The popularity of property auctions has seen a considerable rise in recent years, with house hunters, investors and sellers alike all attracted by the speed, ease and security that auctions offer.  Much of this can be accredited to the new technology online property auctioneers such as TCPA can offer and it’s fair to say that the majority of property industry insiders feel that the growing property auctions industry is only going to get bigger.

So, if you have a property to sell and are considering going down the auction route, what are the differences between traditional auction and modern method of auction, and most importantly, which better suits you?

What are the differences between the two types of auction?

Speed – In terms of speed, the traditional method of auction indicates your property or land will be auctioned to bidders with the winning bidder completing the purchase within just 28 days later.

The modern method of auction is different. Once a bid has been accepted the buyer has 28 days to exchange contracts on the property and a further 28 days to complete the purchase. It is very important that sellers understand that the exchange of contracts (the legally binding agreement of sale) is not immediate as it is with the traditional method of auction meaning the timeline is increased,  in fact it doubles the timeline to 56 days and there is no guarantee of completion.

Security – Many people turn to auction after experiencing the fall through of a sale or in some cases even numerous sales falling through. Any seller that has been in this situation knows the journey can be long and extremely stressful.

The traditional method of auction states that once the auction ends and online gavel falls contracts are exchanged and the sale is legally binding meaning that, neither the buyer nor the seller can pull out, therefore the risk of a sale falling through is eliminated. If there are breaches post exchange of contract, liable party will undertake serious financial penalties, however for this reason such situations are extremely rare.

When utilising the modern method of auction, once a bid has been accepted the buyer still has 28 days to exchange. Although the buyer may have paid a reservation fee to the agent, they are still able to pull out anytime within these 28 days as exchange of contracts hasn’t yet happened. There is no legal obligation to complete. This means fall throughs are still a possible once a bid has been accepted. However, the hope is that if a reservation fee has been paid this will minimise the chances of a sale falling through.

Which method is ‘better’?

Well, if the speed of a sale is of paramount importance, from the moment a sale is agreed it takes 28 days for a traditional auction and 56 days for a modern method of auction to complete and for the seller to receive the funds. So traditional auction sale is completed in half the time.

When it comes to security, a traditional auction secures the sale immediately exchanging contracts and therefore sale is legally binding. The Modern Method of Auction will require a buyer to pay a reservation fee to commit them to the sale, however legally, they are still able able to pull out or to re-negotiate terms during the 28 days up until exchange of contracts. The only penalty to them being the loss of the reservation fee paid should the sale fail to complete.

And finally, the price. Both auction options will look to secure the very best price for the property, and with a computer data base that is full of potential purchasers both from the UK and abroad, whether the potential purchaser is a property investors, a renovator, builder or a private buyer, Town and Country Property Auctions can guarantee that  we will achieve the very best price for the property whichever method you chose to use.

Author Steve Taylor- Director Town and Country Property Auctions has over 30 years’ experience in the Uk Property market and is on hand to advise you on any property matter please contact us on info@tcpa.co.uk for more information.

• Author: Lloyd Marsden
• Categories: Buying at Auction Selling