The Modern Method of Auction
The modern method of auction is known as a conditional auction, as the fees applicable to the transaction depend on the method of instruction from the seller: On acceptance of an offer the buyer must pay either a non-refundable reservation fee or the required deposit amount to secure a property. Whether you are required to pay a reservation fee or deposit is clearly stated in the terms and conditions attached to each property. The buyer is then given 56 days in which to complete the transaction, aiming to exchange contracts within 28 days of the Draft Contract being received by the buyer’s solicitors.
Reservation Fee
All properties sold through the modern method of auction are sold subject to a reservation fee which is clearly stated in the terms and conditions attached to the property. The reservation fee is an additional charge above and beyond the final negotiated selling price and is received on a non-refundable basis. The minimum fee is automatically charged on completion of the successful bid, the buyer agrees prior to making their bid, to pay any outstanding amount of the property reservation fee immediately at the end of the auction. This is held against the 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. Fees paid to the Auctioneer may be considered as part of the chargeable consideration for the property and be included in the calculation for stamp duty liability. Further clarification on this must be sought from your legal representative.
Reservation Form
To enable the sale to be progressed and the production of a Memorandum of Sale, the buyer is required to sign a reservation form. This is an agreement between Hunters Auctions and the buyer and lays out in plain English the terms and conditions that the buyer must meet.
Traditional Auction
A traditional auction known as an unconditional auction, requires a 10% deposit to be paid by the buyer upon completion of the auction and contracts are exchanged immediately. Completion normally takes place 28 days later. The buyer is also required to pay a non-refundable buyer’s premium fee.
Buyers Premium Fee
Properties sold by the traditional auction method are subject to a buyer’s premium fee. Please note that the buyer’s premium fee is in addition to the final negotiated selling price and is received on a non-refundable basis. If the sale falls through due to the vendor breaching the terms of the agreement, the buyers premium fee becomes repayable to the buyer in full.
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