Can A Buyer Pull Out of Modern Auction? [A Guide for Sellers]

Modern auction is usually presented as a faster, more certain alternative to selling with a local estate agent. However, it does come with some risks that can jeopardize your chances of securing a quick, certain sale.

So, can a buyer pull out of modern auction?

A buyer can pull out of a modern auction sale at any point up to exchange of contracts. Unlike traditional auction, exchange does not take place on auction day. Instead, buyers will usually have up to 56 days to exchange and complete. If a buyer pulls out during this time, they will lose their reservation fee.

This article contains everything you need to know if you’re a home seller in this unfortunate position.

If you’ve just had a buyer pull out of your modern auction sale and you want help navigating the next steps of your home sale, we’ve designed a free quiz to help you. On your results page, you’ll have the chance to book a free, impartial consultation with a Home Selling Expert who can answer all your questions.

Click the button below to get started.

1. How does modern auction work?

There are two types of property auction:

1. Traditional Auction
2. Modern Auction (aka the Modern Method of Auction).

Despite what their names suggest, modern auction isn’t the “newer, better version” of traditional auction.

They actually have very different processes…

Traditional Auction Process

With traditional auctions, exchange takes place immediately on the fall of the hammer. At this point, the sale is legally binding, and the buyer must pay a 10% non-refundable deposit.

Buyers then have 28 days on average to complete.

Less than 1% of sales agreed by traditional auction fall through as a result.

Modern Auction Process

Modern auction is an online “conditional” selling method.

Here are the key facts:

• Winning bidders must pay a non-refundable Reservation Fee at the end of the auction.
• At this point, the buyer and seller enter into a Reservation Agreement.
• This grants the buyer an “exclusivity period” (usually 56 days) in which to exchange and complete.
• The sale only becomes legally binding once exchange of contracts has taken place, which can take anywhere between 28-56 days on average.

Due to the longer timescales and less rigid requirements, modern auction sales are not as certain as traditional auction sales.

Related: Traditional Auction Vs Modern Method of Auction: Which is Better?

2. Can a buyer pull out of modern auction?

A buyer can pull out of a modern auction sale at any point up until exchange of contracts.

Modern auction has higher fall-through rates for the following reasons:

• No immediate legally binding contract. Unlike traditional auctions where exchange takes place immediately on the fall of the gavel, buyers have up to 56 days on average to exchange and complete.
• Mortgage buyers. The longer timeframe enables mortgage buyers to take part in modern auctions, and this comes with its own set of risks. If the buyer fails to get a mortgage, the sale will fall through.
• Smaller financial commitment. The financial commitment of modern auction also isn’t as high as traditional auction. Because of this, more buyers might be willing to walk away from a sale.

Related: Is Modern Auction Any Good? [Find Out If It’s Right for You]

3. What happens if a buyer pulls out of modern auction?

If a buyer pulls out of a modern auction sale, they will lose their non-refundable reservation fee.

However, the reservation fee does not go to you, the seller.

Instead, the auction house and estate agent would share the fee themselves and you’ll find yourself back at square one…

Top tip: If you’re just exploring modern auction as a selling option, it’s worth keeping in mind that a failed auction attempt can have a negative impact on the future saleability of your home.

You can read more about the pros & cons of modern auction here… Modern Auction: The Top 15 Pros & Cons [A 2024 Seller’s Guide].

4. What should you do if a buyer pulls out of your modern auction sale?

Unfortunately, modern auction sales do fall through.

If your buyer has pulled out of your modern auction sale, you should:

1. Speak with the auction house. The first thing you should do is speak with the auction house. There might be other bidders that narrowly missed out and might still be interested in purchasing your property.
2. Check your contract. Review your contract terms to see if you’re obliged to enter your property into another auction. You might be tied in, or you could be free to walk away and explore alternative options.
3. Explore alternative selling options. If your property failed to sell at modern auction, it’s probably time to explore alternative selling options. There are other ways to sell that will give you access to a much wider range of buyers that are worth considering.

If you find yourself in this position or are reconsidering whether modern auction is right for you, we can help you find the best way to sell your property.

We’ve helped thousands of our readers sell faster, or for more money, or both, and we’d love to help you too.

We designed this 60-second quiz to help you discover the best way to sell your property.

On your results page, you’ll have the chance to book a free, impartial consultation with a Home Selling Expert. They’ll be able to answer all your questions and provide you with a personalised action plan that fits your unique priorities, property, and timeframes.

Click the button below to get started.