The established selling method that’s getting new attention.
Today’s auctions work for a wider range of vendors than you might expect. In this article, we break down the difference between traditional and modern methods of auction, so that you can pick the strategy that drives the best results for your business.
There are two main types of auction – the Modern Method and the Traditional Method.
Traditional auctions are just that – the established method, taking place in a room with a gavel. Exchange of contracts takes place as soon as the auction ends, and the buyer is also required to pay a 10% deposit at that point.
With completion having to take place within 28 days, it’s the fastest auction method. It also means traditional auctions are only really an option for cash buyers.
In Modern Method of Auction (MMoA), there’s 56 days to complete, from the point of the draft contract being received by the buyer’s solicitors.
Unlike private treaty, with MMoA fees are paid by the buyer, attracting only serious buyers to the property up for auction.
Although not as fast as traditional auctions, MMoA opens auctions up to more buyers, with many taking place virtually. Additionally, the longer completion time (versus traditional auction) gives more scope for the buyer to get a mortgage, while still providing a tight timeframe for secure sales.
Both traditional auctions and MMoA offer improved speed, with a fixed timescale and improved security when compared with private treaty sales.
Auction also gives all parties transparency, as all bids are visible, unlike in private treaty where negotiations take place privately.
The no-sale, no-fee safety net of auctions means your vendors pay nothing if their property doesn’t sell. This also means vendors can draw in a broader pool of buyers motivated to complete the sale.
Source: iamsold, August 2020
Private treaty – that is, a property marketed by an estate agent, with buyers placing offers and negotiations taking place until the seller accepts an offer – presents some challenges.
The process can be slow, and can be prone to fall-throughs due to both buyers and sellers changing their minds.
The relative speed and security of auctions can make them a great choice for today’s selling climate – with many vendors wanting to sell quickly, and low supply of stock being an issue in many areas.
Auction can be an effective solution to many private treaty challenges.
With a 95% completion rate, MMoA in particular can act as a viable, lower fee option for many vendors and buyers.
Offering more choice to your clients through auctions can help your agency stand out – especially in today’s busy, fast-moving market.