Many of you know, in addition to traditional listings, we conduct auctions with or without a reserve. You may be asking yourself, “What is the difference between an auction with a reserve and one without a reserve?”
With an “auction with reserve,” the seller has set a minimum dollar amount he or she is willing to accept for the property. An auction that does not have a reserve, is traditionally called an “absolute” auction, meaning the property will sell to the highest bidder, regardless of price. Unless stated otherwise in the marketing material, the auction is a “reserve auction.”
What happens if the “reserve” is not met? Let me share with you what happened in a sales situation where the “reserve” was not met in the bidding process. My contract said that if the reserve was not met, there was no sale and the property would not be sold or transferred.
In one situation, the high bid was about $10,000 below the reserve amount. The seller was an out of state owner. Since we did not reach the reserve dollar amount, I told the high bidder guy to hold on and I would call the seller to see if he was willing to take less than the reserve. After going back and forth a little bit with the seller on the phone, he accepted the bid even though it was below the reserve. (For my records, I had the seller to email me that he was willing to accept the below reserve dollar amount.)
In this situation, as the seller’s agent, I had no authority to accept the below reserve dollar amount. Only the seller himself had that authority. I have had one or two other similar situations like this in the past.
But not all of them work out the way you want it. For example, we had a bidder bid half the price the seller wanted. You guessed it, the seller turned the bid down and the property is still vacant. This was over a year ago. I told the seller and provided some comps, that his reserve is too high.
I think the hardest part of my job is to tell the seller what price range they may expect at auction or via a traditional listing. Many sellers have a dollar amount in their mind which is not realistic. That dollar amount has been told to them by a brother-in-law, neighbor or friend, without knowing all the facts. Even an official “appraisal” is an opinion of value. (Read the fine print).
I am currently dealing with some out of state heirs that live in a suburban northern city and don’t understand North Carolina rural property values. They seem determined in the reserve they want to set. I may not get this contract as I feel they are being unreasonable in setting the reserve.
Do you have a property, home, farm or land you want to sell? What is the best way to sell it? Give us a call at 252-257-4822 and l
et’s talk or go to our website at www.cansellnow.com .