The Nuts & Bolts of an Auction Guarantee.
An Auction Guarantee is about giving the Seller peace of mind before the auction that they have someone guaranteeing to buy their property for an agreed price but then they still have a chance to get even more $$$ for their property at the auction.
To make this happen, before the auction the seller and a buyer (called an Auction Guarantor) must agree on 2 things.
1: The Auction Guarantee Sale Price or Better Known as the Reserve Price.
The Seller and the Auction Guarantor negotiate and agree on what’s called the Auction Guarantee Sale Price or better known as the reserve price.
The Auction Guarantee Sale Price is simply a price that the Seller is happy to sell their property for and the price that the Auction Guarantor agrees to buy the property for should the highest bid at the auction be under the reserve price and the property is passed in.
2: How they’ll Share any Profit:
The Profit is simply the difference between the highest bid above the reserve price and the reserve price.
The seller and the Auction Guarantor negotiate how they’ll share the profit.
One of the simplest ways to share the profit is for the Seller & Auction Guarantor to receive a percentage of the profit eg. – 90% to the vendor and 10% to the Auction Guarantor.
There are many other ways to share the profit such as receiving a set amount, sharing based on a sliding scale, a combination of these or however the seller and buyer agree to split the profit.
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For further information and examples please watch the Explainer Videos or Contact Us.
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