If you’re considering selling your property through the Modern Method of Auction (MMoA), one of the first things you’ll come across is the reserve price. It’s a term that can feel confusing if you’ve never sold at auction before, but it’s one of the most important decisions you’ll make in the process.
In this guide, we’ll explain exactly what a reserve price is, how it works in the Modern Method of Auction, and how to set one that protects your interests while still attracting competitive bidding.
What is a Reserve Price in the Modern Method of Auction?
The reserve price is the minimum amount you, as the seller, are willing to accept for your property. If bidding reaches this figure, the sale will go ahead. If it doesn’t, the property won’t sell at auction.
In the Modern Method of Auction:
- The reserve price is confidential - buyers cannot see it.
- Buyers only see the guide price and the starting bid, which are designed to generate interest and encourage competition.
- The sale is considered successful once bidding meets or exceeds the reserve price.
For more on how the Modern Method works, read about exchange and completion times here.
Why the Reserve Price Matters
The reserve price gives you control and peace of mind. It ensures you never have to accept less than you’re comfortable with, while still allowing for competitive bidding. Get it right, and you’ll strike a balance between protecting your bottom line and sparking buyer interest.
Factors to Consider When Setting a Reserve Price
Market Value vs Auction Value
Your reserve should reflect a realistic view of your property’s current market value. However, the auction environment creates competition that can sometimes push final bids higher than expected.
Property Condition and Demand
Is your property ready to move into, or does it need significant work? Is it in a high-demand area? These factors influence what buyers are willing to pay, and therefore where your reserve should sit.
Timing of the Sale
The property market shifts throughout the year. In stronger markets, buyers may be more competitive, allowing for a slightly higher reserve. In quieter periods, a more flexible approach can generate better results.
Common Mistakes Sellers Make with Reserve Prices
Setting the Reserve Too High
This is the most common mistake. If your reserve is unrealistic, buyers may be put off, and bidding could stall before it begins. A reserve that’s too high can make your property unattractive compared to others in the auction catalogue. Read more in Common Auction Myths That Stop People Selling (and the Truth Behind Them).
Setting it Too Low Without Advice
While a lower reserve can generate interest, setting it too low without guidance risks underselling your property. This is why working with experienced auction experts is so valuable - they’ll help you strike the right balance.
Ignoring Professional Guidance
Auctioneers understand buyer behaviour and market conditions. Ignoring their advice when setting a reserve can make the process harder than it needs to be.
Who Decides the Reserve Price?
- You do. As the seller, you set the reserve price.
- Auction experts advise. We’ll recommend a figure based on your goals, market conditions, and buyer appetite.
- It’s confidential. Buyers will never know your reserve - they only see the guide price and starting bids.
- It’s legally binding. Once agreed, the auctioneer cannot sell the property for less than the reserve price without your consent.
Tips for Getting the Reserve Price Right
- Get a professional valuation. Use an up-to-date valuation as a guide, but be open to adapting based on auction advice.
- Be realistic. Aim for a price that reflects true buyer demand rather than wishful thinking.
- Balance protection with competition. A good reserve safeguards you while leaving room for competitive bidding.
- Work with The Auction Experts. The right advice makes all the difference in attracting buyers while still protecting your interests.
What’s the “Right” Reserve Price in Modern Method of Auction?
There’s no one-size-fits-all answer. The right reserve price is unique to your property, but it should always:
- Protect you from underselling.
- Be realistic enough to attract buyers.
- Give the auction process room to do what it does best - create competition.
At The Auction Experts, we help sellers set reserve prices that work. We make sure you’re protected, while still creating the right environment for buyers to compete and achieve a strong sale price.
Ready to Discuss Your Reserve Price?
If you’re thinking about selling through the Modern Method of Auction but unsure how to set your reserve, we can help. Our team will guide you through the process, explain your options clearly, and make sure you feel confident in your decision.
Get in touch with The Auction Experts today and let’s talk about your property, your goals, and the reserve price that works best for you. Call us on 0330 179 8180 or email info@theauctionexperts.co.uk
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