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 auction. On average, Modern Auction is faster than an estate agent sale. It also has lower fall-through rates once a sale has been agreed.

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.

Who is responsible for modern auction fees?

Modern auction is often sold to sellers as having “no selling fee”. This is because the buyer is responsible for paying the non-refundable Reservation Fee. However, in practice the buyer will have to deduct the reservation fee from the total amount they’re able to offer on the property. Ultimately, this means the seller still foots this bill.

Why Are Modern Auction Fees So High? [Seller’s Fee Guide]

Q: Is modern auction any good?

In theory, modern auction was created to give home sellers the best of both traditional auction & estate agent sales. It promises the speed and certainty of auction, with the high price of an estate agent sale. In practice, modern auction fails to deliver on many of its promises. It’s certainly not right for everyone.

Q: How much does it cost to sell your house by modern auction?

Although the buyer is responsible for modern auction fees, the seller will be no better off as the fee will be deducted from the amount the buyer is able to bid for the property. On average, modern auction fees are 3-4% + VAT, subject to a minimum of around £5,000 + VAT. Remember it will also cost you 10-15% of your property's market value, as homes tend to achieve between 85-90% of their market value at auction.

Modern auction promises sellers a faster, more certain, and more convenient home sale compared with your standard estate agent sale. In our opinion, modern auction fails to deliver on many of its promises and therefore doesn’t justify the hefty price tag…

So, why are modern auction fees so high?

Modern auction fees are much higher than traditional auction or estate agent fees. On average, modern auction fees are 3-4% + VAT, and are subject to a minimum fee of around £5,000 + VAT. Modern auction fees are so high because of the “premium service” and the estate agent’s hefty referral fee.

In this article, we’ll cover everything you need to know about modern auction fees, including how much they are, who’s responsible for them, how they compare to other selling methods, and why they’re so high!

Just remember that fees are only a small part of what you pay to go through the modern auction process. The biggest cost you incur is that you’ll sell your home for less money overall (10-15% on average)!

If you want to cut right to the chase and see if modern auction is right for you, we’ve created a free quiz to help you do just that. If modern auction is a good fit, we’ll help you get in touch with the #1 Leading Auction House in your area.

Click the button below to get started.

1. What is the modern auction process?

Modern Auction is an online “conditional” selling method.

It has longer timescales and less rigid requirements than traditional auction. This means it’s more accessible to a wider range of buyers (in theory).

Modern auction is faster and more convenient than an estate agent sale on average. You can sell in as little as 12-16 weeks if everything goes to plan.

It also has lower fall-through rates, as buyers must pay a non-refundable reservation fee at the end of the auction. Buyers will then have an exclusive period in which to exchange and complete on the sale (usually 56 days).

2. How much does it cost to sell your house by modern auction?

If you’re thinking about selling your home by modern auction, there are a few costs you should consider:

The Reservation Fee
The Auction Pack (aka the legal pack)
Legal fees
The compromise on the final selling price

Overall, you can expect modern auction to “cost” you 10-15% of your property’s full market value once you factor in fees and the final selling price.

2.1 Who pays the fees in modern auction?

Most sellers will be told there are “no fees” if you decide to sell by modern auction.

But there are – it’s just that the buyer pays most of them.

Modern auction fees are expensive - remember this will come off the final amount the buyer is able and willing to bid for your home!

The buyer will have to deduct the fees from the total amount they’re able to offer on the property.

Ultimately, this means the seller will be no better off and so will, indirectly, still end up covering the fees.

2.2 The Reservation Fee

Modern auction fees are hefty.

On average, buyers will have to pay a reservation fee of around 3-4% + VAT. This fee is subject to a minimum fee of around £5,000 + VAT.

2.3 The Auction Pack (aka the Legal Pack)

The seller might be responsible for the cost of the auction pack (aka the legal pack).

This will either be an upfront cost, or will be due on completion of the sale, depending on the auction house.

If your property doesn’t sell at auction, you might still be expected to cover the cost of the auction pack which is worth bearing in mind.

2.4 Legal Fees

The seller will also have their own legal fees to cover, which will be payable on completion of the sale.

2.5 The compromise on the final selling price

It’s important to bear in mind that you’ll also sell your house for less money at modern auction.

It’s important to bear in mind that you’ll also sell your house for less money at modern auction.

Homes at modern auction tend to achieve between 85-90% of their market value on average.

Effectively, this means it will “cost you” 10-15% of your property’s market value to sell by modern auction.

If you need to achieve full market value for your home, you will need to sell with a good, local estate agent and be willing to wait for the right buyer.

3. How do modern auction fees compare to other selling methods?

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

Let’s take a look at how they compare below:

Estate Agent Fees. Estate agent fees range from 1 – 1.5% + VAT on average. Fees are payable on completion of the sale.
Traditional Auctions. Traditional auction fees tend to be around 1.5 – 2.5% + VAT, payable when the property sells. The seller will usually also have to pay an up-front “entry fee” of a few hundred pounds to enter the auction.

4. Reasons why modern auction fees are so high.

There are two main reasons why modern auction fees are so high:

You get a faster, more convenient sale (in theory).
The estate agent will take a fee too.

Let’s take a look at each of these reasons in more detail below…

4.1 Faster, more convenient sale (in theory)

In theory, modern auction should offer homeowners a quicker, more convenient, and more certain home sale.

As a result, you’re expected to pay a higher price for a premium service.

However, we’ve been in the property industry for over 15 years and have been keeping a close eye on modern auction in that time.

In our opinion, modern auction fails to deliver on many of its promises and therefore doesn’t justify the hefty price tag.

In our opinion, modern auction fails to deliver on many of its promises and therefore doesn’t justify the hefty price tag.

You can read more about our honest advice on the modern auction process, including the promises and realities of the selling method, here: “Is Modern Auction Any Good? [Find Out If It’s Right for You]”.

4.2 Estate agent fees

Another one of the main reasons why Modern Auction fees are so high is how they get their business.

Modern auction companies have mostly grown through partnerships with estate agents.

Estate agents are paid a referral fee on completion, which is taken from the auctioneer's commission.

Modern Auctions have teams of salespeople who work to build these partnerships.

Once a partnership is secured, estate agents will then refer suitable properties to the modern auction company.

Typically, these will be their existing customers who they may be struggling to help sell or have mentioned that they want a “faster than average” sale.

The estate agent will then continue to:

Help with the marketing of the property,
Conduct viewings with any interested parties, and
Encourage offers.

The estate agent will take a substantial chunk of the auctioneer’s commission on completion for their involvement (typically 30-50%).

This covers their usual commission but will also include a bonus on top. This “bonus” creates an incentive for the estate agent to refer properties to auction.

Top tip: If your agent has recommended modern auction to you, make sure you do your own research before committing to anything. From our experience, it’s more likely the agent is prioritising their fees rather than looking out for your best interests.

5. Is modern auction right for you?

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

If modern auction seems like a good fit based on your responses, we’ll recommend our #1 Leading Auction House in your area.

If not, you’ll have a chance to book a free, impartial chat with a Home Selling Expert to help you figure out your optimal selling method.

Click below to get started…

By Matthew Cooper, Co-Founder of Home Selling Expert

I'm an experienced property insider, trusted media commentator, and the Founder of Home Selling Expert and YesHomebuyers.com. I've bought and sold almost 150 properties worth nearly £17m, and my advice articles (like this one!) have been viewed more than 1million times.

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