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What Does it Mean And Why Does it Matter (Another Loophole To Close)

Jay Howard, of auction specialists HAMMERED, comments

If it sounds like I am lambasting auctions, it’s because I am. Through well considered criticism and bringing light to matters in a public forum, I would hope to bring positive change to the marketplace and in the end, increase the visibility and viability of auctions as a primary and legitimate route for the sale and purchase of real estate in the UK.

Today’s rant comes courtesy of an ongoing series of rants centred around the use, meaning and impact of two words in the auction world. The first word is GUIDE and the second is RESERVE.
When it comes to buying a property, a normal person will look at the price listed against the property and assume that if they make an offer at that price level, it will get accepted. Now when it comes to auctions, it’s a little more convoluted than that.

Why? I hear you screaming at the top of your lungs whilst on your commute or the commode. Well, because the guide price at auction is merely an attraction - peacock feathers if you will, its marketing flimflam to entice and entreat willing and able buyers to taste the forbidden property fruit and buy the property unheeded via auction.

This has many intended consequences. The most notable and the most desired of which is to create a horde of excited and competitive bidders to fight to the financial death to secure said property at all and any costs.

So, perplexed as I hope you aren’t, what do we have to say about the reserve price? What does it do, why does it do it and why should it matter to you (a seller, buyer or casual observer)? Well, the reserve price is a secret. It is a secret between the seller and the auctioneer.

The reserve is the price agreed between the seller and the auctioneer - this price is the minimum price at which the seller will allow the property to be sold. That’s it, mystery over…or is it? Of course there is more to it. The reserve is there to protect the seller against their million pound property from selling for three hundred and fifty thousand pounds, as an overly dramatised example.

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