Modern Method of Auction - Complete Breakdown, Everything You Need To Know
Buying or selling a property can often feel like a balancing act between speed, certainty, and value. Traditional private treaty sales can take months to complete, while traditional auctions can feel intimidating and rigid for many first-time buyers.
This is where the modern method of auction comes in, offering a fresh and flexible approach to property transactions in the UK market.
The modern method bridges the gap between conventional estate agency sales and traditional auction houses. Whether you are a seller seeking a quicker route to market, or a buyer looking for fair competition and clarity, this auction style offers an increasingly popular alternative.
Let’s explore how this modern approach works, what it means legally, and the costs involved so you can decide if it’s the right fit for your next property transaction.
What Is the Method of Auction?
At its core, the method of auction refers to the structured process of selling property to the highest bidder in a transparent and competitive environment.
In the UK, there are two main approaches to auctions: the traditional method and the modern method.
The traditional auction process typically takes place in a physical auction room or via a live online event. Once the gavel falls, the buyer must immediately exchange contracts and pay a deposit, usually 10% of the property’s purchase price.
Completion then follows within a fixed timescale, often 28 days.
The modern method, also known as the conditional auction, offers more flexibility. Instead of requiring an immediate exchange, the winning bidder secures the property with a non-refundable reservation fee and has a specified timescale, usually 28 days, to exchange contracts and another 28 days to complete.
What Does MMoA Mean?
MMoA stands for Modern Method of Auction. It’s a term increasingly used by estate agents and online estate auction platforms across the UK to describe a contemporary auction model that aims to make property transactions quicker, more secure, and more accessible.
The MMoA process is primarily conducted online, allowing buyers to bid from anywhere at any time. Unlike traditional in-room auctions that demand instant decisions and immediate contract exchange, the MMoA offers a conditional sale period.
This means the buyer and seller commit to proceeding with the transaction, but with a clear and manageable timeframe to complete due diligence, arrange finance, and finalise contracts.
Transparency also plays a key role. All bids are visible to every participant, ensuring fair competition and avoiding the uncertainty that often surrounds private treaty negotiations.
In short, MMoA brings the property auction experience into the digital age. It’s accessible, transparent, and structured in a way that accommodates modern buyers and sellers.
Is a MOA Legally Binding?
One key difference between modern and traditional auctions lies in when the sale becomes legally binding. In a traditional auction, the contract is binding the moment the gavel falls, and the buyer must pay the deposit and complete within the set timeframe.
In the modern approach, the winning bidder signs a reservation agreement rather than exchanging contracts immediately.
This agreement shows intent to proceed but is not legally binding. The buyer also pays a non-refundable reservation fee, which protects the seller and ensures commitment.
Once both parties exchange contracts, the sale becomes legally binding. This structure strikes a balance between flexibility and security, making it an increasingly popular choice for property transactions.
How Much are the Modern Methods of Auction Fees?
The costs of buying or selling through the modern auction method vary depending on the platform, property value, and specific terms. Generally, there are two main fees: the reservation fee and the seller’s entry fee.
The reservation fee, paid by the winning bidder after the auction, typically ranges from 2% to 4.2% of the sale price (including VAT) or a fixed minimum of around £5,000.
This non-refundable fee secures the property and shows the buyer’s commitment, though it doesn’t go toward the purchase price.
Some auction platforms also charge sellers an entry fee to cover pre-auction marketing and administration, though many waive this cost, recovering expenses through the buyer’s fee instead.
Since terms and costs differ among auction providers, buyers and sellers should always review the fine print before proceeding. It is also important to consider agent fees or guide price if you avail these services.
Who Is Responsible for the Auction Fee to the Auction House – The Buyer or the Seller?
This is a common question among first-time participants. In most cases, the buyer is responsible for paying the auction fee, which is the reservation fee mentioned above.
This fee is paid immediately after the auction concludes and effectively reserves the property while contracts are being prepared.
Since the seller benefits from the buyer’s financial commitment and from having the property secured, they often do not have to pay an additional selling fee.
