If price guides are given, the reserve should be set at the low end of the quote. ie. $850k - $950k. The reserve can't be higher than $850k. Then everyone knows if the price guide is reached in an auction, the property is on market. If it doesn't, the vendor is still available to accept or reject. An easy way of making sure price guides aren't too low and wasting the time of buyers who's budget isn't near the seller's price.
I did like the comment from CEO of REIQ, Anton Kardash in the article mentioned previously. "if sellers want to market their property with a price or price guide, then they should use a private treaty method instead."
With a recent sale, we chose auction for various reasons, one of which to get a bulldog barrister off our back and have an "end date". We chose to ask for "offers over $990K" a figure that was close to our reserve. In fact, it would have been our reserve unless there was a rush of people wanting to pay us even more
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Ultimately we accepted a cash offer before the auction, but the guide price was good because it stopped those thinking they would be getting the house for somewhere in the $800Ks. As much as people here say "know your values" and "do your research", I think it is difficult around the $1M mark to know just what house IS worth. We had people think they might get it for mid $800K.
Of course, our guide price didn't stop the smart folks from verbally offering $900K, but we didn't bother even answering those. However, it was a lowball buyer who "tried it on" at $50K less than he ended up contracting for. We ignored his first offer completely, didn't even bother getting it on paper, didn't bother even responding.
Friends sold their house this weekend at auction. They were hoping for over $1M but sold for $950K. They had people thinking it was worth $850K.
What makes it hard to "know" what a house is worth is the likes of a house in our street, right next door to a house that sold a year ago (different market but not worlds apart). Four bedroom, two bathroom, big deck, extra "storage" rooms underneath, sold for $710K. House right next door to the $710K one sold recently, three bed, one bath, not a big house, but plenty of charm $870K. None of the folk in our street can believe they reached that level. It sold at the first open to a couple who were (I'm told) desperate to get into this street, and we all believe it sold for over the odds due to that. Nobody thinks it is worth $870K.
The house we sold, similarly good street, four bed, three bath, big block, lovely house went for just $110K more.
There doesn't seem to be any rhyme nor reason behind what sells for what figure these days, so pinpointing what something will sell for is not as easy as "doing your DD".
I'm all for the way we sold with "offers over $900+" or whatever figure is the lowest that would be accepted either via auction or private treaty, and let the market find the level. And I've seen that not putting ANY guide on has meant really insulting lowball offers, which are better avoided. It just stops those who think the value is $100K less than it really is from wasting everyone's time.