Published on August 6th, 2012
‘Nothing wrong’ with low reserve
Vendors can set a selling price for their property at any level they choose, the Real Estate Institute of Victoria has reminded property-watchers.
The organisation decided to step up and clarify things after a recent auction of the renovated properties featured on the reality TV show The Block.
While many commentators observed that the reserve prices of these properties were set low – especially when it came to the final sale price of the four terraces – the REIV has asserted there is nothing wrong with taking this action.
It is the duty of the real estate agent to advise the vendor of an estimated selling price for their home that reflects the current market -in fact, real estate agents are required to do this by law.
But armed with this knowledge, the vendor then has the right to set any selling price they choose – this reserve does not necessarily need to reflect the market value.
But according to the REIV, property owners who are keen to see their homes move quickly would be wise to heed their agent's advice.
"An owner who does want to sell will take the advice of their real estate agent and set a selling price that is informed by current market conditions," the REIV asserted.
Auctions, as we know from insights provided by Elders real estate executive for New South Wales Denis McGrath last month, are a great way to track the market – and to ensure sales remain ticking along even in challenging conditions.
Auctions can also give property vendors a realistic outlook of the prices buyers are willing to pay. Compared with private sales, he revealed, auctions can deliver quick, fair results – with the majority of properties selling within 12 weeks of the auction and 50 per cent of transactions recorded on auction day itself.