The auction has closed with your reserve met or exceeded, and a winning bidder identified. What happens in the next few days sets the tone for the 28-day exchange window that's about to start, so speed matters more here than at almost any other point.
What actually happens once a bidder wins?
The highest bid above your reserve is accepted, and the auctioneer contacts the winning bidder, who must pay a non-refundable reservation fee, typically 4% to 5% of the purchase price plus VAT, subject to a minimum set by the auctioneer. Once that's paid, a Memorandum of Sale is drawn up, and the buyer has 28 days to exchange contracts from the point their solicitor receives the draft contract from yours, followed by a further 28 days to complete.
Why does this stage matter so much?
The reservation fee and the timescales that follow are what genuinely distinguish this from a standard private treaty sale, they create a real level of commitment, stronger than simply accepting an offer, even though the transaction still isn't legally binding until contracts exchange. Speed matters from this exact point. The 28-day exchange window is tight, and any delay in issuing the draft contract or responding to enquiries can genuinely jeopardise the whole timeline.
What happens behind the scenes?
Your conveyancer needs to issue the draft contract to the buyer's solicitor as fast as possible, since the 28-day clock typically starts from the date it's received, not from the auction close date. Your auctioneer issues the Memorandum of Sale to both solicitors. The buyer, meanwhile, will be progressing their mortgage application if they have one, and may want to arrange a survey.
A worth-knowing detail on tax
HMRC treats the reservation fee as part of the total consideration for Stamp Duty Land Tax purposes, which affects the buyer's tax calculation on top of the headline purchase price. It's worth buyers factoring this in before bidding, and worth sellers understanding too, since it's a genuine feature of the mechanism, not a hidden cost anyone's trying to obscure.
What should you actually do right now?
Contact your conveyancer immediately and instruct them to issue the draft contract without delay. Confirm the buyer's solicitor's details with the auctioneer so it goes to the right contact first time. Give your conveyancer anything they need to complete the contract, the legal pack should cover most of it, but expect supplementary requests. Keep communication open with the auctioneer, who typically coordinates between both parties during these early post-auction days.
| Right now | Why it matters |
|---|---|
| Instruct your conveyancer to issue the draft contract | The 28-day exchange clock starts when the buyer's solicitor receives it |
| Confirm the buyer's solicitor's details | Avoids delay from the contract going to the wrong contact |
| Respond fast to supplementary requests | The tight timeline has little slack for delay |
| Stay in contact with the auctioneer | They coordinate the early post-auction process |
Frequently asked questions
- How much is the reservation fee in a Modern Method of Auction sale?
- Typically 4% to 5% of the purchase price plus VAT, non-refundable unless the seller is at fault.
- When does the 28-day exchange window actually start?
- From when the buyer's solicitor receives the draft contract, not from the auction close date.
- Is the reservation fee subject to Stamp Duty?
- Yes, HMRC includes it in the total consideration for SDLT purposes.
- What happens if the seller withdraws after the reservation fee is paid?
- The buyer may be entitled to a refund, unlike a buyer-initiated withdrawal.
This guide is general information for home sellers in England and Wales, not legal or tax advice. Reservation fee terms vary by auctioneer, and Stamp Duty calculations should be confirmed with a conveyancer or tax adviser.