I have seen a perfect cottage for sale by 'modern method of auction'. I've not heard of this before. Can you explain?
The 'modern method of auction' (MMoA) is designed to help achieve a quick sale and it differs from the normal auction process.
With an MMoA, exchange of contracts and completion must take place within a fixed 56 day period, but with the buyer paying a non-refundable reservation fee within two hours of the auction closing. The reservation fee is substantial, and you must be very sure you are comfortable with losing this non-refundable deposit, if for any reason you decide you don't wish to continue with the purchase. This deposit covers the legal fees and auctioneers fees and this sum is payable over and above the purchase price and must be added to your costings when considering the deal.
The other key issue is that if you and your solicitor do not adhere strictly to the timeline, you will lose the right to buy and will forfeit the non-refundable deposit. Once you have received contracts, your solicitor will have five days in which to raise additional enquiries on the property. If your solicitor has not done this, you will forfeit the deposit and the property will be re-offered. Your solicitor must be very sure to exchange contracts and complete during the 56 day period. This can be tricky as the conveyancing process is sometimes delayed.
The good news is that you wont be 'gazumped' for a clear 56 days. The bad news is that the reservation fee is a very substantial sum and you can lose it if you do not adhere to the timeline or you decide not to continue with the deal.
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