The modern method of auction, explained for sellers
In a conditional auction the winning bidder reserves the property, and the sale itself comes later. The fee for that reservation comes out of the buyer's budget.
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The short answer
The modern method of auction is a conditional auction. The winning bidder signs a reservation agreement, pays a non-refundable reservation fee, then has a set period to exchange contracts and complete. iamsold's terms require completion within 56 days of the draft contract reaching the buyer's solicitor.1 The seller usually pays no selling fee, because the buyer's fee funds the sale.2
What is the modern method of auction?
Under the modern method of auction, an online sale, the hammer creates a reservation rather than a sale contract. The winning bidder must sign a reservation form and pay a reservation fee or deposit. iamsold's terms describe the form as a legally binding contract.1 From then on the property is held for that buyer while the two sides' solicitors work towards an ordinary exchange of contracts, the point at which a sale becomes legally binding.
The modern method at iamsold, in figures
- 56 days Latest completion, counted from the draft contract reaching the buyer's solicitor1
- 4.5% Typical reservation fee including VAT, paid by the buyer on top of the price2
- £6,600 Minimum reservation fee including VAT2
The RICS professional standard for auctioneers treats a modern auction as a conditional sale, meaning one where the seller or buyer has an extra period to confirm the contract.7 Nobody is bound to the sale when the hammer falls. Operators use their own names for it. iamsold, the trading name of IAM-SOLD Ltd, company 07051399, labels it "Modern Method of Auction (Conditional Auction)" on the auction pages it runs for estate agents.46 SDL Property Auctions and Smart Auction UK also offer conditional sales, on different timescales set out below.910 Our profiles of iamsold and SDL Auctions set out who pays what with each.
An "unconditional auction" is the traditional kind, where the fall of the hammer makes the sale contract binding. Our guide to selling at auction covers it, and guide price and reserve price explained sets out how iamsold's starting bid relates to its reserve.
When each side becomes bound
On the day, both sides are bound to the reservation, not to the sale. Once the reservation form is signed and the fee paid, iamsold's published conditions commit the seller not to reserve the property to anyone else.1 Both sides must use reasonable endeavours to exchange within the exclusivity period, the time during which the property is held for this one buyer.1 The sale contract itself is made at exchange, as in any private sale.
Whether you are committed at all turns on the reserve. iamsold's FAQs say a seller whose reserve is met or beaten must sell when the auction ends, and one whose reserve is not met can decide whether to accept the highest bid.15
Commitment points in a modern method sale
- Fall of the hammer
- Winning bidder must sign the reservation form and pay the reservation fee1
- During the exclusivity period
- Neither side can end the reservation unless the other is in breach1
- Exchange of contracts
- The sale contract binds, with the completion date written into it1
- Period ends without completion
- The reservation lapses and the seller may offer the property again1
iamsold's general conditions, as we read them, carry an October 2022 file reference, and iamsold says the individual reservation form overrides them where they differ.1 The document that binds you is the one you sign, so read that. The general conditions also do not spell out what the seller owes the buyer if the seller is the one who fails to proceed. Ask your solicitor before you instruct.
The exchange and completion deadlines
At iamsold the deadlines run from the draft contract, not from the auction. Completion is due no later than 56 days after the buyer's solicitor receives the draft contract, and exchange within the exclusivity period stated on the reservation form.1 Its buyer guidance repeats the 56 days and contrasts it with a traditional auction, where completion is generally expected within 28 days.3
| Firm | Published timescale | Runs from |
|---|---|---|
| iamsold | Completion no later than 56 days1 | Draft contract received by buyer's solicitor |
| SDL Property Auctions | 60 day exclusivity period9 | Payment of the reservation fee by the winning bidder |
| Smart Auction UK | Conditional sales complete in 56 days10 | Not stated on the page we read |
A period that runs from the draft contract starts only when your solicitor sends it. A seller who has the legal pack and draft contract ready before the auction ends starts the clock sooner.
How a modern method sale is timed at iamsold
- Auction ends The winning bidder signs the reservation form and pays the reservation fee. No sale contract yet.
- Until the draft contract arrives Starts only when your solicitor sends the draft contract. There is no published figure, and a ready legal pack shortens it.
- Draft contract to completion Completion no later than 56 days after the buyer's solicitor receives the draft contract, with exchange inside the exclusivity period.1
iamsold presents the 56 days as time for buyers to arrange mortgage finance.4 For you, the deadline is written down, but a buyer's lender, surveyor and solicitor all have to finish inside it.
The reservation fee, and how it can affect the price you get
The reservation fee is a charge to the buyer on top of the price. It reduces what that buyer has left to bid. In March 2024 iamsold said its fee is typically 4.5% of the purchase price including VAT, with a minimum of £6,600 including VAT, and that it varies by property.2 Its buyer guidance says the fee is separate from the price but counts towards the buyer's stamp duty.3
The Property Ombudsman's position, as reported in 2019, is that an agent recommending the modern method must tell the seller the buyer pays fees. The Ombudsman sees that as a potential disadvantage, because a buyer may vary their offer.13 Its code requires the benefits and disadvantages of any recommended method of sale to be explained in clear terms.12
| Winning bid | Reservation fee | Buyer pays before stamp duty and legal costs | Fee as a share of the bid |
|---|---|---|---|
| £100,000 | £6,600 (minimum applies) | £106,600 | 6.6% |
| £200,000 | £9,000 | £209,000 | 4.5% |
| £300,000 | £13,500 | £313,500 | 4.5% |
At this rate the minimum applies to any bid below about £146,667, so the fee is a larger share of cheaper properties. Rates vary by property, and the figure on your listing is the one that counts.2
Reservation fee at three example bids
- Bid of £100,000Minimum applies: 6.6% of the bid £6,600 2
- Bid of £200,0004.5% of the bid £9,000 2
- Bid of £300,0004.5% of the bid £13,500 2
We found no published data on how far real buyers lower their bids to allow for the fee.
