I Am Sold Online Auction - How is it different to normal auctions
20/02/2018
1,226
7 min read
I Am Sold online auction house takes a very modern approach to auctioning properties. Estate agents can sell properties via the I Am Sold online auction website which adopts a different approach to the standard auction house. Buyers can only bid in an online auction if they register with I Am Sold and attend the property to inspect it. After this buyers can bid in an eBay-like fashion where they can see their bids and those of other buyers, with the buyer bidding the highest winning the auction after a set period of time.
How is an I Am Sold Online Auction Different?
Under normal auction purchases buyers bid either physically in a room or via a phone and the auction is conducted by an auctioneer. The auction lasts for as long as the bids keep coming in and the winning bidder has to pay a 10% deposit on the day of the auction. Read more about buying at auction
With I Am Sold the auction is run online for a set period of time during which buyers can bid and see other buyer's bids. After the set period ends the auction closes and the winning bidder has the option to buy the property - although under the current terms they can still pull out until the buyer signs and returns his Purchase & Reservation form and pays the Reservation fee.
What is the I Am Sold Auction Process?
- Find an auction property through I Am Sold or another property portal (listed as a property for sale through I Am Sold)
- Register as a buyer through I Am Sold's website
- Attend the property to inspect it (a requirement before you can bid)
- Bid on the property through the I Am Sold online auction (if you wish to do so)
- Win the online bid
- Sign and return your Reservation form and pay your reservation fee
- Start the conveyancing process (we explain what happens after this below)
This new approach to online auctions is different because the winning bidder isn't bound to buy the property upon winning like in a normal auction. What actually happens is the seller grants the buyer an exclusive period of time "to use all reasonable endeavours to proceed to a formal exchange of contracts within the Reservation Period (normally 28 days after the contracts are received by the buyer's solicitors". If a buyer fails to exchange during this period of time then the seller "has the absolute right to re-offer the Property for sale free of any obligation to the Buyer. In this event the Reservation Fee is deemed non-refundable as detailed above".
Get a Pre-Auction Legal Report
Limit the risk of buying a property with a legal defect and get a legal advisor to review all of the legal documents provided by the seller prior to making a bid
- Reports returned in 2 to 3 days (subject to availability)
- Competitive prices
- Completed by Solicitors
Report based on information provided by the seller through the Auction House - Created by Solicitors
What happens when you win an I Am Sold Auction?
The winning bidder is sent a Reservation and Purchase Form which needs to be signed and returned to I Am Sold along with the payment for the Reservation Fee. The reservation fee is "not refundable to the Buyer unless the Seller withdraws from the sale during the Reservation Period. In all other circumstances the Buyer agrees that the Reservation Fee shall not be repaid to the Buyer".
Can you pull out after winning an online auction?
You'll need to review the terms of the online auction, however in some cases you can pull out after winning the auction. Under the current terms of I Am Sold winning bidders can pull out after winning an online auction and not incur any costs as long as they don't sign and return their Purchase and Reservation Form and don't pay their Reservation Fee (payable to I Am Sold - the 'Auctioneer').
If the buyer has returned the Purchase and Reservation Form, the terms state: "The Buyer agrees that if contracts for the purchase of the Property have not been legally and unconditionally exchanged within the Reservation Period the Seller has the absolute right to re-offer the Property for sale free of any obligation to the Buyer. In this event the Reservation Fee is deemed non-refundable".
Is the Reservation Fee deductible from the winning bid?
No and this can be confusing. With most reservation deposits, especially on new build purchases, the reservation deposit is deducted from the purchase price. Similarly with normal auction purchases the deposit paid when you win is deducted from the final purchase price - although there are also auction fees to pay on top. Regarding the I Am Sold Reservation Fee the terms state "Fees paid to the Auctioneer may be considered as part of the chargeable consideration for the property and be included in the calculation for stamp duty liability. Further clarification on this must be sought from your legal representative".
HMRC states:
Stamp Duty Land Tax (SDLT) is generally payable on the total amount given (either directly or indirectly) for the purchase or transfer of land or property (‘property’) in the England, Wales and Northern Ireland by the purchaser or someone connected with him. This amount is referred to as the chargeable consideration.
In some property transactions the buyer is charged a fee in addition to the purchase price. In HMRC’s view, if this fee is in reality given for the property then it must be included in the amount of chargeable consideration. It is an indication that the fee is chargeable consideration if:
- it is a condition of the contract that the fee is paid; and/or
- completion of the property transaction is conditional upon the fee being paid.
Similarly, if the fee is only payable once the property transaction goes ahead, then this is also an indication that it should be included as chargeable consideration."
Is the I Am Sold Auction Pro Buyer or Seller?
The general idea of this auction is for buyers to bid against other buyers to win the opportunity to buy the property from the seller under a grant of exclusivity. There are contractual requirements that the buyer has to adhere to:
- Immediately instruct a solicitor - although no time frame is stated, it is expected and could raise a question of what is classed as 'immediate'.
- Within 5 days of winning the auction - the buyer must have paid for a mortgage application and mortgage valuation and keep I Am Sold and the Seller's Solicitor advised of the mortgage progress.
- Within 5 days of receiving contracts the buyer's solicitor must have raised legal enquiries - the Reservation contract goes on further to state "If this has not been undertaken the Seller reserves the absolute right to re-offer the Property for sale free of any obligation to the Buyer. In this event the Reservation Fee is deemed non-refundable.".
- Get to exchange within 28 working days.
It would be very hard for a buyer to be meet with the requirements of I Am Sold, especially in relation to organising a mortgage valuation within 5 working days. The best advice would be to have your mortgage application and solicitor in place prior to bidding so that you are ready to go as soon as you have a winning bid.
Can the seller grant an extension to the exclusivity period?
The buyer has 28 days to get to exchange using all reasonable endeavours. The buyer can ask the seller to extend however the seller is not obliged to do so.
Do you need auction solicitors?
We have a team of auction specialists solicitors who can help with either a pre-auction legal report or with handling the conveyancing work post winning at auction. You can get a quote by calling 0207 112 5388 or you can get an online auction quote by clicking here.
FREE Online Conveyancing Process for Buyers
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