Property auctions are no longer limited to the traditional auction room. Today, buyers and sellers can choose from a range of auction formats, each with its own legal structure, timescales and risks.
Understanding the type of auction being used is essential, as the legal implications — particularly around when contracts become binding — can differ significantly. This guide outlines the main types of property auctions commonly used in England and Wales.
Traditional (unconditional) property auctions
How they work
Traditional auctions, often held in a physical auction room or live‑streamed online, operate on an unconditional basis.
- Properties are offered with a guide price
- Bidding takes place on a set auction date
- When the hammer falls, contracts are exchanged immediately
The buyer is required to:
- Pay a 10% deposit on the day
- Complete the purchase within a fixed period, usually 20–28 days
Legal position
This is the most legally binding form of auction sale. There is:
- No cooling‑off period
- No opportunity to renegotiate after the auction
- An obligation to complete regardless of any issues discovered later
Because of this, pre‑auction legal due diligence is critical.
Online property auctions
How they work
Online auctions operate in a similar way to traditional auctions but take place entirely online. Bidding typically occurs over:
- A fixed bidding window (e.g. 24–72 hours)
- A countdown timer that resets if bids are placed near the end
Online auctions may be:
- Unconditional, like traditional auctions
- Conditional, depending on the auctioneer and method used
Legal position
The legal effect depends on the auction terms:
- In unconditional online auctions, contracts are binding when the auction ends
- In conditional auctions, the winning bid may only reserve the property
Buyers must always check:
- Whether exchange occurs immediately
- What fees are payable
- The completion deadline
Modern method of auction (conditional auction)
How they work
The Modern Method of Auction (often abbreviated to “MMOA”) is increasingly used by estate agents and online platforms.
Under this method:
- The winning bidder pays a reservation fee (often 4–5% plus VAT)
- The fee reserves the property for a set period, typically 28 days
- Exchange of contracts usually takes place within that period
- Completion then follows, often within a further 28 days
Legal position
Unlike traditional auctions:
- The contract is not legally binding at the fall of the hammer
- The buyer has time to carry out legal checks and arrange finance
- However, the reservation fee is usually non‑refundable
This fee is paid in addition to the purchase price and can represent a significant cost if the transaction does not proceed.
Informal or “tender‑style” auctions
How they work
Some auctioneers operate informal auction or “best and final offer” processes, often online.
- Interested buyers submit bids by a deadline
- The seller selects a preferred bidder
- Contracts are exchanged later in the usual way
This method resembles a private treaty sale but is marketed as an auction to encourage competitive bidding.
Legal position
- No binding contract exists until exchange
- The seller may withdraw or change their mind
While less risky legally, this method offers less certainty for buyers.
Sealed bid auctions
How they work
In sealed bid auctions:
- Buyers submit confidential bids by a set date
- Bids are not disclosed to other bidders
- The seller chooses which bid to accept
Legal position
Acceptance of a sealed bid does not usually create a binding contract. Exchange still takes place through solicitors in the usual way.
However, buyers should be aware that:
- They may be asked to exchange quickly
- Legal preparation should still be carried out in advance
The importance of legal advice
Each auction format carries its own benefits and risks and understanding these is essential. Getting a solicitor involved early in the process can ensure that you receive:
- clear advice on whether the auction is conditional or unconditional,
- a thorough review of the legal pack,
- guidance on associated fees, risks and timescales,
- confirmation of the exact point at which you will become legally committed to the purchase.
Without this guidance, buyers risk unexpected liabilities, delays or financial loss arising from obligations they did not fully appreciate before placing a bid.
Conclusion
Property auctions offer a range of buying methods to suit different circumstances, from fast‑paced traditional auctions to more flexible modern methods. However, the legal implications vary significantly depending on the auction type.
Understanding how and when a contract becomes binding and seeking legal advice early is essential to making an informed and confident decision.
