Traditional vs conditional auctions explained

Lots on Lotwick come from both traditional and conditional auctions. They can look the same online, but the moment you become legally committed is different, and so are the costs.

Traditional (unconditional) auctions

In a traditional auction, contracts are exchanged when the hammer falls, or when a timed online auction ends on your winning bid. As the RICS consumer guide puts it, on the fall of the hammer you are entering into a binding legal contract.

• You normally pay a deposit straight away, usually 10% of the price.
• Completion usually follows about four weeks later. Under the RICS Common Auction Conditions the default is 20 business days, unless the special conditions say otherwise.
• You cannot pull out because a survey or a mortgage valuation disappoints.

Conditional auctions (Modern Method of Auction)

In a conditional auction, often marketed as the Modern Method of Auction, the winner does not exchange contracts when bidding ends. Instead you sign a reservation agreement and pay a reservation fee, which holds the property while the conveyancing is done. RICS describes this as buying an option to exchange contracts at the hammer price.

• You then have a set period to exchange and complete. One large conditional auction provider gives buyers 56 days to complete from receiving the draft contract, for standard freehold properties. Check the terms for each lot.
• The reservation fee is usually non-refundable if you pull out, and is often paid on top of the price rather than deducted from it.
• Fees vary. The same provider quotes a typical fee of 4.5% of the price including VAT, with a minimum of £6,600 including VAT. Other providers set their own.

Which suits you?

Conditional auctions give more time, which can help if you need a mortgage. But the reservation fee adds to your cost, and you can lose it if you cannot proceed. Traditional auctions are faster and leave no room to change your mind once the hammer falls.

Whichever type it is, read the auction terms and the legal pack first, and check with a solicitor before bidding. If you plan to borrow, check with a mortgage broker that the timescale is realistic for you.