With this method of auction, the buyer is given a more realistic time frame in order to source funding and complete the purchase. With a traditional auction, the buyer is given 28 days, with a modern auction, the buyer has 56 days – 28 days from the day of the auction to exchange contracts, then a further 28 days to complete the purchase in full.
This gives buyers more time to have funding sorted, if they are reliant on a mortgage, as you don’t have to exchange contracts on the same day.
When a successful bid is made, the buyer is required to pay a non-refundable ‘reservation fee’ in order to secure the property – this can be up to 5% of the purchase price.
The reservation fee can be refunded but only if the sale cannot be completed due to a fault from the vendor. If the buyer pulls out before exchange of contracts, the reservation fee will be lost and the vendor can resell the property.