Determining reserve prices can be tricky when it comes to selling a property at auction. Balancing between a high price to ensure you gain a solid amount, whilst maintaining a fair price to attract bidders, can be a difficult mix. By understanding the different levels of pricing and how the market behaves in response, the process of finding a fair reserve price can become simple.
It's warranted that any seller wants the best price for their property. As such, setting a reserve price which is fair to you and your property is warranted. However, a reserve price which is too high can have its own ramifications - bearing in mind that the reserve price is the lowest price you are willing to sell your property for. In the event that your reserve price is not reached, your property will not be sold on the day and alternative methods of selling your property will be offered.
When setting your reserve price, it's advisable to take into account your property's current market value and try and find a reserve price which is reasonable. Using a property valuation report as a guide to setting you reserve price can be a good way to ensure your reserve price is not overly ambitious.
One of the largest fears by any sellers is the prospect of undervaluing your property and selling it for too low. Whilst a low price can ensure you sell your property on the day, note that buyers are not aware of your reserve price until after it is reached. Your auctioneer will let bidders know once the reserve price has been reached. Notably, this can also work in favour for any sellers as it can drive up competition for your property.
In a scenario where buyers have reached the reserve price, this means the property is truly 'up for grabs' and can result in more fierce and competitive bidding.
Ensuring you make a decision which is fair to both the high and low spectrum of pricing your property can be a significant influence in the overall selling price of your property. Keep in mind that reserve prices are confidential until it is reached within the bidding process.
If in doubt, ask your agent for advice on navigating the reserve pricing arrangement in order to ensure your decision is the right one.