However, some auction platforms operate differently, offering a no buyer’s fee option where the seller agrees to cover the auction costs instead. In those cases, the seller may pay a pre-agreed percentage or fixed amount upon the successful sale of their property.
Understanding which party pays the auction fee is crucial before proceeding, as it influences the overall cost of buying or selling.
At Property Auction io, all fees are clearly disclosed before bidding begins, giving everyone a full understanding of their obligations.
How Does It Work?
While every auction platform may have slight variations, the general process remains consistent.
Step 1: Listing the property
The seller begins by contacting an auction provider, such as Property Auction io, to have their property appraised and listed. During this stage, the auction team prepares a detailed promotional plans, professional photographs, and legal documentation.
The property is then listed on the auction platform, often with a starting bid that reflects its market value.
This stage also includes setting the reserve price, which is the minimum amount the seller is willing to accept. If bidding does not reach this figure, the property will not sell, providing the seller with financial protection.
Step 2: Promotion and viewings
Once listed, the property is marketed widely across property portals, auction websites, and social media channels. Interested buyers can view the property in person or through virtual tours.
This marketing period usually lasts a few weeks, allowing time for potential buyers to conduct research, arrange surveys, and prepare for bidding.
Step 3: Bidding process
The online auction opens at a scheduled date and time. Bidders can place their offers in real time, and all bids are displayed publicly to maintain transparency.
The auction remains open for a fixed duration, often a few days, allowing buyers to monitor and adjust their bids as needed.
When the auction closes, the highest bidder above the reserve price wins. They must immediately pay the reservation fee to secure the property.
Step 4: Reservation agreement
Once the winning bid is confirmed, both parties sign a reservation agreement. This document outlines the terms of the sale, including the timeline for exchanging contracts and completing the transaction.
The reservation period gives the buyer time to finalise their mortgage, conduct surveys, and complete legal checks without the immediate pressure of contract exchange. For the seller, it offers reassurance that the buyer is financially committed.
Step 5: Exchange and completion
During the reservation period, solicitors handle the legal paperwork and confirm all property details. Once both sides are ready, contracts are exchanged, and the transaction becomes legally binding.
Completion then follows within the agreed timeframe, finalising the sale.
By following this process, both parties benefit from a structured timeline that reduces uncertainty and minimises the risk of failed transactions.
Difference between the Modern Method of Auction vs. Traditional Auctions
Although both auction types aim to sell property competitively and transparently, there are key differences in how they operate and the level of flexibility they provide.
Understanding these distinctions helps buyers and sellers choose the approach that best fits their circumstances.
Difference 1: Legal commitment
In a traditional auction, the buyer must pay a deposit (usually 10% of the purchase price) and complete within 28 days. If they fail to do so, they risk losing the deposit and may face legal consequences.
In contrast, the modern auction process is conditional. The winning bidder signs a reservation agreement instead of exchanging contracts immediately. This gives both sides additional time before the sale becomes legally binding at the exchange stage.
Difference 2: Buyer eligibility
Traditional auctions mainly attract cash buyers and investors due to the strict timelines and upfront financial commitment.
The modern approach, however, opens the door to a wider audience, including mortgage buyers and first-time purchasers who need flexibility in arranging funds.
This inclusivity makes the modern auction model particularly appealing for sellers who want to reach a broader market and increase their chances of achieving a fair market price.
###Difference 3: Fees and costs
In most traditional auctions, the buyer pays a deposit that goes toward the purchase price, and the seller pays the auction house’s commission.
In the modern method, the buyer usually pays a separate reservation fee that does not contribute to the purchase price, while the seller may pay reduced or no selling fees.
Both methods have their strengths, but the modern approach has gained traction in recent years for its balance between speed, transparency, and accessibility.
Pros of the Modern Method of Auction
The modern auction process combines the structure of a traditional auction with the flexibility of a standard property sale, creating a fairer and more transparent environment.
Pro 1: Greater accessibility
Unlike traditional auctions that often require immediate payment, this method allows mortgage buyers and first-time purchasers to participate. It opens up a larger pool of potential bidders and increases competition, which can drive the sale price closer to market value.
