Choosing my reserve price at auction

Date: 16 September 2014
Choosing my reserve price at auction
With all the excitement taking place at a property auction, it's easy to get overwhelmed as a home buyer. However, there's just as much for sellers to pay attention to.

After all, the auction is your chance to fetch a high price for your home, so it pays to stay on top of all the factors that can influence the success of a sell.

Chief among these is setting a reserve price.

What is a reserve price?

Put simply, a reserve price is the minimum price that you will accept for the purchase of your property. You get to set this price before the auction begins.

Once this threshold is reached, the highest bidder will become the proud owner of your real estate.

But more important than a definition is figuring out how to set your reserve price.

Choosing a number

The only people who will know the reserve price you choose are you, your agent and the auctioneer. However, choosing a figure all willy nilly is not a smart decision.

You'll want to think about the current market, taking into account what other homes like yours are worth. Additionally, since your home is being pursued by a specific pool of buyers, you should think about how many buyers are interested, as well as any feedback you've gotten on your property.

Obviously you want a solid return, but setting the price too high can backfire.

What if no one reaches my reserve price?

If bidding does not reach your reserve price, numerous options open up to you.

For instance, you could put the property on the market, which means the reserve price is no longer a factor and you'll accept the highest bid.

At the same time, you could request the property to be passed in, which means the auctioneer will tell the bidders the auction is coming to a close because the reserve price has not been reached.

Obviously neither of these options is preferable to having a bidder go above and beyond your reserve price, so think long and hard when selecting a figure.
Back to articles Filed under: Media / National News Tags: auction, bid, price, purchase, reserve price, selling, tips for selling
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