To help you understand the new terms used around auction sales, we've compiled a simple glossary of common terms with an explanation behind each one.
The modern method is also known as a conditional auction: After the acceptance of an offer or at the close of the auction, the buyer must place a non-refundable reservation fee to reserve or deposit to secure the property. Whether you are required to pay a reservation fee or deposit can vary from property to property depending on the method of instruction from the vendor - this will be clearly stated in the terms and conditions attached to each property. The transaction process has 56 days in which to complete, with parties aiming to exchange contracts within 28 days of the Draft Contract being received by the buyer's solicitors. Most buyers prefer to buy through the Modern Method of Auction as the extra time provides greater flexibility.
A traditional auction is also known as an unconditional auction: When a property is sold in this way a 10% deposit is paid on the night and contracts are exchanged immediately. Completion normally takes place 28 days later. This type of auction is generally best suited to investors and property professionals.
Every property is advertised with a start bid, which is the recommended level at which the bidding should open. It must not be relied upon by potential buyers as a valuation, as in most cases the reserve is above this level. Please note that the reserve will generally be no more than 10% above the starting price. Both the reserve and start bid are subject to change.
This is the minimum price that a seller is willing to accept for a subject property. This is a figure that the property will not be sold for less than. Reserve prices are not published; this is a private agreement between the vendor and the auctioneer. This figure is generally no more than 10% in excess of the starting bid. Both the reserve and starting bid can be subject to change.
Unless otherwise stated, each property is sold subject to a reservation fee. If you are interested in a particular lot please speak to a member of the team before you bid and clearly read the terms and conditions attached to the property. Please note that the reservation fee is in addition to the final negotiated selling price, and is received on a non-refundable basis. It is held as a reservation against the subject property until such time that exchange of contracts take place. If the sale falls through due to the vendor breaching the terms of the agreement the reservation fee or deposit becomes repayable to the buyer in full.
The reservation form is an agreement between the auction house and the buyer which lays out in plain English the terms and conditions which need to be met by the buyer. The sale will not be instructed and the Memorandum Of Sale will not be sent out until the reservation form is signed by the buyer.
If a property has been entered to a live auction room at one of our regional auctions the online bidding facility is disabled. If you wish to place a pre auction offer you will need to speak with a member of the auction team who will explain the process to you. The vendor can consider offers prior to the live auction, but this is at their discretion to do so.
Here, the buyer signs the contract for sale and sends it to the seller, who also signs it. This is the point at which both parties are legally obliged to complete the transaction. The purchase is not actually complete at this point, but there is a legal obligation for the purchaser to buy and the vendor to sell.
This is when the purchase becomes final. The purchase price is paid in full by the buyer's conveyancer and received by the seller's conveyancer. Completion can take place at the same time as the exchange of contracts (see above) but is usually a week or so later. The seller must move out of the property on this date and release the keys to the buyer, who may move into the property.
The buyer is given 56 days to Complete from the date the Draft Contract being received by the Buyer's Solicitor, with all reasonable endeavours must be made to exchange contracts within 28 days of this date.
I think we’ve explained pretty much everything. However if you're struggling with the concept, have a question or just want to confirm some details, don't hesitate to speak to a member of the Auction team. They are approachable, friendly and able to offer honest and sensible advice. You can contact us by telephone, email or fax.