Adjusting your reserve price on auction day can give you a better result

10/08/2017

 

There’s no doubt that auctions are a fantastic way to sell your house. The latest findings from REIV back this up with 35.4% of homes in Melbourne sold through auction this year compared to just 16% in 2009. 

 

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The key to a successful auction is how it is run. Vendors need to consider a host of variables but today we’re focusing on how being willing to adjust your reserve price on auction day can increase your chances of a higher result.


The auction journey


It’s human nature to want your property to sell for its maximum price and go beyond sales for your area. In our experience, we have found this occurs when buyers bid emotionally at auction rather than logically.

 

Logical behaviour sees buyers researching surrounding properties before auction day, comparing those that have sold in recent times and then working out an average selling price. On auction day, they’ll have this number firmly in their minds. However, during the heat of bidding when the buyer’s adrenalin is pumping, logic often flies out the window and they start bidding emotionally instead. After all, buying a home is an emotional and sometimes long journey. They don’t want to be the ones who miss out on a dream property yet again.

 

As agents selling your home, we want this emotion on auction day as it often pushes bids up and results in you receiving a much higher selling price.

 

Knowing when to put your property ‘on the market’ on auction day


If you want to sell - and sell big - on auction day, you need to be open to adjusting your reserve price during bidding. We know this sounds risky but being willing to do this can lead to a much better outcome than you ever thought possible. We’ll share a recent success story from one of our client’s to illustrate this.

 

The case study

 

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Recently we had the pleasure of auctioning our client’s property at 5 Rubens Court in Wheelers Hill. We secured five bidders for the home owner on the day of the auction.

 

The owner wanted $960,000 for their property, which was a little bit higher than recent sales for similar properties within a 500m radius area. For example, the two properties below were similar in building size and land and also still in their original condition. 

 

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On auction day, the bidding for our client’s Rubens Court property started at $800,000 with a bidding increment of $20,000. Bidding then proceeded to $900,000.

 

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At this point, the bidding increment dropped to $10,000 and the bid price rose to $940,000. The auction then paused for few minutes without any further bids. 

 

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The auction then paused for few minutes without any further bids. During this nail-biting time, we knew buyers were thinking logically, comparing it with other homes that had sold in the area and with other options on the market. Many were debating whether they should wait and bid on other properties in the coming weeks.

 

The auction restarted with another two quick bids pushing the price up to $941,000. Another slow bid came in at $945,000 and we felt the pace indicated the market had reached its logical ceiling. 

 

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At this point, our client had two options –

 

1.    To pass the property in and then negotiate with the highest bidder to try and get their reserve price of $960,000, or

 

2.    To take a risk and adjust their reserve price, putting it on the market at the lower reserve price where bidding had stalled

 

Taking the riskier option


We advised our client to take the second option. By putting the house on the market at the lower reserve price, we knew it could potentially stimulate more bids. This tactic would allow buyers to break with their ‘logical barrier’ and start bidding emotionally. Putting the house on the market clearly said the property was going to sell that day. Buyers didn’t want to lose out as they knew someone was walking away as the proud owner of that house that day.

 

The case study result


The owner took our advice and lowered their reserve price from $960,000 to $945,000 thereby announcing to bidders the property was on the market. Bidding accelerated and the property SOLD for $1,035,000, a whopping $90,000 above their reserve.

 

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Your auction can achieve a similar outcome

 

This is just one case study of a successful auction result due to sellers being open to adjusting their reserve price on auction day and taking advantage of emotional - rather than logical - bidding behaviour.

 

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Audwin Wibrata is the Director of WIN Real Estate who adapts creativity from lifestyle point of view in his selling approach . He recognises the vitally important role of new technology that plays in today’s real estate market.

 

For a private discussion on your plan of selling please contact Audwin on 0403 205 759 or email to audwin@winrealestate.com.au

 

You can also connect with WIN Real Estate on social media at: https://www.facebook.com/winrealestate.com.au/

 

#winrealestate #realestateagent #propertyauction #sellinghome #mulgraveproperty #wheelershillproperty #mulgraveagent #wheelershillagent

 
 (SOURCE:  www.linkedin.com/pulse/adjusting-your-reserve-price-auction-day-can-give-you-audwin-wibrata?trk=mp-reader-card


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