Nicola Kelland - Auction Reserves

If you have been attending auctions lately you will know that auctions reserve remain confidential to the agent, the vendor and the auctioneer.

In Australia there has recently been a move by some real estate agents to have reserves published before the auction. Their reasoning is the purchasers are becoming disillusioned with the auction price guides when the properties are selling well over the indicated price and there appears to be an environment of agents under-quoting property to increase the numbers of bidders. These agents are also saying that because under-quoting price indications has become such common place, bidders are not attending auctions that are in their price range, as they think they will sell for well over the indication. Instead they only attend auctions in a lower pricing bracket.

Many purchasers outlay substantial amounts of money on building inspections, legal fees and valuations to enable them to bid on a property and when it is sold well in advanced of their expectations or the price indications, they have wasted a lot of money. Times this scenario several times during the buying process and you can see how expensive it becomes.

There are very good arguments both for declaring reserves prior and for keeping to the current norm of confidential reserves. I will watch with interest how it progresses in Australia in the coming months.