Auction Reserve Calculator
Work out what an auction sale nets after entry costs, the auctioneer commission and the buyer premium, and the reserve you need to set.
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Auction is chosen for speed and certainty — a binding sale on the day and completion in weeks rather than months. It costs more in fees than a private treaty sale, and the reserve has to be set with those fees in mind or the hammer price will not deliver the amount you need.
This works backwards from the net proceeds you require to the reserve that produces them, including entry costs, commission and any legal pack preparation.
The calculation
Commission is a percentage of the hammer price, so the reserve has to be grossed up rather than simply added to. Reserve = (net proceeds needed + mortgage to redeem + fixed fees) ÷ (1 − commission rate).
Worked example
To walk away with 300,000 net, with 2.5% commission, a 1,500 entry fee and a 1,200 legal pack: the reserve is (300,000 + 2,700) ÷ 0.975 = 310,462. At that price the fees total 10,462, or 3.37% of the hammer price, leaving exactly 300,000.
The reserve is a floor, not a guide price
The guide price is marketing and is usually set below the reserve to attract interest. The reserve is the figure below which you are not obliged to sell, and it stays confidential. Setting the guide too close to the reserve is the most common reason an auction lot attracts no bidding at all.
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Create your free property pageFrequently asked questions
What happens if the reserve is not met?
The property does not sell, and you generally still owe the entry fee and legal pack costs. Many auctioneers then negotiate with the highest bidder afterwards, which frequently completes the sale at or near the reserve.
Should the guide price equal the reserve?
No. A guide set below the reserve draws more bidders, and competition is what pushes the price past it. A guide at or above the reserve tends to suppress bidding and produce no sale at all.
Is auction cheaper or dearer than a private sale?
Usually dearer in fees, and often faster and more certain. Auction suits properties that are hard to value, need work, or where speed matters more than achieving the last few percent of price.
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