Selling A House Or Apartment Via Auction - How To Set An Auction Reserve Price | McGrath
Selling A House Or Apartment Via Auction - How To Set An Auction Reserve Price

Selling A House Or Apartment Via Auction - How To Set An Auction Reserve Price

18/10/2021 | 4 MIN READ

If you're selling a house or apartment via auction one of the key elements of a successful sale is setting a realistic, market driven reserve price. If you set the reserve too low you could miss out on thousands, but set it to high and you may price yourself out of the market. 

As the reserve price is set by the vendor knowing what factors you should take into consideration is valuable. Here is a deep dive into auction reserves, how to set the price and what factors you should review when working out the right reserve price for your property.


What is an auction reserve when selling a house or apartment?

An auction reserve is the minimum price a vendor is willing to sell their property for. 

Importantly the reserve price is confidential to everyone except the seller and the auctioneer. When the reserve price has been reached the auctioneer will announce that reserve has been met and the property is “on the market”, or in other words it will sell to the highest bidder. 

If the bidding doesn’t go over the reserve during the auction, then the agent will negotiate with the highest bidder/s to achieve a sale price both the vendor and buyer are happy with. 

As we mentioned above, the vendor is responsible for setting the reserve for their property. When working out a fair market reserve ensure you consider the following factors:

1. Your initial property value estimate or property appraisal

Your real estate agent would have appraised your property at the beginning of your campaign. They would have assessed its key selling features including; its size, the number of bedrooms and bathroom, the condition of the property, its fixtures and fittings and the quality of any renovations. They would have reviewed the property’s location and its potential buyer appeal. They would have reviewed comparative properties that have sold within the last 90 days, looked at the current competition and reviewed wider market trends to provide you with a price guide for your property.

The property price guide given to you after the appraisal is a good starting point when working out your reserve. However, keep in mind, an auction campaign normally runs for 4 weeks, during which time your local property market may have changed. So, a price that was relevant at the start of the campaign may no longer be as you get closer to auction day.

2. Buyer emotion

One of the key benefits of an auction is the fact that it can generate a lot of excitement. It’s this excitement that can lead to competitive bidding and great results. When 2 or more bidders want to buy the property, prices are driven up. When setting your reserve understanding what potential buyers are feeling about your property can help guide your decision making.  

Talk to your agent to understand buyer sentiment. Are there any passionate buyers who can afford the property, if so, how many buyers and what does the agent think they would be prepared to pay for your property.

In most cases buyers have their finger on the pulse when it comes to property prices. They most likely have been monitoring the market for a while. Getting some insight into what they may be prepared to spend on your property can be useful when setting a reserve. Keep in mind though, that buyers may also keep the figure they would be prepared to spend on your property to themselves.

3. Agent feedback 

A key source of on update to date market information is your agent. They are across what is happening with other properties in the area. What they are selling for, what interest they are generating and the general market sentiment. This insight is invaluable when working out how much to set your reserve at. 

4. Have you received any offers?

In some instances, buyers may make a pre-auction offer in an attempt to purchase your property before auction day. While you may have decided not to accept the offer/s, it does give you a starting point to work from with regards to your reserve.

A final word

When setting your reserve price it’s important not to get sentimental about your property and set an unrealistic price. By reviewing your property value estimate or price guide, talking to your agent to gauge buyer sentiment and reviewing current market conditions, can help guide you to set the right reserve price. To talk to your local McGrath Real Estate Agent click here


Other sell my house or apartment tools and information

Complete Guide to Selling a Property 

Preparing Your Home For Sale Checklist

Guide to Sell my House or Apartment

What are the Costs of Selling a House or Apartment 

Get a Price Guide for my Property

Selling a Property FAQ's 

Choosing a Real Estate Agent and Questions to Ask


This information is provided subject to our Terms and Conditions.