Richard Copus, a leading traditional auctioneer and critic of the ‘modern method’ has publicly put the boot into this increasingly popular way of selling properties.
Copus has published a blog via the website of HomeOwners Alliance that warns agents to be careful that ‘modern method of auctions’ (MMoAs) are the best option for a vendor.
Conditional or MMoA auctions have become popular with vendors because they offer ‘fee-free’ home moving while estate agents are attracted by the generous commissions on offer.
They are also being heavily marketed at the moment. Leading supplier Iamsold last month struck deals with both Zoopla and Rightmove to market MMoA to their agents.
It’s easy to see why they are taking off. Reservation fees paid by successfully bidders are often a minimum of £6,000 and agents can be given up to 50% of this in commission.
“Under the Property Ombudsman Code of Conduct, before taking on a property agents have a duty to advise their clients of the best method of sale and the pitfalls of the one that they recommend,” says Copus (pictured, left).
“Some of the houses on the market through the MMOA are ordinary, mortgageable homes where the homeowner has been attracted to sell this way because there is no fee payable.
“Selling these properties by any form of auction is not normally advisable, unless the seller needs a very quick sale and is not too worried about the price they achieve, and there is a duty to spell this out to the seller at the outset.”
Adam Horton of hybrid estate agency Hortons (pictured), says he worries that too many agents market MMoA both as a zero-percent way to sell and also as a way to increase buyer competition and reduce fall-through rates, but don’t mention that the ‘auction deposit’ is a non-refundable fee.
“My concern is that it’s pitched to agents as a way to increase fees and get deals through, but I’m not convinced vendors realise how the auction pricing works or that they are comprising final sale price in return for speed and certainty,” says Horton.
Horton also claims that buyers who are already £6,000 down before an auction even starts are less likely to bid in the same way as they would at a traditional auction.
Iamsold: Clear, robust and transparent
Jamie Cooke, CEO of Iamsold, says: “MMoA has many benefits for buyers and sellers when it’s the right method of sale for their circumstances – mainly speed and security.
“To support this we developed and released a Best Practice Guide for MMoA in 2019, to help Estate Agents and suppliers alike adhere to industry best practice standards in line with a code of conduct for MMoA transactions.
“We believe that all providers of MMoA should adhere to clear, robust and transparent guidelines so consumers are informed about what MMoA entails and are given a fair and consistent service.
“This year we will be building on our already comprehensive processes and support assets, conducting additional audits as well as enhancing our training on MMoA to our new and existing Partner Agents.
“Best practice is also front and centre in our new innovations and we are introducing functionality in our movebutler platform, due for release in spring, to help agents offer the right advice suited to their vendors’ circumstances, ensuring they understand the advantages and disadvantages of all methods of sale available to them. We’ll always be committed to driving best practice and transparency in this space.”