If you’ve watched Homes Under the Hammer then you may have thought about buying or selling a property through auction. Here we give you an insight into some of the pros and cons of buying or selling in this way, and the differences between the Traditional and Modern auction methods.
Are Auctions a Good Choice?
If you’re thinking about buying or selling a home then property auctions can be an attractive option. For buyers they offer the chance to find a bargain, while for sellers they can help shift a hard to sell property, or a property that needs to be sold quickly for various reasons.
What might surprise you – especially if you’ve watched Homes Under the Hammer – is that property auctions actually only make up a very small amount of home sales in the UK. With two different types of auction now available – Traditional and Modern – there are more options to buy this way, but many people are nervous about setting foot in a little known area.
Unfortunately this isn’t helped by a recent report by The Property Ombudsman (TPO), which highlighted that auctions generate complaints at over four times the average rate of the overall housing market.
Their figures show that while auction sales represented about 2% of residential property sales, they were responsible for 5% of all complaints in 2025 and 9% of complaints about residential sales, with 68% of residential auction complaints being from property buyers.
TPO believes that the root of the problem is that many people go into the auction process without being fully aware of the risks, costs and commitments. With information often difficult to understand and not clearly explained, TPO says that disputes are unfortunately more likely.
This is particularly true with the Modern Method of Auction – where it appears similar to an estate agency but there are different fees and consequences. TPO highlighted that complaints about Modern Auctions have increased as they have become better known and more used.
So what does all this mean for buyers and sellers? Auctions are still a very useful sales and buying method in certain circumstances, but it’s important to understand more about them. Here we take a look at the two different approaches –
Traditional Auctions
Here at Cardigan Bay Properties we use Traditional Auctions through Town + Country Auctions to sell homes in a number of situations, often if the homes are in disrepair or have been repossessed, or if they need to be sold quickly and securely for example. With a Traditional Auction it takes place on a set date and buyers will bid online for their preferred property. Buyers need to register with the auction company in advance and provide a deposit for the property they wish to bid on. This can be done by credit card or bank transfer – unsuccessful bids have the money returned to them following the auction.
When the hammer falls on a sale, the buyer pays a ‘Buyers Premium’ alongside the deposit (often around 10% of the purchase price, but this varies) plus VAT. At Town & Country the Buyer Premium is 6% and the deposit is 5%. It’s also at this point that the buyer and seller must exchange contracts – so it’s immediately after the sale is agreed.
The purchaser is then legally bound to buy the property and the seller is legally bound to sell the property. Completion generally then happens very quickly – normally within 28 days following the auction, or 56 days if the buyer has a mortgage – but if the buyer decides to pull out at any point they can lose their deposit and risk legal action.
These types of auctions are generally good for cash buyers and investors. Generally there’s little time to arrange a mortgage as everything happens so quickly once the hammer goes down, however if an auction property is mortgageable and the seller is happy to sell to someone requiring a mortgage (agreed in advance) then mortgage buyers can also buy properties at a Traditional Auction. The only people who can’t buy at a Traditional Auction are people in a chain due to the speed the purchase goes through.
For a seller an auction offers a fast, secure way to sell a property at the best price, with sellers able to set a reserve price that must be met. They’re assured of a quick completion and when the hammer falls they know that the buyer is committed to buy. With Town and Country the seller only has to pay for the legal pack on a no sale, no fee basis.
If you’re tempted by a Traditional Auction then it’s important to do your research into the properties you’re interested in and understand any issues that may be associated with them. You can find out more about how the auction system works on the Town and Country website here.
Modern Auctions
Modern Auctions are just that, an online format that has evolved more recently. They make auctions accessible to more buyers and sellers because the bidding takes place online over a longer period of time – often over a month or more, opening up the auction to more buyers. A closing date is set and competitive bidding runs until the timer ends, with the highest bidder securing the property.
A non-refundable reservation fee (around 2.5% – 5%, which may or may not include VAT that is also payable) is paid by the winning bidder to secure the property. If you back out of the purchase then you will lose this fee. This reservation fee is in addition to the purchase price and must be paid within two hours following acceptance of the offer. It must be paid by cleared funds to the auctioneer.
For some auctions a buyer reservation fee is only payable when the seller pays no fees to sell – this usually results in a lower reserve price.
The successful buyer will also have to pay the fee for the Buyer Information Pack, which is used by the solicitor to progress the sale. This may cost around £350.
Completion must then take place within 56 days, giving time for any queries to be highlighted and finance to be arranged before exchanging contracts.
Buying through auction still means that you will need a solicitor during the conveyancing, and Stamp Duty Land Tax will be payable on properties over a certain value.
If you’re planning to buy with a mortgage or are a first time buyer and need additional time to arrange finance, the Modern Auction has more flexibility for this – although some properties at Traditional Auctions also allow this.
Where problems arise
According to the report from TPO it’s the issue of reservation fees with the Modern Method of Auction that is one of the most common sources of complaint. For example, if a sale falls through then some buyers mistakenly think they will get a refund of their reservation fee, which they do not. There have also been issues with incomplete legal packs and inaccurate property descriptions, highlighting the need for improvements in both types of auction.
The main reason for these issues is predominantly a lack of clarity around both auction processes, with buyers – and in some cases sellers as well – struggling with unclear information and confusing terminology. In a situation where buyers are required to make quick decisions and financial penalties may apply earlier than in a conventional sale, having clear, accurate information available is key.
Things are changing
The Property Ombudsman has asked auction companies to provide more clarity – explaining the type of auction they use, what fees are required, when legal and financial commitments start, and what occurs if a buyer drops out of the sale. The aim is to clarify the rules and commitments of an auction to all involved.
So, hopefully we will start to see more auction companies provide much clearer explanations of the process and ensure key risks are clearly outlined to buyers and sellers. We would always advise anyone thinking about buying or selling through auction to do plenty of research into the property you’re interested in and the auction process. Ask questions, speak to the agent, visit the property, and carry out as many checks as you can to help you decide if you bid on a property.
Despite all of this, you can find some gems at auction and if your property is proving hard to sell, an auction may be a good option for you. We sell through Traditional Auctions from time to time, so are happy to help you and give you guidance – why not give us a call to discuss your property sale or purchase? We’re always happy to help and work with Town + Country Property Auctions who provide upfront, transparent information for buyers and sellers to clearly see what is involved with their auctions.