setting auction reserve price Melbourne

Discussion in 'The Buying & Selling Process' started by Perthguy, 20th Nov, 2015.

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  1. Perthguy

    Perthguy Well-Known Member

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    Thanks all for the advice. It really helped. Ok, so the house around the corner, nicer house, bigger block (750 sqm), I would have expected to sell for 750k. Auction was slow, bids to 650, passed in on a vendor bid of 690k. It never went on the market. Based on that result, I lowered our expectations a little. I gave the agent a reserve of 680k. He was not happy! :)

    We just let him know that he might have to do a strategic pass in and negotiate with the highest bidder. He reiterated the reserve should be 620k. Who was right?

    The auction was fast and hard. 3 bidders dropped to 2. Then back to one with a top genuine bid of ... 680k. So, we gauged the market spot on and the agent was way off.
    :p

    He could have put the property on the market at that point but he actually did a great job at that point to feel out if there were any more genuine bidders. I was watching the auction and it was over. So the agent rightly passed in so we could negotiate with the highest bidder. I was really glad at that point I had given him very clear instructions at that point. It worked out well.

    Anyway, the final price was 685k, which I feel was a very strong result for the day. We sold to a developer, so there wasn't any more in it. Our options were to sell on the day or put the property on the open market and hope to get a better price by mid December. As we all know, hope is not a strategy, so we accepted the offer.:)

    I feel like that is a good result because the house around the corner that I feel is a much better property, only got a genuine bid of 650k and was passed in on a vendor bid.

    As always, I appreciate the advice. Thanks.
     
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  2. Scott No Mates

    Scott No Mates Well-Known Member

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    Great feedback & good outcome. At least you have certaintyprior to Xmas
     
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  3. Perthguy

    Perthguy Well-Known Member

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    Cheers @Scott No Mates. This forum has been so useful that I like to give back when I can. It's funny that I have been investing in property for about 12 years but I have never sold at auction. I found the entire process very stressful and confusing, which is quite confronting for a generally competent and confident person. How much of that is the process and how much is my agent, I have no idea. Still, I am glad its over, and hope this is useful info. I was very glad to have a sounding board through the whole process. Thanks propertychat, thanks @Simon Hampel . Once again, this is a wonderful resource.
     
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  4. MTR

    MTR Well-Known Member

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    1+
    But they all underquote in Melb this is the norm, been doing it for years...busturds
     
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  5. MTR

    MTR Well-Known Member

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    I know auction clearances have come down somewhat? What is the property worth today in your opinion?
    When did you get close to asking price?
     
  6. MTR

    MTR Well-Known Member

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    agree 100%
     
  7. Perthguy

    Perthguy Well-Known Member

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    Yep. 70% weekend before last (Sat 14th Nov) and 65% the weekend I sold. :rolleyes:

    The market says $685,000 but weekend before last I would have sworn it would have sold for $705k.

    The offer we got 3 days before the auction was well above the list price because of the underquoting thing. However, with 3 days to the Auction I thought it was better to just see what the market thought. Same person bid $15k higher at Auction, so that was a good move.

    You may recall there was a better property for Auction 1/2 before mine. I predicted that house should have sold for $750k. It did not sell and was passed in at Auction. It is now on the market for $759,000 for sale by private treaty. This means the asking price is the real price, not the Auction underquote price.

    3 Bamfield Road Heidelberg Heights Vic 3081 - House for Sale #121109750 - realestate.com.au

    It's a great block in a good location but if I'm right, it is now over what the market will pay. I would actually like to see them get close to that even if that means we under-sold by $15k.
     
  8. Waldo

    Waldo Well-Known Member

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    Can you elaborate on this part for me? So the reserve was set at 680k & the final bid was 680k. But then the agent passed it in and negotiated further with the top bidder? I would have thought that if the reserve is met it would have been sold straight to the top bidder without further negotiations?
     
  9. Perthguy

    Perthguy Well-Known Member

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    The agent did not put the property on the market. Once it goes on the market, it will sell to the highest bidder. This is quite literal. The agent will announce during the Auction, 'this property is now on the market'. Once the agent announces that, the property sells to the highest bidder. In my case, the Auction did a really good job trying to elicit additional bids. Once he realised there were not going to be any more bids, instead of putting the property "on the market", he passed it in. I had briefed him beforehand to do this if necessary, so he didn't have to consult with me, he just did it.

    Under Auction rules, the highest bidder then has exclusive rights to negotiate with the vendor until a deal is done or agreement on a price cannot be reached. We had a deal that was acceptable to both parties within 10 minutes of the Auction ending.

    The key is to work with your Agent so that he knows your reserve but doesn't put the property "on the market" during the Auction unless he or she is confident that there are more bids. Conversely, the Agent should not pass the property in unless they think they can get a higher price after the Auction is over. It's a bit of a fine line but this was the one time in the whole selling process where my Agent and myself were actually on the same page! :p
     
  10. Chrispy

    Chrispy Well-Known Member

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    According to tonight's News there will be 1800 auctions this weekend..a new record apparently!!!!
     
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  11. Perthguy

    Perthguy Well-Known Member

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    Woah! That's amazing. I am following Heidelberg Heights and Heidelberg West.

    5 Properties for Auction on Saturday 28 Nov in Heidelberg Heights, VIC 3081

    5 Properties for Auction on Saturday 28 Nov in Heidelberg West, VIC 3081

    That's a lot. There is usually only one or two in each or 3 at the most. Never 5 in both!

    I'm also going to quote this in the Melbourne thread.
     
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