Modern Auction: The Top 15 Pros & Cons [A 2024 Seller’s Guide]

Modern Auction may sound like the newer, upgraded version of Traditional Auctions – but they’re actually very different. Modern Auction can be a good fit for some homeowners looking for a quicker than average sale…but it’s not right for everyone.

So, what are the pros and cons of selling your house by Modern Auction?

Modern Auction’s main advantage is speed. You can sell your home in as little as 12-16 weeks if all goes well. The main disadvantage is price, as you’ll typically get less selling by Modern Auction. There is also no guarantee that the property will sell. High fees and hidden costs can also put potential buyers off.

In this article, we’ll cover the top pros and cons of selling your house at modern auction.

If you want to cut right to the chase and see if modern auction could be right for you, we’ve created a free online quiz to help you do just that. If modern auction is a good fit, we’ll recommend the #1 Leading Auction House in your area on your results page.

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1. What is Modern Auction?

Modern Auction (aka The Modern Method of Auction) is an online “conditional auction” process. It has longer timescales and less rigid requirements compared with traditional auctions. This means modern auctions are more accessible to a wider range of buyers, including mortgage buyers.

Winning bidders must pay a non-refundable reservation fee at the end of the auction.

The buyer then has between 28-56 days to exchange contracts and complete. The buyer can pull out at any point up to exchange but would lose their reservation fee in the process.

Modern Auction isn't necessarily "better" or "worse" than Traditional Auction. They're different tools, best used in different circumstances.

It all depends on your priorities, property, and timeframes.

We've designed this free quiz to help you figure out if Modern Auction is right for you.

2. Advantages of Modern Auction.

Selling your home by modern auction has a few advantages. The main benefit is speed, as you can sell in as little as 12-16 weeks (compared with the average 25-week estate agent sale). If you agree a sale, you’ll also benefit from a reduced fall-through rate.

Let’s take a look at the advantages of modern auction in more detail…

Pro #1: Faster than the average estate agent sale (if it sells first time round)

One of the main benefits of selling your house by modern auction is speed. You can sell your house in as little as 12-16 weeks, which is much faster than the average estate agent sale.

Remember though that this is based on the property selling first time around which isn’t guaranteed.

By comparison, it takes nearly 6 months on average (according to Zoopla) to sell a house with an estate agent.

Top tip: The fastest way to sell your home is selling directly to a reputable house buying company. They can make you an offer within 24-48 hours and buy your house in as little as 7 days.

If you need a faster than average sale, you can see if a house buying company is right for you for free by taking our quiz here.

Pro #2: Wider range of buyers compared with traditional auction (in theory)

Modern auctions attract a wider range of buyers compared with traditional auction.

People can purchase with a mortgage thanks to the longer timeframes. This means you won’t just be limited to cash buyers like you would at a traditional auction.

Top tip: Although modern auctions are open to any kinds of buyers in theory, many are put off by the high fees or intimidated by the process.

Pro #3: More properties fit the criteria for Modern Auction

Traditionally, auctions were limited to problem properties, commercial premises, land, and development opportunities.

Modern auctions have widened the “traditional” criteria and attract “normal” mortgageable properties in good condition. This is because people can purchase with a mortgage thanks to the slightly longer timeframes.

Pro #4: Reduced fall-through rates compared with an estate agent (if you agree a sale)

If you agree a sale, modern auctions offer a much greater level of certainty than selling with an estate agent.

Only around 5% of modern auction sales fall-through once the reservation fee is paid.

By comparison, around 31% of estate agent sales fall through at least once before completion!

Pro #5: Competitive bidding can drive up the price achieved

The format of modern auction encourages multiple buyers to bid against each other. Ideally, this will create a competitive bidding war which will quickly drive up the final price.

Top tip: Make sure you listen to your auctioneer’s advice when setting your guide price. An overpriced property will not generate the type of interest needed to start a bidding war.

3. Disadvantages of Modern Auction.

The main disadvantage of selling your home by modern auction is price. You can expect to receive around 85-90% of the market value of your home. There’s no guarantee that your house will sell at auction either. High fees and hidden costs can put many buyers off, and it’s not an option if you’re in a house chain.

So, do the disadvantages outweigh the advantages of modern auction? Let’s take a closer look…

Con #1: Compromise on price

The main disadvantage of selling your house by modern auction is the compromise you make on price.

Properties in modern auctions tend to fetch around 85-90% of their market value.

If you need to achieve full, or close to, market value, the only way to sell your home will be with a good, local estate agent.

Related: How To Sell Your House Fast for the Best Price: My 9 Top Tips!

Con #2: High fees & hidden costs

Modern auction fees are much higher than estate agent and traditional auction fees.

On average, modern auction fees tend to be around 3-4% plus VAT and are usually subject to a minimum fee of around £5,000 + VAT.

Modern auction can initially seem appealing to sellers because the buyer is usually responsible for the fees.

However, remember this will ultimately come off the final amount the buyer is able to bid on the day (so you won’t be any better off). It can also cause issues later down the line if the buyer hasn’t noticed that they’ll be responsible for the seller’s fees in the contract.

