Traditional vs modern method of auction
There are two main auction routes in the UK, and understanding which applies before you bid is essential. Under the traditional (unconditional) method, the sale becomes legally binding the instant the hammer falls. You pay a 10% deposit on the day and must complete within 28 days. This is the classic auction format used by long-established houses such as Allsop, Savills and SDL Auctions. It suits cash buyers and those who have their finance fully arranged in advance.
Under the modern method of auction (conditional), the process is slower and more forgiving. You pay a non-refundable reservation fee, typically 3 to 5% of the purchase price plus VAT, and then have up to 28 days to exchange contracts and a further 28 days to complete. This gives mortgage buyers more time to arrange their lending, but the reservation fee is additional to the purchase price and is not deducted from it, which significantly increases your upfront outlay.
Online-only auctions follow the same split: some are unconditional with a 28-day deadline, others use the modern method. Always read the special conditions of sale before registering to bid so you know exactly which route applies to each lot.
How auction buying works step by step
1. Find the property and legal pack
Review the auction catalogue, shortlist lots that interest you, and request the legal pack for each. Legal packs are usually available on the auctioneer's website and are free to download.
2. Review the legal pack
Have a solicitor check the title, special conditions of sale, any existing tenancies and the searches. Problems found here are your responsibility after the hammer falls, not grounds to pull out.
3. Survey and inspect
Attend the block viewing, take a builder or chartered surveyor if possible, and commission a survey on any lot where you are serious. Repair costs must factor into your maximum bid.
4. Arrange your finance
Confirm your mortgage offer, bridging facility or cash position before auction day. For traditional auctions, funds must be available to complete within 28 days.
5. Set your maximum bid and stick to it
Calculate your ceiling including all fees, stamp duty, survey and refurbishment costs. Write it down and do not exceed it in the heat of bidding.
6. Bid, win and pay the deposit
If you win, the sale is legally binding immediately. Pay the 10% deposit by cheque or bank transfer on the day. Under the modern method, pay the reservation fee instead.
7. Complete within the deadline
Instruct your solicitor to proceed immediately. Pay the balance and complete, usually within 28 days for traditional auctions.
Full costs to budget for at auction
Auction costs go well beyond the hammer price. Plan for all of these before you bid.
| Cost | When due | Typical amount |
|---|---|---|
| Deposit | On auction day | 10% of the hammer price |
| Balance of purchase price | At completion | Remaining 90% |
| Stamp duty (SDLT/LBTT/LTT) | Within 14 days of completion | Based on price, nation and buyer type |
| Conveyancing fees | Around completion | £900 to £1,800 |
| Survey (pre-bid) | Before auction day | £400 to £1,500 depending on type |
| Auctioneer's buyer's fee | On the day or at completion | £1,000 to £5,000 or 1 to 2.5% of price |
| Modern method reservation fee | On the day (non-refundable) | 3 to 5% of price plus VAT |
| Bridging finance arrangement fee | On drawdown | 1 to 2% of the loan amount |
| Refurbishment (where needed) | After completion | Varies widely; factor in before bidding |
The reservation fee under the modern method is on top of the purchase price and is not refundable if you fail to complete.
Financing an auction purchase
Finance is the biggest practical obstacle for buyers new to auction. The 28-day completion window under the traditional method is too tight for most standard mortgage processes, which typically take six to twelve weeks from application to offer. If you intend to bid at a traditional auction using a mortgage, you need a full mortgage offer already in place, not just an agreement in principle.
Many experienced auction buyers use bridging finance instead. A bridging loan can be arranged in as little as five to ten working days, giving you the speed to complete on time. Once you own the property and have carried out any works required, you remortgage onto a standard residential or buy-to-let product. Bridging is more expensive, typically 0.8 to 1.5% per month, so factor those costs carefully into your return.
Cash buyers face no such constraints and hold a significant competitive advantage at traditional auctions. If you are buying with cash, have proof of funds ready to show the auctioneer on registration.
Bidding is legally binding
Once the hammer falls (or you win an online lot under the traditional method), you are committed to purchase. If you cannot complete, you forfeit your deposit and the seller can pursue you for any further losses, including the cost of reselling at a lower price. Arrange all checks and finance before you bid, not after.