Terms of trade

Herald Sun - Property - - Agent’s Choice - REIV chief ex­ec­u­tive ENZO RAI­MONDO

ANY terms are used in real es­tate and, as the spring sell­ing sea­son ap­proaches, it’s timely to ex­plain three of those used in auc­tions: passed in, passed in on a ven­dor’s bid, and re­serve price.

About 30 per cent of prop­er­ties auc­tioned on any given week­end this year have been passed in. This oc­curs when the high­est bid at the auc­tion does not meet the seller’s re­serve price.

Some prop­er­ties that are passed in are done so on a ven­dor’s bid. This means the last bid was made by the ven­dor or by an agent on the ven­dor’s be­half. This shows de­mand at the auc­tion has fallen short of the ven­dor’s ex­pec­ta­tions.

This year the pro­por­tion of auc­tions passed in on ven­dors’ bids is 13 to 15 per cent.

At the heart of the auc­tion process is the re­serve price— the min­i­mum price a ven­dor wants for their prop­erty.

The re­serve is typ­i­cally set by the ven­dor on the day of, or the day be­fore, the auc­tion.

There is no re­quire­ment for the ven­dor to set a par­tic­u­lar price or have re­gard to what sim­i­lar prop­er­ties have sold for; it’s sim­ply the price they would like to re­ceive for their prop­erty.

It’s also worth not­ing that though it of­ten is an­nounced, there is no re­quire­ment for the auc­tion­eer to an­nounce dur­ing the auc­tion that the re­serve has been met.

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