Why The Block finale wasn't representative of auctions
With last week’s The Block finale ending in controversy, some residential property sellers appear to have become nervous about using auctions as a sales mechanism.
Justin Nickerson from the REIQ Auctioneers Chapter says the reality TV show had created confusion in the minds of some viewers about how the auction process actually works.
The Block finale auctioneers represented the show, not the contestants“There are issues about how the finale represented auctions,” Nickerson says.
“The Block finale contestants did not own the properties that were being auctioned and therefore had no control over the auction process.
“In the real world, a property vendor has complete control.
“In this case, it appears it was The Block who was the client, so there was no requirement from the auctioneers to take any instructions from the contestants.”
The reserve price was allocated to the contestantsEach property was set a reserve price of $4.08 million by The Block, not by the contestants.
“In the real world, it’s the vendor who decides the reserve price in consultation with their agent prior to the auction,” Nickerson says.
“This means the vendor sets a reserve price that they are happy to sell the property for and, if that price is not met, the property is passed in.”
The Block finale contestants only kept money made above the reserveNickerson says during a normal auction, the vendor receives the entire proceeds of the sale, less commission and other expenses.
“The contestants on The Block only kept the money that could be made above the $4.08 million reserve so, if the house was sold only a small amount above that reserve, they only received that small amount.
“For the contestants, this may have felt like a disappointing result.
“However, in real life, this would be a great outcome for a vendor because they have set the reserve price themselves and a sale at that amount, or indeed over, is a great outcome for them.”
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