What's the difference between a conditional and unconditional auction?
The principal difference between conditional and unconditional property auction comes down to sale speed and the timeframe within which you want to complete.
Conditional Auction (56 Day Completion)
After marketing your property and conducting viewings/open days, the auctioneer will conduct a competitive bidding process.
The bid is won once the virtual hammer falls.
There is then an allocated 4-week (28-day) exclusivity period for the buyer to exchange contracts on the property.
At this juncture, a non-refundable deposit is also instantly paid (for extra security). The buyer must exchange after the 28 day period or risk losing all of this deposit.
At the point of exchange, a 10% deposit is paid into the buyer’s conveyancer’s account.
There is then a further 4 weeks (28 days) for the sale to complete.
The main upsides of selling this way is the longer timeline that buyers have to complete on the sale and higher achievable prices.
The ‘pool’ of potential purchasers of your property widens as there is more time to organise mortgage finance compared to what is the case with traditional (or ‘unconditional’) auctions.
Unconditional Auction (28 Day Completion)
Similar to the 56-day auction, there will be best bids process after the property has been marketed and viewed by potential bidders.
A stipulated bidding period will see potential buyers compete against each other. Once the virtual hammer falls, the winning buyer has effectively exchanged contracts and will need to pay a minimum deposit of 10%.
The buyer is obliged to complete on the sale within 28 days. Failing to do so means that he/she will lose the deposit and incur other financial penalties set by the auction house.
Although the price achieved can be lower, sellers sometimes prefer this auction sales channel due to the time saving.
Typically we often find that tenanted, pre-repossession, inherited/probate, divorce/separation and other types of problem properties are better suited for unconditional auctions.
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