Nothing comes for free…

Top tip: Lots of mortgage buyers are put off buying at modern auction because of the non-refundable reservation fee. This will need to be paid in addition to the 10% deposit to secure their mortgage.

If something goes wrong, they risk losing the reservation fee which will be a massive chunk of the money they’ve saved for their future home. Many buyers aren’t willing to take the gamble.

Con #3: Sale not as “final” as traditional auctions

Unlike traditional auctions, there is no legally binding contract created when a modern auction ends.

Mortgage buyers can also take part in modern auctions. If the buyer fails to get a mortgage, the sale will fall through.

For these reasons, modern auctions do have a slightly higher fall-through rate (5%) than traditional auctions (less than 1%).

If modern auction is starting to sound like the wrong option for you, take our free quiz to explore other fast sale methods. We'll match you with the best option for you based on your priorities, property, and timeframes.

Con #4: Smaller buyer pool vs estate agent sale

If you sell by modern auction, you’ll have a much smaller buyer pool than if you choose to sell with a local estate agent.

Many buyers are put off modern auction for the following reasons:

• High fees. Buyers are usually responsible for the fees, which can be as much as 3-4% + VAT.
• Intimidating process. Buyers must pay a non-refundable reservation fee, commit to a deadline, and risk losing it all if things don’t pan out or they change their mind.
• Unknown companies. Buyers can be put off dealing with an out-of-area online company they’ve never heard of (many of whom have bad reviews).
• Some companies have bad reviews. Buyers will see any bad reviews and may decide not to bid on your home if they don’t want to deal with the company you’re selling through.

It’s also worth noting that bad reviews from buyers probably mean the modern auction company are treating their sellers badly too!

Related: If you want help finding the best auction house for you, read my guide: My Guide To Finding The Best Auction House In The UK [Based On The Real Data]

Con #5: No guarantee it will sell

Not every house that goes to auction sells.

Insider contacts have told us that some of the major modern auctions currently sell as few as 30-40% of the properties they take on!

Certain auction houses use sneaky tactics to keep their success rates looking high. If a property is not going to sell, many withdraw it from the auction, so the unsold lot doesn’t skew their numbers.

Top tip: Failed auction attempts can be costly – not only do you lose time, but it can also affect the value of your property.

Con #6: Difficult to coordinate in a chain

Modern auction isn’t really an option if you have an onward purchase.

Modern auction sales tend to take 12-16 weeks on average, and there’s no guarantee the property will sell in the first auction. This makes it hard to sync up the sales and co-ordinate if you’re in a house chain.

Con #7: Inflated valuations are becoming common

We’ve seen an increase in the number of modern auction houses inflating valuations to win more business.

From their perspective, it’s better to win the business and be in with a shot of selling than giving a realistic price and risk not signing you up.

This is similar to many estate agents, who tell you what you want to hear to win the business, then get you to reduce the price.

Top tip: We'd advise getting 2-3 valuations from different modern auction companies and ask them to justify their valuation. Remember, on average, most modern auction houses sell properties for 85-90% of their market value. If their valuation sounds too good to be true, it probably is…

Con #8: Sales don’t always run to deadlines

Unfortunately, there is no guarantee your modern auction sale will complete on time.

There is no penalty if a sale creeps over the 56-day completion deadline. Sales can sometimes run over because of this.

This undermines one of the main benefits of modern auction and can be tricky to navigate if you’re working to a strict deadline.

Con #9: Untrustworthy modern auction houses

Unfortunately, there are lots of modern auction companies who have built a business around making big (but empty) promises. Many of the biggest players have bad reviews and reputations.

Because barriers to entry are so low, it’s easy for other companies to spring up and make these empty promises too.

This means it can be hard to find a reputable, experienced modern auction company.

If you’re looking to save a lot of the homework, headaches, and guesswork, we can help. Take our quiz to discover if modern auction is right for you. If it is, we’ll recommend our #1 Leading Auction House in your area.

Con #10: Ulterior motives when it comes to recommendations

If you say you want a fast sale to an estate agent, many will be quick to recommend modern auction as a “great option” for you.

Keep in mind that agents will get paid massive referral fees for recommending modern auction. They’ll get paid even more for the referral than they would selling your property themselves (sometimes twice as much)!

Take their recommendation with a pinch of salt. Make sure you do your own research and understand the pros and pitfalls of modern auction before you sign anything.

They may not be looking out for your best interests when the referral fees are so high.

4. Should I sell my house by Modern Auction?

In our experience, modern auction is only right for a very small number of home sellers in specific circumstances.

We believe the negatives of modern auction outweigh the positives for the majority of home sellers.

However, it all depends on your individual priorities, property, and timeframes.

If you want to find out if modern auction is right for you, you can take our free quiz.

If modern auction is a good fit, we’ll recommend our #1 Leading Auction House in your area. If not, you’ll have the chance to book a free consultation with a Home Selling Expert to help you figure out your optimal selling method.

Click below to get started…