A reserve price is a price stipulated by a seller as the lowest acceptable price and is a mechanism that can assist with generating a successful sale price for the vendor.
If your reserve price isn’t met you are not obliged to sell and bidders are not obliged to buy.
Your reserve price should remain confidential and not be advertised anywhere.
Your reserve price can be set anywhere up to the day of the auction.
Auctioneers will let the bidders know once the reserve price has been reached and some bidders will only start bidding then, as the property is officially “on the market”.
When setting your reserve price, consider the following :
- How many buyers have seen the property?
- Have you already received other offers?
- What have local comparable properties sold for recently ?
- How many people are expected to show up?
- What comments have buyers been making about the property?
- What has their level of interest been?
- Attend local auctions to get an understanding of reserve prices and the margins.
- Discuss with your agent what your lowest acceptable price will be and effectively this will be the reserve that you put on the property.
- Consider your personal circumstances and how important it is that you sell on the day of the auction.
- Steer clear of bait pricing and underquoting
- Be ready to accept your reserve price if it is met
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