A new online auction service is launching and is looking to tie up with estate agents.
My Auction will not pay a cut to agents, who currently earn a minimum £2,500 from the likes of iamsold.
However, My Auction will hope to tie up deals quickly so that agents get their commissions sooner.
My Auction will not charge sellers anything over and above what they are already paying agents. So, unlike modern method of auction providers, sellers will still pay to get their homes sold.
My Auction will charge buyers, but far less than modern method of auction providers, at 1% plus VAT.
The business will hold weekly online sales, in an attempt to get deals moving quickly, which will be more like traditional ‘ballroom’ sales – albeit without the ballroom – than the modern method.
Director Stuart Collar-Brown said that charges to buyers in online sales are often “extortionate premiums”.
His firm’s costs to buyers compare with a typical 6% fee (including VAT) charged by modern method of auction operators.
He said: “To put this into perspective, if a buyer bought a £250,000 lot through My Auction, it would cost them £3,000 including VAT, with the security of exchanging contracts immediately. They know the property is theirs and the buyer can’t pull out.
“If the same property was bought through another online auction provider, the buyer could have to pay as much as £15,000 including VAT, so it would cost them £12,000 more to buy the same property.
“I don’t think this is fair and it’s one of the main drivers behind creating the business.”
At My Auction’s sales, the winning bidder will pay a 5% non-refundable deposit plus the buyer’s premium of 1% plus VAT – with the minimum fee being £2,000 plus VAT.
The buyer pays the remaining 95% of the purchase price on completion, which is typically 20 days after exchange of contract – which takes place on the fall of the electronic gavel.
Bidders must register with My Auction before the sale and undergo AML checks.
Agents would market the property in the usual way, but would carry out one or two open houses each week in the run-up to the auction. My Auction would also list the property on the Essential Information Group website.
Collar-Brown said he believes his offering is a no-brainer for estate agents, as their fee will be unaffected but the transaction will be quicker and much more certain.
He said that the flaw with the modern method of auction is that sellers lose out: “If a buyer has £10,000 in costs to pay, then they simply take it off the price they would otherwise have paid the seller.”
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