To help you understand the terms used around auction sales, we've compiled a simple glossary of common terms with an explanation behind each one.
On acceptance of a bid the buyer is required to sign the Contract for Sale and to pay a 10% (minimum of £6,000) part payment contract deposit. Normally 28 days are granted to the buyer to complete the sale. Unless stated otherwise the buyer will also pay a reservation fee in addition to their bid price.
On acceptance of a bid the buyer is required to sign a Reservation Form and to pay a c. 3.6% incl VAT (minimum of £6,000 incl VAT) reservation fee or part payment reservation deposit as stated on the property details. The winning bid secures the property exclusively for the successful bidder for the 28 day reservation period. The buyer must sign the Contract for Sale and pay the balance of the 10% contract deposit (if applicable) within the 28 day reservation period. After contracts for sale are signed by the buyer, they are granted a further 28 days to complete the sale. If the contract for sale is not signed by the buyer within the 28 day reservation period the buyers reservation deposit is forfeited and the seller can re offer the property to the market.
Properties marked ‘Pre Auction Marketing’ means that viewings are available, however, the ‘Property Information Pack’ is not yet available. Once the pack is received from the seller’s solicitor the property will then be listed for either online auction or public auction event.
Every property is advertised with a starting bid, which is the recommended level at which the bidding should open. It must not be relied upon by potential buyers as a valuation, as in most cases the reserve is above this level. Both the reserve and starting bid are subject to change.
This is the minimum price that a seller is willing to accept for a subject property. This is a figure that the property will not be sold below. Reserve prices are usually not published; this is a private agreement between the seller and the auctioneer. Both the reserve and starting bid can be subject to change.
Contract Deposits or Reservation Deposits are paid to secure the property for the successful buyer. Contract Deposits are generally 10% of the bid price and Reservation Deposits are generally 3.6% of the bid price ‘subject to’ a minimum deposit amount of £6,000. Both contract deposits and reservation deposits are part payment of the purchase price and are paid on a non-refundable basis. All deposits must be paid to the auction team and will be held in their client account.
If the seller chooses to pay 0% commisson, as per the T&C's of the auction the buyer will pay a non-refundable reservation fee in addition to their bid price when the auction is successfully concluded. The fee paid is typically 3.6% including VAT of the final purchase price and is subject to a minimum payment of £6,000 including VAT. The fee is held by IAM Sold to reserve the property to the buyer and show their commitment to the purchase. It is later used to pay the Estate Agent and Auctioneer.
Yes, the seller may decide to accept a bid prior to the nominated auction date. By law we must put all bids forward to the seller and they will decide whether to accept a bid or not. It is therefore important that buyers note their interest to the auction team early to avoid disappointment. If a bid is accepted by the seller before the nominated auction date it will be strictly under auction terms and conditions.
A Property Information Pack will be uploaded for each property to the auction website once the pack is received from the seller’s solicitor. The pack will usually contain a reservation form, contract for sale, title information, title map, planning information, tax receipts amongst other supporting documentation to help buyers make a decision on their property of interest. The Property Information Pack can be viewed and downloaded from the auction website by registered users. The auction team advise buyers to employ a solicitor to review the pack for them ahead of bidding.
The Reservation Form is the conditional auction agreement between the auction house as agent for the seller and the buyer. The agreement lays out in plain English the terms and conditions which need to be met by the buyer to progress the agreed sale. The sale will not be instructed and the Notification of Sale will not be sent out until the Reservation Agreement is signed by the buyer and reservation fee or deposit paid down.
Here, the buyer signs the contract for sale and then the same contract is counter signed by the seller. This is the point at which both parties are legally obliged to complete the transaction. The purchase is not complete at this point, but there is a legal obligation for the purchaser to buy and the seller to sell.
This is when the purchase becomes final: the purchase price is paid in full by the buyer's solicitor and received by the seller's solicitor. Completion can take place at the same time as the exchange of contracts (see above), however, normally takes place within 28 days afterwards. The seller must move out of the property on this date and release the keys. The buyer is free to move into the property..
We think we’ve explained pretty much everything. However if you're struggling with the concept, have a question or just want to confirm some details, don't hesitate to speak to a member of the Auction team. They are approachable, friendly and able to offer honest and sensible advice. You can contact us by telephone, email or fax.