The question I would ask first is whether your likely buyers need a mortgage. If they do, the longer period suits them; if not, a traditional auction gives you a binding contract at the hammer, with no reservation fee taken from their budget. Either way, ask your agent whether the operator pays it anything.
Haroon Ali Author, The House Desk. Over 11 years in property and renovation In Northern Ireland, one iamsold listing we read charged a 2% reservation deposit with a £6,000 minimum, plus a buyer administration fee of 1.8% including VAT with a £2,400 minimum.5 That is one listing, not a published rate card.
How much does the modern method of auction cost a seller?
Selling a house by the modern method usually costs the seller nothing in operator fees. The buyer pays the operator, and you pay only your own solicitor. According to iamsold there is typically no selling fee. The reservation fee it keeps covers auction, marketing and associated costs, and none of it is paid to the seller.23
- Buyer to operator. The reservation fee, and any buyer's fees in the listing.3
- Seller to operator. Typically no selling fee at iamsold.2 Smart Auction UK says sellers pay no fees or commission.10 SDL offers a "sell for free" option in which the buyer pays extra instead.9
- Seller to operator, the other version. iamsold also describes a reservation deposit that forms part of the price where the seller covers the fees.2 In that version the cost is yours, deducted from the price.
- Seller to solicitor and pack provider. You still pay for conveyancing, covered in solicitor fees when selling. iamsold says pricing for the auction pack it offers is set out in the seller's auction contract.2
- Operator to estate agent. BTG Eddisons Property Auctions, which now runs SDL, publishes that partner estate agents receive a referral fee once a referred property sells, under a fee-sharing agreement. It does not publish the amount.11
That last payment matters because the agent is often the one recommending the method. National Trading Standards guidance says referral fees should be disclosed to the seller, including the amount.14 The Property Ombudsman's code makes disclosure under that guidance mandatory for its members.12
If you want to withdraw, or the buyer does not proceed
A buyer who fails to exchange or complete in time leaves you free to sell elsewhere. Under iamsold's conditions the seller may offer the property again once the exclusivity period expires without completion, and the buyer's reservation fee is non-refundable.1 iamsold says it may consider refunds in some cases, such as where the seller cannot proceed or material information was wrong or missing.2
Losing the fee is what holds a buyer to the deal, but none of it comes to you as compensation for lost time.3
Withdrawing yourself is governed by your auction contract. The RICS standard says an auctioneer's terms of appointment should state precisely what the seller owes if they withdraw instructions between appointment and the auction.7 The House Desk found no withdrawal fee published on any of the modern method operator pages it read. Treat that as a gap in the published record, not as a sign that withdrawal is free.
Traditional auction vs modern method: what is the difference?
The difference between a traditional auction and the modern method is when the sale becomes certain. At a traditional auction the hammer makes the contract binding and the buyer pays a deposit at once.7 Under the modern method only the reservation binds, and the contract follows at exchange.1
| Question | Traditional (unconditional) | Modern method (conditional) |
|---|---|---|
| What binds on the day | The sale contract7 | A reservation agreement1 |
| Buyer pays on the day | Deposit: the greater of the stated minimum and 10% of the price8 | Non-refundable reservation fee, or a reservation deposit1 |
| Completion | 20 business days after the contract unless the special conditions say otherwise8 | No later than 56 days from draft contract, at iamsold1 |
| Usual seller fee | Entry fee plus commission, which differ by firm (see seller fees) | Typically none, at iamsold2 |
| If the buyer fails | Default provisions in the conditions, starting with a notice to complete8 | Reservation lapses and the seller may re-offer1 |
| When results may show it as sold | At the hammer | Only once conditions are met and the sale completes7 |
Modern method of auction pros and cons: is it good for sellers?
The modern method of auction suits a seller whose likely buyers need time to arrange a mortgage. If you want a binding contract on the day, a traditional auction gives you one. The open question is how much the buyer's fee reduces what they bid.
| For the seller | Against the seller |
|---|---|
| Usually no selling fee to pay from your proceeds2 | The buyer's fee comes from the buyer's budget and may lower bids13 |
| Buyers get time to arrange a mortgage, which a 20 business day completion does not allow48 | No binding sale contract until exchange. A buyer can still fail within the period1 |
| A buyer who does not proceed loses a non-refundable fee3 | The fee they lose is not paid to you3 |
| A written deadline for completion1 | The recommending agent may be paid by the operator, and the amount may not be published11 |
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Sources
(15)
Numbers in the text link to these. Each was read on the date shown. How we research
- Terms and Conditions, Modern Method of Auction
- Fees explained: buying and selling with MMoA
- Property auctions explained: buyer FAQs
- Leaders property auction terms page, operated by iamsold
- Fees and charges explained, iamsold NI listing
- IAM-SOLD LTD, company 07051399
- Auctioneers selling real estate (incorporating Common Auction Conditions), RICS professional standard, UK, 7th edition
- Common Auction Conditions (5th edition), reproduced with the consent of RICS
- Property auction fees for sellers
- Property auctioneers, Smart Auction UK home page
- Auction partners
- Code of Practice for Residential Estate Agents
- Ombudsman says agents must tell sellers about potential disadvantage of modern method of auction
- Guidance on transparency of fees involving property sales
- Property auctions explained, frequently asked questions