Selling at Auction, Costs, Process and When It Makes Sense

Why Some Sellers Choose Auction

The open market sale process in England and Wales, where neither party is legally committed until exchange of contracts, is inherently uncertain. Sales fall through, chains collapse, and buyers withdraw. Auction removes much of this uncertainty. When the hammer falls, a binding contract is formed immediately. The buyer cannot withdraw without losing their deposit, and completion typically follows within 28 days.

This speed and certainty comes at a cost, both in fees and in the risk that your property sells for less than you hoped. Understanding both sides is essential before committing to an auction strategy.

The Two Main Auction Formats

Traditional (Unconditional) Auction

At a traditional auction, the winning bidder exchanges contracts immediately when the hammer falls. They pay a 10% deposit on the day and complete within, typically, 28 days. If they fail to complete, they lose their deposit and may face further legal action.

This format provides the highest level of certainty. It is favoured for properties where speed of sale is critical.

Modern Method of Auction (Conditional Auction)

The Modern Method of Auction is conducted online over a fixed bidding period. The winning bidder pays a reservation fee (to the auctioneer, not the seller) and enters a period in which they have, typically, 28 days to exchange contracts and a further 28 days to complete.

During this reservation period, the buyer can carry out surveys and finalise their mortgage. If they withdraw before exchange, they lose the reservation fee. If they withdraw after exchange, they lose their deposit.

The Modern Method is less legally binding than traditional auction at the point of the hammer falling, buyers have more time to pull out, but it is more accessible to buyers relying on mortgage finance, which traditional auction typically precludes.

Auction Costs for Sellers

Auction fees vary between houses, but the broad structure is consistent:

• **Entry fee:** A fixed charge to include the property in the catalogue, commonly £300–£600, payable whether the property sells or not
• **Seller's commission:** Typically 2%–3% + VAT of the sale price, charged on a successful sale
• **Legal pack preparation:** You must provide a legal pack (title register, searches, draft contract, office copies) before the auction. Your solicitor will prepare this, budget £500–£1,500 for the work

The buyer pays the auctioneer's buyer's premium separately in most cases, which reduces price sensitivity slightly.

Setting the Guide Price and Reserve

The **guide price** is the indicative price published to attract bidders. The **reserve price** is the minimum price you are willing to accept, kept confidential between you and the auctioneer. The reserve must be set within 10% above the guide price under the Advertising Standards Authority's guidelines on auction property marketing.

If the reserve is not reached, the property is "passed in", unsold, but you remain liable for entry and legal pack fees.

When Auction Makes Sense

Auction is not appropriate for every property or every seller. It tends to work best for:

• Properties requiring significant renovation or in unusual condition
• Probate and repossession properties where certainty is a priority
• Properties with complex title issues, unusual planning history, or restricted use
• Land, development opportunities, or commercial premises
• Sellers with a genuine need to sell quickly

For well-presented, straightforward residential properties in active markets, the open market will typically achieve a higher price. The auction premium for certainty usually comes at the cost of competitive tension.

Before You Instruct an Auctioneer

Research comparable auction results in your area, most auction houses publish past results online. Check the auctioneer's membership of RICS or the National Association of Valuers and Auctioneers (NAVA). Review the full fee schedule, including any marketing or withdrawal fees.

Property Passport UK can provide you with sold price history and EPC data that you can share with your auctioneer to support guide price discussions and ensure the legal pack accurately reflects the property's documented history.