The thought of bidding for the house of your dreams against others who want it as much as you do can be stressful for buyers in the lead-up to an auction.
The experience may be no picnic for the vendor, either, for different reasons. The vendor often ends up feeling like the meat in the sandwich between the prospective purchasers wanting a keen price, and the agent wanting a done deal.
They also have to consider their own need to get as much as possible for what is probably their biggest financial asset.
The thorny issue is how to set the reserve. Too low means the vendor stands to lose if bidding stops at this point, too high might dampen enthusiasm so that it is passed in having not met the reserve.
We asked a couple of experts for their advice: Brett Trigger, auctioneer with Barfoot & Thompson; and Tim Jones, conveyancing lawyer with Glaister Ennor.
Q: Can the reserve be altered while the auction is in progress?
A. Brett Trigger: Yes, because in some cases the owners change their minds. It can be raised but more often it is lowered.
Q: Should the vendor set a high or a low reserve?
A. Tim Jones: The answer to that is not a simple one, and depends on a variety of factors, possibly unique to that sale.
For example, if the vendor has a low mortgage and is keen to sell, then they might set it below where they have been advised its market price is.
On the other hand, if they have high borrowings against the property they would not want to risk it selling below what they need to realise.
Q: What should the reserve represent?
A. Brett Trigger: I wouldn't be comfortable about a reserve being set at a level which I knew the vendor was not prepared to sell at.
The reserve should be a realistic representation of what they are prepared to sell at, taking into account all the information they have about its market value and their own personal circumstances.
Q: How does the vendor arrive at a figure?
A. Tim Jones: Get the most information possible about the property's value, (the recent CV, an independent valuer's report, agent feedback), factor in individual issues, and take advice from sources such as a solicitor who is independent and experienced in the tactics of auctions. If they feel their lawyer is not experienced then change to someone who is.
Q: Should the agent know what you want for it?
A. Tim Jones: Yes they should. They can assist in setting the reserve and the price you can aspire to.