Guide to modern method of auction
Released On 12th Jan 2024
The modern method of auction is growing in popularity. It is like an ordinary estate agency sale but with the added control and transparency offered by a traditional auction sale.
The agent is instructed to market the property and it appears online through the usual sites such as Zoopla and Rightmove. The agent deals with contact from perspective buyers and undertakes viewings, but any prospective buyers are then invited to submit their offer online by placing a bid.
The auction runs online and usually for 28 days. The seller sets the reserve price and buyers will bid against each other, much like ebay, with the highest bid at the close of the auction being the winning bid. Bids can be incremental, or a maximum bid placed at the outset and the system will bid on your behalf up to this figure.
The highest bidder on close of the auction is required to pay a deposit. The amount of deposit can vary from agent to agent, so it is advisable to check this with the agent prior to placing a bid as it is usually based on a percentage of the final sale price (subject to a minimum amount).
This deposit does not contribute towards the purchase price of the property and 10% of the purchase price will still be required on exchange of contracts and the balance of the purchase price payable on completion. You will need to factor this in when calculating your highest possible bid.
In a traditional auction on the fall of the hammer exchange of contracts has taken place and a completion date is set, this is usually 28 days from the auction. However, the modern method is slightly different. At the end of the auction the winning bidder has 28 days to exchange contracts and a further 28 days to complete. This gives a buyer more time to finalise mortgage finance and is therefore more appealing to non-cash buyers.
As a result, the modern method of auction makes it more accessible to a wider range of buyers whilst still providing surety for the sellers. The modern method also simplifies some aspects of the traditional property auction.
For more information contact Nicola Pugsley FCILEx in the Residential Property Team on 01308 801112 or nicola.pugsley@battens.co.uk
