is that it can be a quicker and more transparent way of buying and selling property than traditional methods. A benefit for the seller is it can also attract a wider pool of potential buyers because the auction process is open to everyone with an internet connection.
However, there are some potential downsides to the modern method of auction. One of the main drawbacks is the high fees that are typically charged by auctioneers. The fees can commonly be as high as 10% of the sale price, which can be significantly higher than the fees charged by estate agents in traditional property sales.
When buying a property through the modern method of auction, it is important to carefully review the legal pack provided by the auctioneer. The legal pack contains important information about the property and the terms of the sale, including any special conditions that may apply. In addition to the fees charged by the auctioneer, the legal pack may also contain information about other costs and obligations that the buyer will be responsible for, such as maintenance charges, service charges, or ground rent. These costs can significantly add to the overall cost of owning the property and should be carefully considered before placing a bid.
Finally, the modern method of auction can also create a sense of urgency that may lead buyers to make impulsive decisions without conducting proper due diligence on the property. It is critically important for buyers to do their research and seek professional advice before placing a bid on a property as exchange of contracts often takes place on the fall of the hammer.