house sale by auction

[Gill Smith]

someone told me 'guide price' can mean an unrealistic rock bottom price that no seller would accept

anyone any exprience of houses bought/sold at auctions?

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[John Rumm]

At auction, the seller may well accept the guide price - much depends on the circumstances and state of the place and the amount of competition for it.

When selling by sealed bid, the the guide price is often deliberately kept on the low side to encourage more viewings and bids. In the same way that an auction sale may have a reserve, a sealed bid sale does not obligate the seller to accept any of the bids.

[mark]

I think guide prices are there to attract punters. In my experience the reserve is within the guide price range. I've bought several houses at auction and found it best to ignore the guide price and make my own mind up as to what it's worth to me. Quite often the property will sell within the guide.

If a house doesn't reach it's reserve and is not far short the auctioneer will usually invite interested punters to come and have a word after the auction. Often the vendor will take a bit less than the reserve rather than pay to go through the process again.

mark

[mark]

With a sealed bid it isn't always the highest that wins. The vendor or his agent will consider the bidders ability to progress and complete the sale.

mark

[mark]

Another consideration is that if you are a successful bidder you will need to put down 10% on the day and the rest within 28 days or whatever the contract requires. Defaulting is an expensive option. Usually a high interest rate on the o/s monies and ultimately they can re-auction the house and if it goes for less you owe the difference plus selling fees.

mark

[GB]

I agree that guide prices are often set very low to sucker people into the room. Usually, the reserve is somewhere around the guide price, and the property will usually be bid up well above the reserve.

[Andrew May]

I've been to an auction where the winning bid was above the guide price and the auctioneer then announced that it had not reached the reserve.

[John Rumm]

Indeed. Other factors may come into play as well such as the buyers flexibility etc. Bidders can put together a "package" to offer that goes quite a way beyond just the money.

[tim....]

There was one that I looked at which IIRC has a guide of 120-140 and when at the end of the auction it didn't sell, it was revealed that the reserve was

180!

I've also seen auction property which sell, on the day, at 10% below the guide.

So the rule is, there is no correlation at all between guide and reserve.

However, looking across a range of auction most properties will either sell at a price between guide and +20% or not sell at all. Some will sell at much more than +20% but that will usually be because there are interested OOs prepared to pay over the odds for it!

tim

[Tony Bryer]

Standard practice here in Melbourne where there are hundreds of auctions each week - it's the normal way of selling in many suburbs. Guide price in the adverts will be (say) $600K-650K and then the Sunday paper will say that it was passed in (not sold) at $680K.