Why is a No Reserve property auction a guaranteed sale?
A without reserve auction maximises the prospect of a deal, as the property has no minimum bid nor the right for the seller to decline any bid — so the property could sell for R 1000 in theory.
“In a no reserve property auction, the property is essentially guaranteed to sell, unless no bid at all is made on the property within a reasonable time after the item is offered to the participating audience”, explains Rainer Stenzhorn, Marketing Director of In2asstes, the commercial property real estate company specialising in commercial property auctions. “Since the item is essentially guaranteed to sell, the highest bidder is guaranteed to be the new owner of the property. In the no reserve auction, the seller is prohibited from withdrawing the property in any fashion once a bid is made, which allows the auctioneer to take the seller out of the process once the item is opened for bidding. It is fair to say that what drives bidders to any auction is the ‘prospect of a deal’”, explains Stenzhorn further. “A without reserve auction maximises the prospect of a deal, as the property has no minimum bid nor the right for the seller to decline any bid — so the property could sell for R 1000 in theory. Naturally many more buyers respond to this opportunity than do people respond to auctions with minimum bids or seller confirmation. In a no reserve auction, the true value of the property is realised without any regard to prior expectations, valuations, original cost, etc. This process is known as “full price discovery” in that without these extraneous issues, interested buyers, alone determine the price of the property, and the value of that same property at that very moment, ends Stenzhorn with his explanations”.
In2assets offers two no reserve auctions as part of their combined 28 January 2016 Commercial auction. For more info, follow this link: https://www.in2assets.co.za/physical_auctions/18