Reserve price vs Dream price

26/07/2018

Auction: your dream price VS your reserve price
Selling your home via auction can bring you an outstanding result; provided the method is
used in the right way. A common mistake many owners make is to use their dream price as
their reserve price during auction. This dream price either pushes buyers away, or ‘tires the
market’ as auction-goers must bid for much longer before they hear the magic words ‘on the
market’.
Here are some key reasons why setting a good reserve price at your auction will bring you
the price of your dreams.
The difference between a DREAM price & a RESERVE price
There are two auction prices you need to understand:
1. Dream price
The term is fairly self-explanatory – it is the price of your dreams! Together with
your agent, you can usually arrive at this figure based on similar results of nearby
properties.

2. Reserve price
This one is the minimum price you would be willing to put your property ‘on the
market’ during auction. It needs to be lower than your dream price, plus at a logical
level based on feedback gleaned from the market. This allows bidders to bid
competitively and reach an emotional level - which is what you need to skyrocket to
your dream price!
Note: when you view auctions results in the Sunday paper, it’s worth understanding the final
price is likely the owner’s dream price. The reserve price will always be set lower to achieve
this final price.
The case study

Let's now take a look at our recent auction at 1 Baldios Lane in Mulgrave. Our owner’s
dream price was $1 million.
The opening bid was $700,000 but it slowly crept up to $965,000. On route to this bid, we
had countless buyer enquires about whether the property was now ‘on the market’. It was

clear the market had reached a logical level, where the price was consistent with the
feedback received during the campaign.
To be able to shift the bidding to an emotional level, it was vital bidders quickly heard the
words ‘on the market’. As soon as buyers know the property is going to sell that day, failing
to bid means they will lose out. It can be a very scary thought, which is precisely the
emotionality we want.
Our vendor then decided to put it on the market at $970,000, which was $30,000 lower than
their dream price. It was a calculated risk, but they clearly understood that by putting it on
the market at a lower price, it would stimulate more bids. And that’s exactly what
happened.
In the end, their property SOLD for $1,005,000. The final price exceeded our vendor’s initial
expectation by a $5000!

Put this tactic into practice to get your dream price
As you can see, setting the right reserve price is a very important part of a successful auction
campaign. It’s not something to underestimate as if it’s set appropriately, your dream price
doesn’t have to be the limit at auction. It could very well go beyond!
If you’d like some assistance in coming up with the right reserve and dream price for your
property auction, please feel free to contact us. We’d love to help.

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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



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