While more entertainment than real estate, the recent auction of The Block properties did provide a valuable lesson for buyers and sellers.
A lot of people commented that the reserves were set very low, especially when compared to the sale price. A comparison of recent sales of similar properties and the sale prices of the four terraces certainly shows that these figures were not extraordinary and that the reserves were set, by the owners, at a level well below what they were likely to sell for.
Despite suggestions to the contrary, there is nothing wrong with that. An owner can set a selling price for their home at any level; it is, after all their home. It is the real estate agent who is required by law to provide the owner with an estimated selling price that reflects what the home may sell for in the current market.
There is no legal requirement that the owner’s asking price or reserve reflect the market value. This means that an owner can, if they wish, set a very low reserve.
What the owner cannot determine is the actual selling price, as this is determined by the market.
An owner who does want to sell will take the advice of their real estate agent and set a selling price that is informed by current market conditions.