Podcast Summary
Modern method of auction: Not a traditional auction: The modern method of auction involves bidding on a property, but it's subject to contract and can take several weeks to complete, with risks of buyers pulling out and agents charging holding fees.
The modern method of auction is not a traditional auction, despite its name. While it involves bidding on a property during a set period, the key differences lie in the fact that the sale is subject to contract and the buyer's solicitor exchanges contracts with the seller's solicitor once the highest bid is accepted. This process can take several weeks, and during this time, buyers may pull out, leading to gazumping. Additionally, agents may charge holding fees for managing the sale. So, while the modern method of auction can lead to a quick sale, it also comes with risks and additional costs. It's essential for buyers to be aware of these factors before deciding to participate in a modern method auction.
Modern Method of Auction vs Traditional Auction: Modern method of auction offers buyers perceived simplicity and potential mortgage flexibility, but primary benefits are for vendors and agents, including reduced or no agent fees and potential mortgage sales.
The modern method of auction, also known as a conditional auction, offers some differences compared to a traditional auction. At the end of a traditional auction, the hammer falls and the buyer is committed to purchasing the property with a deposit payable immediately and a strict completion deadline. In contrast, a modern method auction allows the buyer to put down a reservation fee and have a set period to exchange contracts and complete the purchase. This method can be marketed as more straightforward for buyers due to the strict time frame leading to a definitive sale. However, the primary benefits seem to be for the vendor and the agent, who may not have to pay any or only a small fee to the agent, as the buyer covers the cost instead. This flexibility can potentially allow vendors to sell with a mortgage, unlike in a traditional auction. Overall, while the modern method of auction may seem beneficial for buyers due to its perceived simplicity and potential mortgage flexibility, the primary advantages appear to be for the vendor and the agent.
Modern estate agency trend: Buyers pay agent fees: Agents benefit from higher fees and potentially less work with buyers paying, but it's a cost for homebuyers. Suburban areas with strong rental demand challenge traditional views on hotspots.
The modern method of estate agency, where the buyer pays the agent's fee, is becoming more popular due to its benefits for agents. Agents can charge higher fees and potentially do less work, making it an attractive option for them. This trend is particularly noticeable for cheaper properties where the agent's fee would be relatively low. While this method may not be ideal for buyers, as they end up bearing the fee, it's essential to be aware of it when house hunting. Regarding your second question, it seems you've been analyzing rental demand using Rightmove and have noticed that some suburban areas, which aren't typically considered fundamental hotspots, still have strong rental demand. This finding could challenge the conventional wisdom that only specific areas have high rental demand and could be worth further investigation for property investors.
Strong fundamentals in suburbs and rural areas: Suburbs and rural areas with major shopping centers, industrial estates, transport links, and major employers can offer strong rental demand and potential for capital growth
Rental demand is a crucial factor in real estate investment, and it's not limited to city center properties. A good example is the area of Arnold in Nottingham, which may be outside the city center but still boasts strong fundamentals such as major shopping centers, industrial estates, transport links, and major employers. These fundamentals contribute to both rental demand and the potential for capital growth. So, while city center properties may often have good fundamentals, it's essential to remember that rural areas and suburbs can also offer attractive investment opportunities. It's important to conduct thorough research and assessment before making an investment decision, but the presence of strong fundamentals is a promising sign.
Discussing property investment with a focus on renters and homeowners: To succeed in property investment, focus on areas that offer both rental demand and potential for growth, as renters and homeowners prioritize similar factors like transport, employment, and leisure.
Both renters and homeowners look for similar factors when choosing a place to live, including transport, employment, and leisure. However, some areas may cater more to renters or capital growth. To succeed in property investment, it's crucial to identify these fundamentals and focus on areas that offer both rental demand and potential for growth. This week, we had a special episode of Ask Rob and Rob, where we discussed this topic with Steven. Remember, our regular impartial and neutral stance returns next week with two guests and their questions. Stay tuned for the main event on Thursday.
