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Setting the Reserve

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  • Setting the Reserve

    Hi All,

    In a couple of weeks time I need to set the reserve of a property I plan to sell through auction. I have never sold a property before but I now need to liquidate. I am not sure where to draw the line; don't want to sell it for a song but don't want to set it ridiculously high so that it doesn't sell and get dragged for more open-homes and negotiations etc.

    Can I set it quite high just before the auction starts and then depending on how things unfold lower it if the auction stalls as opposed to setting a realistic reserve right from the start? What is the de facto way of doing things? I am of the understanding that the reserve can only be lowered but not increased once the auction has begun.

    I have had appraisals done, valuations from QV and Homes.co.nz. They are all over the place really!

    Any tips on how to set the reserve price is much appreciated.

    Many thanks.
    Last edited by joesanga; 02-08-2016, 01:18 AM.

  • #2
    do your numbers

    Originally posted by joesanga View Post
    Hi All,

    In a couple of weeks time I need to set the reserve of a property I plan to sell through auction. I have never sold a property before but I now need to liquidate. I am not sure where to draw the line; don't want to sell it for a song but don't want to set it ridiculously high so that it doesn't sell and get dragged for more open-homes and negotiations etc.

    Can I set it quite high just before the auction starts and then depending on how things unfold lower it if the auction stalls as opposed to setting a realistic reserve right from the start? What is the de facto way of doing things? I am of the understanding that the reserve can only be lowered but not increased once the auction has begun.

    I have had appraisals done, valuations from QV and Homes.co.nz. They are all over the place really!

    Any tips on how to set the reserve price is much appreciated.

    Many thanks.
    If you're using an agent, they should be helping you with that if you trust them?! But just as the starting figure since you're liquidating you obviously know what you need to sell the property for, add on top commissions etc and plus anything else that is necessary to cover, then your reserve should be above that. You can lower the reserve at the auction, but you don't want set it at an unrealistic figure either. The job of an auction is to get more than 1 party bidding on the property to outbid eachother.

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    • #3
      Set it high absolutely. Regardless of where the reserve is, once the highest bid is reached the agent will come and pressure you to put the home on the market promising more bids once people know it is really for sale. So there is no risk in a high reserve at all, it makes no difference. Setting a low reserve opens the door for someone to pick it up cheap, even a favoured client of the agent.
      So always go high, ignore the bleating of the agent, you will get a chance to lower it once the auction starts.

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