What is the Modern Method of Auction?
What is the Modern Method of Auction?
Most things in life are subject to modernisation and upgrade – cars, mobile phones, and computers, for example – and the world of property auctions is no different.
For decades, auction houses worked to a very traditional format: properties were listed in a catalogue, potential purchasers turned up in person on the day, bids were made and if the reserve was met, the gavel would fall and exchange would take place instantly.
Of course, the invention of the internet and later the extraordinary events of COVID led to the greater adoption of online auctions and proxy bidding. In recent years, a new style of property auction has gained in popularity, blending classic elements with contemporary approaches and the flexibility of the open market.
Viewber is increasingly being asked to visit and inspect properties that are being sold in this relatively new way, so now is a great time to answer some of the most commonly asked questions about the Modern Method of Auction.
I’ve heard MMoA described as eBay for properties – is this true?
A. This is a great analogy. MMoA works in a very similar way to eBay, as the buyer can see what’s for sale, the starting price and how long they have to make their bid. Properties sold by MMoA are sold online to the highest bidder.
Is the MMoA known by another name?
A. You may also see a MMoA described as a conditional auction or a secure sale.
Where will I find homes being sold via the MMoA?
You can find properties being sold via the MMoA on an auctioneer’s website, on the leading portals (Rightmove, Zoopla and OnTheMarket) and on estate agents’ websites – the latter if the agent has its own auction department or if they work with an auction partner.
What upfront information do buyers have access to?
A. Potential purchasers will see a home’s full description with photos and a floorplan, an EPC certificate, information on buyers’ fees, MMoA terms and conditions, and details of who is running the auction. Some properties sold using the MMoA will also have a full legal pack to view in advance.
Can anyone make a bid?
A. Usually a potential buyer will have to register with the auctioneer, provide ID, forward details of their solicitor, and share credit card details (where the reservation fee will be charged to) before they can make a bid.
Can I view a property in person?
A. The auctioneer will usually be able to facilitate one-to-one viewings or open house events ahead of the auction. Viewber is the trusted viewing partner of many auctioneers and our network has met 100s of potential buyers at MMoA properties to show them around.
Do I physically have to attend a MMoA?
The MMoA is conducted exclusively online and not ‘in the room’. There is no auction event to attend and no auctioneer at the front wielding a gavel. Instead, potential buyers can bid from the comfort of their own home using the internet and an account they have set up with the auctioneer.
How long is the bidding process open for?
The auctioneer and the seller will agree to how long the bidding process lasts. This could be days or even weeks, giving buyers time to mull over the decision and visit the property before they bid. This is in stark contrast to traditional auctions, where purchasers have to decide on the spot whether to bid or increase their offer.
Bidding using MMoA usually spikes in the last hours before the auction closes. We are, however, seeing some MMoAs create a more level playing field by ensuring there are 2 clear minutes with no bids before the auction ends, with bids made in the final seconds discounted.
Can I bid by proxy?
The MMoA auction style lends itself to proxy bidding. It is typically possible to make automatic, incremental and maximum bids in advance – ideal if you can’t tune in to the final hours/minutes of a MMoA event.
Does the MMoA allow for a reserve price?
A. Yes. Sellers can work with the auctioneer to set a reserve price. This is the minimum value the property should be sold for. If the highest bid doesn’t reach the reserve, the property will be withdrawn from sale.
Can you also set a guide price with MMoA?
Yes, the guide price is what will appear on the property listing and all advertising materials.
Do you still exchange on the day with MMoA?
A. No. The MMoA allows the buyer to exchange, usually 28 days after the price is agreed at the auction and complete at a later date, typically another 28 days after exchange. This clearly differs from a standard auction, where the property usually exchanges on the fall of the gavel. Think of the end of an MMoA as the property going under offer.
Is the completion date fixed?
No, as the MMoA allows the buyer and the seller to be flexible when it comes to completion. This is in contrast to a traditional auction, where there is a rigid completion date.
Can I use a mortgage to buy at a MMoA?
A. Yes. MMoAs are conditional – the condition being the buyer has more time to secure a mortgage after the auction concludes. Traditional auctions are unconditional – meaning completion and the transfer of purchase funds follows in a matter of days – a tight timeframe that prevents most buyers from obtaining a mortgage. When it comes to a deposit, both traditional and MMoA will require a 10% deposit to be paid upon exchange.
What fees does the buyer pay at a MMoA?
The MMoA turns who pays for a property sale on its head. The buyer who makes the successful bid has to pay a non-refundable reservation fee to secure the property (usually around 5% of the final sales price). This fee has been introduced to reduce the chances of the purchaser walking away from the transaction after the auction, although this payment does not make the sale legally binding.
After the buyer pays their reservation fee (automatically taken from their credit card), the property will be marked Sold STC or Under Offer. If anything arises between the auction closing and exchange that means the sale can’t go ahead, the buyer will lose their non-refundable fee.
What fees does the seller pay at a MMoA?
Traditional auctions and estate agents will charge the seller a fee to list and advertise their property. When using the MMoA, the seller usually has zero fees to pay. It’s worth noting that some MMoA have started charging sellers an ‘auction entry fee’, or they have a ‘split fees’ policy, where the buyer and seller share the cost.
Are you a potential buyer?
Viewber can undertake a property visit on your behalf. We can take photos and videos, live stream from the property and create a comprehensive condition report, all saving you from travelling to visit uncessarily.
Are you an auctioneer?
Join dozens of the best known auctioneers who already partner with Viewber for a hassle-free approach to pre-auction administration, viewings, open houses, property listing packs with 360 tour and key management.
Viewber has a network of over 3000 viewers nationally, available to book seven days a week, including evenings, weekends, and Bank Holidays. Contact Viewber to register an account
What is the Modern Method of Auction?
