Buyers Premium Required

[Guitars]

I'm seeing more and more listings on Rightmove with "BUYERS PREMIUM REQUIRED". It started of with the just a few but over the past few months I can now find dozens listed with it.

I'm struggling to find out what this actually is. I rang an estate agent but they wouldn't give any details until I first gave them my details. None of these properties are anything I'm interested in but I'm troubled that this practice (what ever it is) seems to be spreading.

Anyone know?

[juvenal]

Stick this one up on the main forum. A 'Buyer's Premium' is an auction room phrase, and is the amount paid by the buyer of a lot in addition to the fall-of-hammer price.

Surely EA's aren't trying to take another slice - in addition to their usual percentage?

Edited to remove misleading percentage figure. See later post.

Edited June 28, 2010 by juvenal

[Mikhail Liebenstein]

Stick this one up on the main forum. A 'Buyer's Premium' is an auction room phrase, and is the amount (10%-20%) paid by the buyer of a lot in addition to the fall-of-hammer price.

Surely EA's aren't trying to take another slice - in addition to their usual percentage?

This would only work in an extremely strong market.

[Pent Up]

I'm seeing more and more listings on Rightmove with "BUYERS PREMIUM REQUIRED". It started of with the just a few but over the past few months I can now find dozens listed with it.

I'm struggling to find out what this actually is. I rang an estate agent but they wouldn't give any details until I first gave them my details. None of these properties are anything I'm interested in but I'm troubled that this practice (what ever it is) seems to be spreading.

Anyone know?

Never seen or heard of it. Can you post a link to one?

[Guest happy?]

I'm seeing more and more listings on Rightmove with "BUYERS PREMIUM REQUIRED". It started of with the just a few but over the past few months I can now find dozens listed with it.

I'm struggling to find out what this actually is. I rang an estate agent but they wouldn't give any details until I first gave them my details. None of these properties are anything I'm interested in but I'm troubled that this practice (what ever it is) seems to be spreading.

Anyone know?

Juvenal's post suggests that these properties are due to be sold at auction.

My only other thought is that this is a long-winded and euphemistic way of suggesting that the property won't secure a full mortgage i.e. it's significantly over-valued and has been previously valued for a mortgage at a lower price than the asking price.

The estate agent rather than say it's over-priced is describing the difference between its value and the asking price as a "buyers' premium".

[Guitars]

Here's a couple of examples:

one

Two

It mostly seems to be ones that have been to be auction before. My best guess was they'd failed to sell at auction but somehow there were still auction fees to be paid. Looking through the list again it's mostly the stuff at the bottom of the market (although still overpriced for the area) I found it mad that they weren't selling so someone was essentially putting a price increase on them.

[Quokka]

Here's a couple of examples:

one

Two

It mostly seems to be ones that have been to be auction before. My best guess was they'd failed to sell at auction but somehow there were still auction fees to be paid. Looking through the list again it's mostly the stuff at the bottom of the market (although still overpriced for the area) I found it mad that they weren't selling so someone was essentially putting a price increase on them.

The properties will be in the next Pattinsons auction. Details of the premium will be on their website. If you are interested in the proporty make an offer direct to the EA, not at auction. They can't charge a premium then.

[SarahBell]

Buyers premium sounds fantastic! I'll have six!

Sounds like a con... but on MSE last week there was someone putting an offer in who has the EA try and make them pay them £50 for it being accepted...

[tim123]

Here's a couple of examples:

one

Two

It mostly seems to be ones that have been to be auction before. My best guess was they'd failed to sell at auction but somehow there were still auction fees to be paid. Looking through the list again it's mostly the stuff at the bottom of the market (although still overpriced for the area) I found it mad that they weren't selling so someone was essentially putting a price increase on them.

I think it means that the Buyer has to pay the some EA fees.

This is quite common with reposession companies.

Though it is odd if you really think that they are overpriced for the local conditions.

tim

[juvenal]

Stick this one up on the main forum. A 'Buyer's Premium' is an auction room phrase, and is the amount (10%-20%) paid by the buyer of a lot in addition to the fall-of-hammer price.

Surely EA's aren't trying to take another slice - in addition to their usual percentage?

I may have misled readers of this thread in my earlier reply. Sorry. 10-20% is a normal buyer's premium at general auction sales - furniture, ceramics, household, s/h vehicles etc.

Apparently sales of houses attract a buyers premium of 1%-2% of hammer price. This is the auction house fee for their marketing/selling efforts. Auctioneers differ in the percentage levied.

Are we looking at a situation here where a house has failed to sell at auction, and the EA involved is now trying to levy a similar fee that the auctioneers would have? In addition to; or instead of their normal fee?

Any further info from anyone?

Edited June 28, 2010 by juvenal

[Guest happy?]

Here's a couple of examples:

one

Two

It mostly seems to be ones that have been to be auction before. My best guess was they'd failed to sell at auction but somehow there were still auction fees to be paid. Looking through the list again it's mostly the stuff at the bottom of the market (although still overpriced for the area) I found it mad that they weren't selling so someone was essentially putting a price increase on them.

Technically this comes under 'trying it on'.

Buyer's premium as stated elsewhere are levied at auction only. An auctioneer covers their costs in both directions i.e. taking a commission from the seller for selling the property and from the buyer as well (known as the buyer's premium).

This is standard auction practice and generally for household items (furniture, knick-knacks etc.) the buyer's premium is circa 15-20% plus VAT (though not all sale items are VATable).

For property auction the buyer's premium is considerably lower (generally 1-2% only) this lower percentage reflects the higher overall cost of the item.

Estate agents make their fee from the seller only - i.e. as a buyer you do not make an additional payment to them (although it will be reflected in the overall cost).

If you buy from an estate agent the type of contract is very different from an auction - auctions are an irrevocable committment to buy and sell. You can't turn around after the winning bid at an auction and say you don't want to buy and the seller can't turn around and say they've changed their mind about selling.

An offer on a house (in England and Wales) can be withdrawn at anytime up to the exchange of contract with no liability on your part.

I can see no good reason why anyone would be paying an estate agent a buyer's premium on a non-auction sale, as a non-auction sale requires no committment on the part of the seller.

Methinks they're taking the piss.

[wizard_of_the_north]

Pattinson's Buyer's Premium is on their 'sell for free' auction stock. vendors don't pay anything but buyer pays a 5% (min £5k+VAT) 'buyer's premium'. it has to be paid whether the deal is done in the auction room or not. but apparently to qualify for sell for free you have to let pattinson's set your reserve price.

[Spark]

Here's a couple of examples:

one

Two

It mostly seems to be ones that have been to be auction before. My best guess was they'd failed to sell at auction but somehow there were still auction fees to be paid. Looking through the list again it's mostly the stuff at the bottom of the market (although still overpriced for the area) I found it mad that they weren't selling so someone was essentially putting a price increase on them.

They seem to be expecting £10K buyers premium on example one, unless the people who made the listing failed GCSE arithmetic.