The sale process by auction is immediate, with exchange of contracts being achieved on the "fall of the hammer". A reserve price is the lowest price the vendor is prepared to accept and the property will not be sold unless a higher bid is received.
In most cases, a guide price is also available from the auctioneer. In the case of disposing of a property, auctioneers usually require a catalogue entry fee for each property that is included in an auction which can vary between £1,000 to £1,500 (exclusive) and is payable regardless of whether a sale is achieved. In addition, on completion, a further fee is payable to the auctioneer which usually ranges from between 1.25% to 1.5%, (exclusive) of the sale price. This also excludes legal fees, which the vendor is required to pay.
Not all properties are suitable for a sale by auction because there are different types of purchasers operating in the auction market compared to normal private treaty sales. Each property therefore needs to be considered individually to ascertain whether this method of sale is the most appropriate.
The Royal Institution of Chartered Surveyors is currently preparing a document known as "Common Conditions of Sale" in order to simplify the auction process, and also make auction contracts easier to understand.