Pricing your house to sell at auction is a black art!
Thankfully the auction house will help you. But before speaking to an auctioneer its as well to understand something about pricing property for sale at auction.
Not one, but two prices are central to the way property auctions work. The Guide Price and the Reserve Price.
It’s also important to understand the relationship between the two prices.
All property sold at auction has a reserve price. This is your bottom line price – the minimum you’ll sell at. The reserve is worked out in advance and is not made public.
The price that is made public and is declared in the auction catalogue is the Guide Price.
The guide price is the figure the auctioneer expects the property to sell for. Guide Prices are however generally on the low side, and properties routinely sell for much more.
For most auctions the guide price is higher than the reserve price. Where this is not the case it is potentially misleading. Always ask individual auctioneers how they handle the relationship between the two.
A low guide price can help attract interest. How low you’re prepared to set the reserve depends on a range of factors including how much you need to clear from the sale. Setting a relatively high reserve say at 75& of a property’s market value, may lead to a property being unsold.
Pricing your house to sell at an auction for cash means (most likely) it will sell for less than you’d get through estate agents, but it should sell. However using auctions to ‘test the water’ can be expensive, as you have to pay fees even if your property is unsold.