The reserve price is the amount the vendor is prepared to sell for on auction day.
The reserve is normally set a few days before the auction. The auction can not be held without a reserve price in writing and in fact it is the first condition of the “Prescribed Conditions of Sale by Auction” which must be on display at an auction.
During the marketing campaign the agent will update the vendor on price feedback from potential buyers. Most agents will meet their clients a day or so prior to the auction to set the reserve (also a vendor bid).
This is put in writing so that it can be given to the auctioneer on auction day.
Things to note:
- The reserve price can be changed during the auction. It can be increased or decreased!
- The auctioneer no longer has to declare that a property is ‘on the market’ – ie. it has reached the reserve, so don’t wait to bid
If you missed the last post or any of the others in this auction advice series, check out part 7 – Vendor bid vs Reserve Price
