What is a reserve price?
It is a dollar amount placed on a property by the Government. A reserve price is not released to the public. If you hear the auctioneer say “Bidding closed, subject to the acceptance of the seller,” it means the high bid did not reach the reserve price. In most cases, the reserve price is met. In the event the high bid does not reach the reserve price, the Government may open negotiations with the high bidder.
The reserve price of an auction is the minimum price that the seller of the item is willing to sell the item for. This price should be above the minimum bid price. The auction will begin at the minimum bid price and once the bidding reaches the reserve price then the seller is obliged to sell the item placed for sale.
A reserve price is a price set by the owner of the property that is the minimum amount the property can sell for at the auction. Sellers know people come to auctions for bargains so they would take this into account but they also do not want to let their property go for a ridiculous figure. They therefore set a reserve price and if no offers are made above this price the property isn’t sold. If this is the case the owner may try another auction house or have the house go up for auction again at the same auction house but review and possible lower the reserve price. Is It Different From A Guide Price? Some people get confused between reserve prices and guide prices. A guide price is separate from the reserve price. A guide price is used to attract buyers to the auction. It gives the buyers an idea of how much the house will sell for. Guide prices can be deceiving though as they are usually set much lower than the seller intends to sell for. This is done to attract buyers. If many buyers
