The Difference between a Traditional Auction and a Modern Auction

Buying a property at auction can be a great way to buy a property quickly and for a great price. However, not all property auctions work in the same way.

There are two methods, the Traditional Auction and the Modern Auction:

A Traditional Auction is where one can bid in person or online, and when the auctioneer’s hammer falls, the highest bidder is then legally bound to complete the purchase.

Main features of a traditional auction:

1. Traditional auctions take place on a set date.
2. When the hammer falls, the buyer and seller immediately exchange contracts.
3. The buyer must pay a deposit (usually 10%) on the day.
4. Completion typically takes place within 28 days or 20 working days.
5. If the buyer pulls out after exchange, they risk losing their deposit and could face further legal consequences.

The traditional auction is ideal for cash buyers, investors, and experienced sellers who want a quick completion.

The Modern Method of Auction is a more recent, online-based approach designed to make auctions more accessible to everyday buyers and sellers.

Main features of the modern method:

1. The bidding process takes place online, often over a month or longer, which gives more buyers a chance to bid.
2. The winning bidder will pay a reservation fee to secure the property for a set period. (please note that Stamp Duty is payable on this fee as well as the purchase price)
3. Exchange of contracts does not take place straight away.
4. Completion usually takes place 56 days after the buyer’s solicitors receive draft contract.
5. There is an opportunity for enquiries to be raised, although within a 5-day period from receiving draft contract.
6. There’s more time for buyers to arrange finance before exchange of contracts.

The modern method would appeal to first-time buyers, or buyers who plan to purchase with a mortgage and need more time to arrange their finance.

In conclusion, both methods of auction offer a quicker and more certain sale or purchase than a typical transaction, however the best method for you depends on your circumstances. If you would prefer speed and certainty, a traditional auction may be the way to go, however if you are looking for a more flexible option which takes a little longer, then a modern auction may be more suitable for you.

At Attwells, our Auction team has experience with both types of auction methods. We can guide you through each step, from reviewing the legal pack to completing the transaction efficiently.