We attended an auction recently where a bid was made at the high end of the advertised Statement of Information (SOI) range, and the bidder asked: “Is the property on the market?”. The agent replied, “we will let you know when it is”.
The reply caused a minor crowd disturbance, but the agent was within their legal rights to reply in this way even though the last bid was at the hight end of the SOI.
The Statement of Information must include:
- An indicative selling price for each property, based on recent comparable sales.
- An indicative selling price for the property which may be a single price or a price range of up to 10 per cent.
- It must not be less than the agents estimated selling price OR
- Not less than a price in a written offer that has already been rejected by the seller.
However, the seller may choose to set their reserve price on the day of the auction. The reserve price decided on the day may be above the advertised price. The reserve can be whatever the vendor chooses on the morning of the auction — regardless of the indicative price range. In a competitive auction market, vendors can set reserves higher than the advertised price guide and sometimes this can come as a surprise even to the selling agent.
That reserve prices are exceeding advertised price ranges also highlights why the property market is increasingly difficult for inexperienced buyers on a budget to navigate. For example, a house may be advertised with a price guide of $800,000 to $880,000. But on the day of the auction, the reserve price may be more than $900,000.
How does this happen?
Because the seller, not the agent entirely decides the reserve price, a spokesman for Consumer Affairs Victoria said. “The reserve can be set as late as auction day and may be influenced by the level of interest in their property,” he said.
Call us at ela Property Advocates to discuss all of your options for selling or buying property and the necessary strategy to succeed in today’s complex market.