Warning: online property auctions – the extensive pitfalls our expert conveyancing team want you to know about
More people than ever before are considering buying a property online using what’s known as the Modern Method of Auction (MMA).
With MMA properties now commonly listed for sale on portals like Rightmove and Zoopla, the market is growing rapidly with one leading firm reporting an almost 10% increase in sales in 2025.
However, complaints to The Property Ombudsman about this type of auction have also risen with buyer confusion highlighted as a major problem.
Many buyers don’t realise they could lose thousands of pounds if the purchase falls through.
This is why Wards’ expert conveyancing team will not normally act in an MMA transaction.
We believe buyers need to be made aware of the risks and dangers – limited time to raise legal enquiries, the possibility of losing thousands in non-refundable reservation fees if a legal problem emerges and the burden of financial penalties incurred by delays – even if the seller causes them – carried by the buyer.
What’s the difference between a traditional property auction and an MMA?
Traditional property auctions have a set time and date. When the auctioneer’s hammer falls signalling the end of the sale, the person who has placed the highest winning bid enters into a legally binding contract and must pay a 10% deposit. The seller pays the auctioneer’s fee. Contracts are exchanged on the day and both parties are legally obliged to complete, normally within 28 days.
The Modern Method of Auction works more like eBay. Each auction usually lasts for a month or more and potential buyers can keep bidding on a property until the deadline.
Once the reserve is met, the highest bidder wins.
However, at this point, no contracts are exchanged. Instead, the winning bidder pays a non-refundable reservation fee, usually 3% to 5% (plus VAT) on top of the sale price. The seller pays nothing. After this, there is time frame within which the successful buyer can exchange contracts and complete the purchase. If the buyer does not meet the deadline set, they are likely to lose the fee paid upfront.
What are the potential problems with buying a property at an MMA auction?
The Property Ombudsman has highlighted reservation fees as a major cause of dispute.
On a £450,000 property, for example, with a 3% reservation fee you pay £13,500 up front and on top of the agreed sale price to secure the property.
This is non-refundable, can’t come out of your mortgage funds and if you pull out or don’t complete in time, you’ll lose this fee unless the seller agrees to an extension.
Reasons for forfeiting your full reservation fee could include:
- A poor post-auction survey. If you decide to walk away as a result, you’ll lose the reservation fee.
- Conveyancing delays. If an issue such as obtaining the full title takes you beyond the exchange deadline, your reservation fee is at risk. Any delay (even from the seller or their conveyancer) counts towards the time frame within which a successful buyer must complete the purchase.
- Mortgage problems. If your provider refuses to lend on the property or decides to ‘down-value’ it, you could lose the reservation fee. In a traditional purchase, a down-valuation usually gives you the chance to renegotiate with the seller.
Why can buying at an MMA auction cause you more expense?
There are a number of reasons including:
- Higher stamp duty – this is calculated on the cost of the property plus the reservation fee. If you buy in the traditional way, only the sale price is included in the calculation.
- You may have to pay for the seller’s legal pack and a participation fee for taking part in the auction, although this is sometimes refundable.
- The buyer, in the hefty upfront reservation fee, picks up the costs a seller normally pays the estate agent to sell their property.
- If you are selling through an estate agent and buying at an MMA you’ll be hit with two sets of fees.
Why is it safer to buy property via an estate agent using a specialist solicitor?
The traditional route enables you to minimise upfront financial risk by conducting a structural survey of the property and conducting all the legal checks necessary before you are legally committed to buy it.
Why choose Wards for your conveyancing transaction?
Wards Solicitors wins high praise in the 2026 edition of the independent Legal 500 guide of outstanding legal professionals for its exceptional professional service standards and high levels of technical expertise.
Our expert and highly regarded Conveyancing Team works across all 13 of our local offices in Bristol, South Gloucestershire, Bath and North East Somerset and North Somerset.
Please don’t hesitate to get in contact.