Don’t be reserved when setting a reserve

The auction to sell your house is around the corner and you’re struggling to set the perfect reserve price. But setting this price isn’t a simple process so take a deep breath and ensure you have plenty of time to manage this decision. It could mean the difference between selling your property under the hammer – or not.

Let’s start at the very beginning….

Your reserve is the lowest price at which you’re prepared to sell your property. You’re looking for the ideal sales price which will have you, as the vendor, celebrating with plenty of cash in your hip pocket. At the same time, your reserve shouldn’t soar so high that it discourages bidders from putting up their hands. 

Whatever figure you decide on, remember it won’t be advertised and it’s always confidential. Even when a bidder asks for the reserve – and rest assured, someone always does! – your auctioneer won’t reveal this information.

How should I set my reserve?

Aim to be objective and logical. Yes, this can be hard especially if you’re selling a family house you’ve lived in for 20 years or an apartment you and your spouse bought together and spent your post-wedding period in. 

Answer: talk to your agent and auctioneer. They’ve gone through this process dozens of times and can tell you how much interest there has been in your home during the marketing campaign as well as local buyer sentiment. They may well know of several passionate buyers keen to snap up your house at auction.

Also, do your research on what similar homes in your area are worth and attend nearby auctions. Make your initial reserve decision a few weeks before the big day but factor in potential changes as the market can change during your marketing campaign. 

Last but not least, think about your personal situation. Do you have to obtain a quick sale? If so, are you prepared to possibly sell for a lower price than you’d like? Give your final verdict on your reserve in the final few days before your auction.

Do I have to set a reserve?

Short answer: no. But it’s a risky business.

If you decide to head in this direction, your house will sell to the highest bidder, regardless of how high (or low) their bid is. As such, it’s always best to set a smart reserve before auction. 

On the other hand, not setting a reserve can sometimes result in a great sale as the possibility of no reserve can increase interest and see multiple bidder hands simultaneously. But if you’ve never sold a home at auction before, it’s recommended you stick with setting a reserve.

On auction day

While auctioneers can’t reveal the reserve price to bidders, they may let people know when bidding has hit this price. After doing this, you may see bidding jump ahead or slump, depending on your figure. Some bidders who haven’t yet raised their hands will immediately do so when they know the property is on the market.

Chin up!

Bidding which doesn’t hit the reserve might see your house not selling under the hammer, otherwise known as passed in. If this happens to you, don’t despair. Everything is definitely not lost with plenty of homes selling in post-auction private negotiations between the highest bidder and your agent. 

But it is crucial to remember that if your reserve price is met, you may have to accept that price – and that price only – if no further bidding materialises.

chrisbrown1224

Managing Director – New Vision Financial Services & New Vision Real Estate After years in the banking, finance & commercial sector Chris noticed that the industry needed a company with a personal touch that offered their customers a complete solution. In 2015 New Vision Financial Services was created to allow our consultants to use their experience (including approving and structuring large complex commercial transactions through to basic home loans) and to concentrate on offering a personalised service to their clients. With the growth and success of New Vision Financial Services a decision was made in 2019 to launch New Vision Real Estate to provide an end to end solution for client weather they be first home buyers or seasoned investors. Chris has built a team at New Vision Financial Services and New Vision Real Estate that have access to over 70 different lenders, insurers, lawyers, accountants and financial planners giving you more flexibility when making a decision. We offer a full service Real Estate agency offering Sales, Leasing, New Developments, House & Land and Commercial. Call me anytime on 0433 181 544 or email chris@newvisionfinancial.com.au The team at New Vision Financial Services have access to over 70 different lenders, giving you more flexibility when making a decision. Our consultants have had extensive experience within the banking, financial and corporate sector. At New Vision Financial Services we specialise in finance lending for home, investment, business, commercial, asset, debtor and many other requirements. As New Vision Financial Services has progressed, we have developed strong relationships with professional service providers such as; Financial Planners, Accountants, Settlement Agents, Leasing & Equipment Providers, Debt Management Specialists and any more to allow our clients access to a complete suite of services.