The modern method of auction is a conditional auction, usually held online, in which the winning bidder pays a non-refundable reservation fee and then has a fixed period, commonly 28 days to exchange contracts and a further 28 days to complete, instead of being legally bound when the bidding ends. It aims to combine some of the pace of an auction with the flexibility buyers need to arrange a mortgage.
It has become more common, and so have complaints about it. In 2026 The Property Ombudsman reported that confusion about the modern method of auction had driven a rise in complaints, with reservation fees a major source of dispute. This guide explains how it works in England and Wales, and what to check before you agree to sell this way.
How does the modern method of auction work?
The details vary between providers, but the usual pattern is:
- Listing. Your home is marketed, often through a local estate agent working with an auction provider, with a guide price and a reserve. MoneyHelper explains that the guide price can be set below open market value to attract interest, while the reserve is the minimum you will accept and is not disclosed to buyers.
- Bidding. Buyers register and bid online during a set bidding period.
- Reservation. If bidding reaches the reserve, the highest bidder pays a reservation fee and the property is reserved for them.
- Exchange. The buyer typically has 28 days to exchange contracts, during which they arrange their survey, mortgage and legal work.
- Completion. The buyer typically then has a further 28 days to complete, making 56 days in total from the end of the auction.
Because nothing is binding until exchange, the buyer can still withdraw during the reservation period. Under typical terms, a buyer who fails to exchange or complete in time loses the reservation fee.
What is the reservation fee, and who pays it?
The buyer pays it. Which? explains that non-refundable reservation fees are standard in auction sales and are usually a percentage of the final purchase price, although the percentage varies. It is normally paid on top of the price rather than deducted from it.
This is where much of the confusion lies. The Property Ombudsman found that disputes often arise where buyers believed the fee would count towards the purchase price or would be refunded if the sale did not go ahead, sometimes because the terms were confusing or not prominent enough.
There is a tax point for buyers too. HMRC’s Stamp Duty Land Tax manual explains that a fee paid as part of the deal for the property, rather than simply to take part in an auction, can count as part of the price for Stamp Duty Land Tax.
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Why does the buyer’s fee matter to a seller?
Because buyers are paying the reservation fee as well as the price, many will factor it into what they bid. In 2019 The Property Ombudsman told agents they must explain the benefits and disadvantages of their recommended method of sale, and that the buyer paying the fee is a potential disadvantage, since buyers may adjust their offers accordingly. Ask your agent to show you how the total cost to the buyer could affect the price you receive.
Check your own costs as well. Ask whether you pay anything to list, whether you owe anything if the home does not sell or the buyer pulls out, and whether you are tied in for a minimum period.
How is it different from a traditional auction?
| Traditional auction | Modern method of auction | |
|---|---|---|
| When the sale becomes binding | Usually when the hammer falls | When contracts are exchanged |
| Deposit or fee on the day | Usually a 10% deposit (Which?) | A non-refundable reservation fee |
| Time to complete | Balance usually due within 28 days (Which?) | Commonly 28 days to exchange, then 28 days to complete |
| Suits buyers who need a mortgage | Less so | More so |
| Risk of the buyer pulling out | Low once the hammer falls | Possible until exchange |
MoneyHelper notes that an auction sale which is legally binding on acceptance avoids gazundering. With the modern method, the buyer is not committed until exchange, so that protection is weaker.
What are the criticisms?
The Property Ombudsman’s 2026 insight report found that property auctions account for only about 2% of home sales but generate more than four times their share of complaints. In 2025 it resolved over 300 auction complaints, which made up 5% of all its complaints and 9% of residential sales complaints. Around 68% of those auction complaints came from buyers or would-be buyers.
The report highlighted:
- confusion about the modern method of auction, which can look like an ordinary agency sale but has different fees, deadlines and commitment points
- disputes over reservation fees, particularly about whether they count towards the price or can be refunded
- inaccurate marketing information, incomplete legal packs, unexpected fees and unclear processes
For sellers, the main concerns are that the buyer’s fee may depress bids, that a reserved sale can still fall through before exchange, and that your own contract with the provider may carry costs or tie-ins you did not expect.
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What does The Property Ombudsman recommend?
The Property Ombudsman is calling on auction providers to explain clearly the type of auction being used, when financial and legal commitment begins, what fees are payable and what happens if the sale does not proceed. It wants businesses to treat reservation fees as a high-risk consumer issue, explain them in writing and in person before taking payment, and make sure key risks in legal packs are properly highlighted.
Its advice to buyers and sellers is to read the guidance before taking part, ask questions about the process and the property, and do proper checks before bidding or listing. If something goes wrong, GOV.UK explains that you can complain to The Property Ombudsman or the Property Redress Scheme, depending on which scheme the agent belongs to.
Is the modern method of auction right for you?
It may suit you if you want a defined timetable, your home might attract investors or buyers looking for a project, and you are comfortable with the fee structure. A property that needs renovation is one example. It may not suit you if the fee is likely to push bids down, or if you need the certainty of a binding sale on the day.
It is worth comparing it with the alternatives. Our comparison of cash buyers, estate agents and auctions sets out the differences, and our tips on how to sell your house fast apply whichever route you choose. If any provider pressures you to sign quickly, our guide to spotting rogue quick sale companies is worth reading first.
This guide describes practice in England and Wales. In Scotland, a sale becomes binding when missives are concluded, so ask a Scottish solicitor how any auction terms fit that process.
If you would like to compare an auction route with cash offers, you can get offers for my home from buyers on our panel. Our service is free for homeowners, and there is no obligation to accept.
Common questions
Is the reservation fee part of the purchase price?
Usually not. It is normally paid by the buyer on top of the price, and is usually non-refundable. The Property Ombudsman says reservation fees are a major source of disputes, often because buyers thought the fee counted towards the price or would be refunded. Check the terms before listing or bidding.
Is a modern method of auction sale legally binding?
Not when the bidding ends. The winning bidder reserves the property by paying the reservation fee, and the sale only becomes legally binding when contracts are exchanged, usually within a set period such as 28 days. A traditional auction is different, because the contract is usually formed when the hammer falls.
What happens if the buyer does not exchange in time?
Under typical terms, a buyer who fails to exchange or complete within the timescales loses their reservation fee, and the seller can look for another buyer. Terms vary between providers, so check what happens to the fee, and to your own costs, if the sale does not go ahead.
Who can I complain to about an auction provider?
Start with the provider's complaints procedure. If you dealt with an estate agent, GOV.UK explains that you can complain to The Property Ombudsman or the Property Redress Scheme, depending on which one the agent belongs to, so ask. The Property Ombudsman handled more than 300 auction complaints in 2025.
Related guides
- Cash buyer vs estate agent vs auction: which suits you? Speed, price, certainty and fees compared across the main routes.
- How to sell your house fast: practical tips for any route Balanced, practical tips for a faster sale by any route.
- Are quick house sale companies legit? How to spot a rogue firm Warning signs, simple checks and how to complain.
- Selling a house that needs renovation Major work, fire, flood and damp damage, lenders, auctions and over-investing.