Selling a house at auction: traditional vs modern method

Auctions have a reputation for renovation projects and repossessions, but they’re used for all sorts of homes. Their big advantage is certainty: at a traditional auction, once the hammer falls the sale is legally binding. There are two quite different kinds, though, and it matters which one you choose.

Traditional (unconditional) auction

• Contracts are exchanged when the hammer falls — the buyer can’t pull out without losing their deposit.
• The buyer normally pays a 10% deposit on the day.
• Under the RICS Common Auction Conditions, completion is 20 business days later — the origin of the “28 days” often quoted.
• Your solicitor prepares a legal pack before the auction, so buyers can check the title and searches in advance.

Conditional or “modern method” auction

• The hammer doesn’t mean exchange. The winning bidder buys an option to exchange, usually within about four weeks.
• Buyers often pay a non-refundable reservation fee on top of the price.
• Because of that fee, buyers may bid less. The Property Ombudsman has said agents must explain this potential disadvantage to sellers.
• It suits buyers who need a mortgage, so it can widen the pool — but the sale is less certain than a traditional auction.

Reserve and guide prices

The reserve is the minimum price you’ll accept — the auctioneer can’t sell below it, and it can be agreed close to auction day. The guide price is the figure advertised to buyers, and should reflect what you’re likely to accept. Set the reserve from recent sold prices, allowing for condition, rather than hoping for a bidding war.

What it costs

The auctioneer’s commission and any extra charges (marketing, catalogue entry) are set out in your terms of appointment — ask for them in writing, including VAT. You’ll also pay your solicitor for the sale and the legal pack, usually before the auction takes place.

Which homes suit auction?

• Homes that need renovation or can’t be mortgaged.
• Unusual properties that are hard to value.
• Probate and empty properties where a fixed timescale helps.
• Sellers who want a legally binding sale on a known date.

The risks

• It may not sell. If bidding doesn’t reach the reserve, you’re left with costs and no sale.
• The price is set by who turns up on the day.
• You pay for the legal pack upfront, whatever happens.

Compare auction with the other quick routes in our guide to every way to sell fast, and see selling a house as-is if yours needs work.

Preparing for auction

1. Choose an auctioneer and agree the terms in writing, including fees and VAT.
2. Instruct a solicitor to prepare the legal pack: title documents, searches, property information forms and any lease.
3. Agree a guide price and a reserve with the auctioneer.
4. Allow viewings — often block viewings at set times.
5. The auction takes place; if the lot sells, contracts are exchanged (traditional) or the buyer’s exchange period starts (conditional).

Allow several weeks between deciding to use auction and the auction date — the legal pack is usually the longest part.

Room, online and timed auctions

Many auctions now run online, either live-streamed or as timed auctions that close at a set time. The legal position depends on the auction terms, not the format, so check whether a sale is binding on the fall of the hammer or conditional.

If your property doesn’t sell

If bidding doesn’t reach your reserve, the auctioneer may try to negotiate with bidders straight after the auction. Otherwise you can enter a later auction, often at a revised guide, or try another route. You’ll have already paid for the legal pack, but it can usually be reused.

Auction versus a direct sale

Both routes suit homes that need work or have to be sold by a certain date. Auction exposes the property to competitive bidding, so it can achieve more if several buyers want it — but there’s a risk it won’t sell, and you pay for the legal pack and some fees whatever happens. A direct sale gives you a fixed figure before you commit to anything, with no marketing, viewings or auction-day uncertainty, usually at a lower price than a well-attended auction. Getting a figure for both is a sensible way to decide.