Pro 2: Faster sale timeline
Properties sold this way typically complete within 56 days. This timeframe is significantly quicker than a private treaty sale, which can take months. For sellers seeking a faster turnaround, this provides welcome certainty.
Pro 3: Transparency in bidding
All bids are visible to participants during the auction, ensuring full transparency. This openness encourages fair competition and removes the ambiguity that sometimes surrounds private negotiations.
Pro 4: Reduced risk of fall-throughs
The reservation agreement and fee act as safeguards. Buyers who commit financially are less likely to withdraw, providing sellers with greater assurance that the sale will proceed as planned.
Pro 5: Broader exposure and marketing
Auction properties are actively promoted through major property portals and online advertising. Sellers benefit from high visibility, while buyers gain easy access to verified listings.
Cons of the Modern Method Auction
While this approach has many strengths, it’s equally important to understand the potential drawbacks before participating.
Con 1: Reservation fee cost
Buyers must pay a non-refundable reservation fee, usually several thousand pounds. This fee does not count toward the property’s purchase price and must be considered when assessing affordability.
Con 2: Limited room for negotiation
Since the process is competitive, buyers have less opportunity to negotiate price reductions after the auction ends. Once the winning bid is placed, the price is effectively fixed.
Con 3: Legal and financial commitment
Even though the sale isn’t immediately binding, the reservation agreement still represents a serious commitment. If a buyer withdraws without valid cause, they risk losing their fee.
Con 4: Time restrictions
The 56-day completion window can feel tight for buyers who face delays in securing mortgage approval or completing surveys. Planning ahead is essential.
Con 5: Perception in the market
Some buyers may still associate auctions with distressed or repossessed properties, which can limit interest. However, as awareness grows, this perception is gradually changing.
The Modern Methods of Auction Buying Process
Step 1: Registration
Buyers register with an online platform like Property Auction io, providing identification and financial details before bidding.
Step 2: Research
Review property information packs, conduct viewings, and confirm mortgage eligibility before placing a bid.
Step 3: Bidding
During the auction, bids are placed online in real time. The process remains open and transparent until the auction timer expires.
Step 4: Reservation agreement
The highest bidder signs a reservation agreement and pays the reservation fee to secure the property.
Step 5: Exchange and completion
Both parties complete legal checks, exchange contracts, and finalise the sale within the set timeframe.
What are the Three Types of Auctions?
The three types of auctions include:
Traditional auction: Immediate exchange of contracts when the gavel falls, with completion typically in 28 days.
- Modern (conditional) auction: Reservation agreement signed first, allowing more time before exchange.
- Silent or sealed-bid auction: Buyers submit confidential offers, and the seller selects the best one.
Can You Get a Mortgage on a Property Sold Via a Modern Method?
Yes. One of the main advantages of this auction style is that mortgage buyers can participate.
The extended reservation period provides time to finalise mortgage arrangements and complete valuation checks.
Buyers should still seek an agreement in principle before bidding to ensure the timeline is achievable.
What Are Other Ways I Can Sell My House?
Here are some other ways you can consider when looking to sale out a property:
- Private treaty sale through an estate agent
- Traditional auction (in-room or online)
- Part exchange with a developer
- Quick sale to a cash-buying company
- Selling directly to an investor
Each route offers different benefits, depending on the urgency and financial goals of the seller.
Frequently Asked Questions
🏡 What are some of the benefits of buying a house via a modern auction method?
⚠️ What are the pitfalls of the modern method?
❌ Can a buyer pull out of a modern auction?
🏠 What happens if a house doesn't sell at a modern auction?
🤔 What happens if I change my mind and no longer want to purchase the property?
💼 Why do people sell houses by modern auction?
Summary – Modern Method of Auction Process
The modern auction process offers a balanced alternative to both traditional auctions and standard property sales.
It combines competitive bidding, clear timelines, and inclusivity for mortgage buyers.
While the reservation fee can be a drawback, the overall transparency and security make it an increasingly attractive route for many.