A proptech platform which provides modern method of auction (MMoA) services to estate agents says the method of sale is “ultimately about trust”.
Bamboo Proptech provides the technology behind Alto Auctions, a live auction system used by 6,000 UK estate agents. There have been growing calls for transparency surrounding the fee structure and incentives for estate agents placing homes for sale via the MMoA process, with a disproportionate number of complaints received by the Property Ombudsman and conveyancers and traditional auction houses calling for clarity around the language used to promote the sales and the information provided to buyers and sellers.
Responding to questions from Today’s Conveyancer, a spokesperson for Bamboo Proptech said MMoA – which the company refers to as a conditional auction – is “ultimately about trust” in the method of sale, the provider and the process.
The MMoA process is conducted online, with potential buyers placing bids on a property over a period of around 30 days. The ‘winning’ bidder pays a non-refundable reservation fee, usually 5% of the purchase price, in addition to the sale price of the property. The transaction then has a fixed timeframe for completion, usually 56 days.
Critics of the system have said it’s no more than “the right to try to buy” a property. But Bamboo Proptech says there are safeguards built into the process, including the possibility to extend the completion deadline.
“Agents, in consultation with their vendors, can extend the 20 working day reservation period, ie the period between the end of the auction and the default deadline to exchange”, the spokesperson explained. “The 20 working day period to completion can also be amended as part of the exchange process.”
The ‘non-refundable’ reservation fee can also be refunded in some circumstances, Bamboo Proptech added.
“If the property is unmortgageable and the buyer can provide evidence of this, then their reservation fee is refunded.
“There are also other extenuating circumstances where reservation fees are refunded. Time alone is not a reason to refund, but we manage this by encouraging all sellers to make sure that draft contracts are available as part of the legal pack.
“Where there are problems with title, etc, then these should be disclosed in advance so that buyers can make fully informed decisions before bidding.”
One of the criticisms levelled at the process is that buyers can be penalised and lose their deposit if the seller doesn’t provide the information necessary for completion.
“Sellers not providing documents is not a reason for refund”, Bamboo Proptech said. But, the company added, “sellers are again encouraged to provide full legal packs, so that buyers have as much information as possible”.
The information sellers are obliged to provide before listing their home includes information that would form part of a “usual legal pack”, the spokesperson explained, including “title documents, leases, tenancy schedules, searches (or no search indemnity insurance), special conditions of sale or draft contracts for sale.”
They added: “Bidders are provided with standard terms and conditions, legal pack access, details about all fees involved in a fully transparent way.
“Bidders have to have completed a biometric ID check, input their payment details and input their solicitor details before they can bid.”
If the seller pulls out of the purchase, it is possible for the buyer the receive a refund of the reservation fee – although Bamboo Proptech says “this happens in very rare circumstances”.
“When it does happen, it’s usually for very good reason and so we do try and be commercial about it to ensure that buyers and sellers are treated fairly”, the spokesperson explained.
“Ultimately it’s about trust. Trust in the method of sale, trust in the provider and trust in the process.”
