What does this mean? Put simply if a property is worth $1,000,000 to $1,100,000, an agent could be getting 10% of any amount above reserve. It is in the agents best interest to quote the property $900,000 to $990,000 to attract lots of buyers and portray this is what is best for the vendor.
Some agents then provide feedback to the vendors that buyer interest is perhaps circa $1,000,000 and if they wish to be sold this is where they should set their reserve on auction day. Unfortunately, most agree to this.
If they advised their clients that interest was in fact around $1,100,000, then the vendors would likely set their reserve $100,000 more than the previous example. This would potentially cost the agent $10,000 extra commission.
Always remember, when an agents income is dependant on how low or high a reserve price is, then it’s easy to understand why they would prefer lower quotes & lower reserves.
This is exactly why we always advise our clients that they should never agree to any incentive based on a reserve price.
If we can help you in anyway please just ask.