Why Auction Sales Don’t Fall Through
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Produced by Ruban Selvanayagam
Transcript
Hi, I’m Ruban Selvanayagam from Property Solvers Auctions.
One of the biggest challenges when selling a property on the open market isn’t just how long it takes – it’s the uncertainty around whether the deal will actually complete.
When using an estate agent, it’s well known that a significant proportion of agreed sales fall through before exchange. These days, it’s estimated to be in the region of 1 in 3.
And that’s one of the reasons property auctions have remained such a well-established route to sale, particularly for sellers who value certainty, structure and a defined timeline.
Because once a property sells at auction, the outcome is very different.
Traditional auction sales work on a legally binding basis from the point of sale, and as a result, fall-throughs are extremely unusual.
So in this video, I want to explain why that is, what’s happening structurally behind the scenes, and what it means if you’re deciding how to sell.
Let’s get into it…
To understand why estate agent sales fall through so often, you have to understand the legal position the moment a sale is agreed.
When a buyer offers on a property through an estate agent and you as the seller, accept – what has actually happened in legal terms?
Almost nothing.
Every open market sale in England and Wales operates “subject to contract.”
That means until contracts are formally exchanged – which typically takes anywhere from 3 to 9 months – neither side is legally committed to anything.
The buyer can walk away at any point, for any reason, with no financial penalty.
And that window – weeks or months of being technically “under offer” with no real legal commitment – is where everything tends to go wrong.
The causes of open market fall-throughs tend to follow recognisable patterns.
Mortgage problems are one of the most common.
A lender’s surveyor values the property below the agreed price. The buyer’s offer is reduced or withdrawn. The deal collapses – sometimes months in, after solicitors on both sides have been working throughout.
Survey findings are another.
The buyer’s survey flags structural issues, damp, roofing problems or other defects. The buyer uses that to renegotiate the price – or simply withdraws.
You’ve lost time, potentially incurred abortive legal costs, and you’re relisting from scratch with a property that fresh buyers might now perceive as being “tainted”.
Chain collapse is arguably the most unpredictable of all.
Many open market sales – particularly in the more expensive parts of the country – are linked to other transactions. Your buyer has a property to sell. The person buying from them has a property to sell.
A single problem anywhere in that sequence – at any level, involving a party you’ve never met – can bring your sale down with it.
And sometimes buyers simply change their mind. With no legal commitment and no financial exposure, there’s nothing to stop them.
Auction works differently because the legal architecture is fundamentally different.
In a traditional or unconditional auction, exchange of contracts happens at the moment the auction closes – not weeks later.
This is underpinned by Section 57, subsection 2 of the Law of Property Act 1925, which establishes that a binding contract is formed at the fall of the hammer.
In an online auction, that’s the moment bidding ends and the reserve – or the seller’s minimum acceptable price – has been met.
That exchange is confirmed through the Auction Memorandum of Sale, signed by both parties on the day – satisfying Section 2 of the Law of Property (Miscellaneous Provisions) Act 1989, which requires property contracts to be in writing.
From that moment, everything changes.
The buyer pays a 10% non-refundable deposit immediately. They are legally committed to completing within 28 days.
If they fail to complete, contractual interest accrues daily from the completion date – under the Standard Conditions of Sale (5th Edition) and the Common Auction Conditions, both of which Property Solvers Auctions follow.
The seller can serve a Notice to Complete, pursue damages, and the deposit is forfeited.
There is no cooling-off period. No “subject to survey.” No chain.
No mortgage lender who can withdraw approval two months in.
The commitment happens at the very start of the transaction – not somewhere in the middle of it.
It’s worth addressing something sellers sometimes ask at this point – what if a traditional auction buyer defaults?
It’s rare. Precisely because the financial exposure is so significant, buyers take the commitment seriously before they bid.
But if it does happen, the seller’s position is very strong.
A defaulting buyer can face significant financial consequences. Crucially, the 10% deposit paid after the fall of the hammer becomes at risk. If the buyer doesn’t complete, the seller can serve a 10-day Notice to Complete, with interest accruing.
If completion still doesn’t happen, the contract can be rescinded and the deposit forfeited to the seller.
On top of that, the buyer also becomes liable for abortive auctioneer fees and both sides’ conveyancing costs, which can very quickly turn into a very large sum of money.
In practice, since launching our auction service in 2021, we’ve only seen this happen once. In that case, the defaulting buyer incurred a significant loss, but we were able to move quickly – engaging the 2nd highest bidder and completing the sale within a short timeframe. The seller ultimately ended up in a very strong net position.
And importantly, because the legal pack, photography and marketing are already in place, the property can usually be reintroduced to the market almost immediately – without starting from scratch.
At Property Solvers Auctions, we also maintain a network of pre-vetted cash buyers who can step in when speed matters. Compare that to an estate agent fall-through – months of time lost, legal fees incurred on a transaction that came to nothing, and a relisting that buyers will look at with suspicion.
That said, it’s important to recognise that this level of certainty and speed often comes with a trade-off. Auction buyers are typically looking for a margin in return for committing quickly, taking on risk, and completing within a fixed timeframe.
In many cases, that’s reflected in pricing sitting at around 10-15% under the realistic open market value – but in return, the seller benefits from structure, commitment, and a far lower risk of the deal unravelling late in the process.
So if you’re looking to optimise your price and are willing to patient, my recommendation is usually always to stick with or find a new estate agent.
Now, this is where it’s also worth being clear about the modern method of auction – sometimes called conditional auction – because it works slightly differently, and more often than not can support stronger pricing outcomes.
With these auctions, the buyer pays a non-refundable reservation fee at the close of bidding but does not exchange contracts on the day.
They have a defined period – typically 56 days – to exchange and complete.
This opens bidding to mortgage buyers, which widens the buyer pool.
The trade-off is that until exchange takes place, there is no legally binding contract under Section 2 of the 1989 Act.
A buyer who walks away loses their reservation fee – but they’re not exposed to the same level of liability as a traditional auction buyer who has already exchanged.
Modern method offers meaningfully more protection than a private-treaty estate agent sale.
But traditional auction offers the strongest legal certainty of any mainstream route to market.
Both have a place depending on the property, the buyer pool, and what the seller needs.
At Property Solvers Auctions, we offer both – and we’ll always be straight with you about which approach suits your situation best.
The practical upshot is straightforward.
In a traditional auction, the outcome is typically known within 3 to 4 weeks of going to market.
If bidding reaches your reserve, you exchange on the day.
If it doesn’t, you know quickly – and you can make decisions from a position of clarity, not after months of uncertainty.
That speed, combined with the legal commitment built into the process, is why auction fall-through rates are practically zero. It’s because the structure removes the long window where deals can fall apart.
If you’d like a straightforward conversation about whether auction is the right route for your property – and a free auction valuation report based on actual sold data – feel free to email me at ruban@propertysolvers.co.uk.
We’d be delighted to help.
A big thanks for watching – and if you found this useful, please do like the video and subscribe to the channel.
