What Happens If We Don't Reach the Reserve Price?
Not every auction sells under the hammer, and that is a normal part of the process, not a red flag. If bidding stalls before it reaches the reserve, here is exactly what happens.
We negotiate on the floor
If the auction stops short of the reserve, the same principle applies as it would at any stage of the campaign, we negotiate. The auctioneer goes back and forth between buyer and seller, working to close the gap between where bidding has landed and where the owner needs to be.
Sometimes this includes showing the reserve to the highest bidder, so they know exactly what number would get the deal done. This does not happen in every case, but it is a tool the auctioneer can use where it makes sense.
If you are the buyer in this position, do not be concerned if we come back and ask you to increase your offer. It simply means bidding is at a level the owner will not accept, and if you want to secure the property, you will need to move.
If no deal is reached on the floor
If negotiation on the day does not close the gap, the property is passed in. The highest bidder is then given a courtesy, often called the first right of refusal, to negotiate directly with the owner at the reserve price. It is exactly that, a courtesy. If that bidder says no, the agent then opens negotiations with all interested buyers, not just the one who was highest on the day.
The seller's side of the equation
Sometimes, once the reserve has been tested against genuine bidding on the day, the seller decides to adjust their expectations to meet the market. This is a normal and sensible response once real, live feedback is in front of them.
The bottom line
A pass in is not the end of the road, it is a checkpoint. It tells everyone involved exactly where the market sits, and it usually leads directly into a negotiation, starting with the highest bidder's first right of refusal, that gets the property sold.
If you are weighing up whether auction is the right method for your property, the team at Axford Auctions is happy to talk through how this process typically plays out.