Selling a property at auction is an unpredictable, exciting and nerve-wracking experience. If you set the reserve price correctly, it can greatly optimise the outcome of results. Determining a reserve price for selling a property at auction can be a fine balancing act, between setting a high price to ensure vendors are gaining a substantial amount, while maintaining a fair price to attract enough bidders on the actual day.
When Should A Reserve Price Be Set?
It’s important to make a decision on the reserve price well before the day of auction. Due to factors such as adrenaline and excitement on the actual day of auction, a vendor’s judgement can be clouded and easily influenced.
Vendors need to make the decision as logically and unemotionally as possible, so it’s always a good idea to make that decision a few weeks prior, and to avoid reversing it without any logical evidence to back the decision. When deciding to set the reserve price, be sure to speak to home conveyancers as they will be able to provide you with the expertise and guidance to make an informed decision.
How To Make A Final Decision
To determine an effective reserve price there are several important things to consider:
- Market feedback from professionals and experts in home conveyancing
- The amount of interest in similar properties
- The comparable sales in similar properties
- Whether there’s been any pre-auction offers
- The amount of people expected to show up at auction
- The level of apparent interest in the property
- The comments buyers have been making regarding the property
In order to get a better idea of the margin between reserve price and final selling price, research should be done into other auctions in the local area, as well as speaking with local residential conveyancing professionals in Melbourne.
Ultimately, the vendor’s personal circumstances need to also be considered, and how crucial it is for them to sell on the day of auction. The more pressure to achieve a quick sale, the less important the reserve price becomes. Depending on their circumstances, choosing a slightly more conservative reserve price could be better to avoid the property being passed in.
A pass-in at auction, which is when the highest bid fails to exceed the reserve price, happens for a number of reasons, however a reserve price set too high for the market is the most common. It’s important to remember that if a property is passed in, it doesn’t mean the auction was a failure. An estate agent together with residential conveyancing professionals in Melbourne can help leverage by negotiating with the highest bidder or other interested bidders, to make a post-auction sale.
The auction process should be explained clearly and concisely, while an indication of the odds of the home passing in or selling successfully will be clear. With the guidance of a home conveyancing professionals, a final figure can be determined to see whether it needs to be adjusted accordingly. To have the best chance at your next auction, speak to the experts in residential conveyancing.