AUCTIONS ARE AN ART FORM. They are more than just calling for bids, trying to reach a reserve and popping champagne afterwards. Brett Macadam of Strong Property shares a ‘start to finish’ guide to running a successful auction campaign.
A SKILLED auction agent can make tens of thousands of dollars of difference to a sale price in a matter of minutes through their choice of words, teamwork, body language and theatre. The performance an agent displays on auction day can have a huge influence on their reputation and whether or not they receive future business from neighbours.
DURING THE CAMPAIGN
At open houses, qualify your buyers. Whether they’re neighbours, just getting a feel for the market, somewhat interested or red hot buyers, every person you meet is an opportunity for either present or future business.
Ask smart questions for smart buyers. Experienced buyers will be cagey and refuse to answer blunt, personal questions. Ask questions instead that give you the information you want whilst being conversational, tactful and friendly.
For example, to discover a buyer’s budget ask them if they’ve looked at similar properties. Find out how your listing compares to others they’ve seen. Listen and learn about whether they’ve perhaps been an under-bidder at an auction recently. Were they close to being successful or were they blown out of the water? These questions alone will tell you how active they are, how much they’re prepared to spend on a property and some of their buyer preferences – crucial knowledge that you can use to determine their likelihood of buying your property.
Contact your vendors daily, either through a phone call, face to face, text, email or post. If things don’t go to plan on auction day, they can’t fault you for your work ethic and communication levels. Therefore they are more likely to realise that you have achieved the absolute best possible price on the day. It’s an excellent conditioning tool if your owners have lofty expectations, and it can at least maintain a good relationship post-auction if the property is eventually passed in. As far as actual communication goes, even if it’s ‘We had no enquiries today’, use it positively and with purposeful strategy: ‘I will rewrite the advertisement and rearrange the photos online, and I think we should also perhaps reconsider our price guide or marketing budget to generate more interest.’
Encourage setting a reserve early and get regularly updated price expectations from your owners throughout the campaign. It may also be worthwhile advising your vendors of recent, comparable sale results to realign their expectations. Keep their feet on the ground and always remember to under-promise and over-deliver.
Regardless of your actual feelings, always be smiling and upbeat. It will convey confidence and that you are in control of the proceedings, as well as having the additional benefit of genuinely calming you down.
Consider your auction day presentation: flags, a banner, balloons, pointer arrows – hey, why not even a free barbecue before a hot summer’s day lunchtime auction, or a complimentary coffee van on a chilly winter’s morning?
Identify your key, registered buyers when they arrive and remember their names and what they are wearing. It sounds obvious, but it’s always good to address them by name when in negotiations – forgetting them would be embarrassing and unprofessional.
Relay all the information you know to the auctioneer discreetly beforehand, including the reserve, number of registered bidders, what you think they will pay, where an opening bid should be called at, increments and any other important information. Relay a vendor bid strategy should it be necessary. This information is critical; it allows the auctioneer to be more confident and informed, and perform more smartly.
Set up a video camera. I cannot stress this enough. Set aside half an hour or so later and re-watch the auction – good or bad. Focus on your body language, your facial expressions, when you approach bidders and how you control the floor. Would a prospective vendor be thoroughly impressed with your performance? Take constructive notes to improve yourself – even if you’re very good already.
At most auctions, you will encounter a lot of neighbours coming through on the day for a ‘stickybeak’. Some may refuse to provide you with their details upon entry, which is fine. Try and get a first name and some sort of further identification politely and tactfully – a surname, what street number they live in, a contact number or an email – then follow them up later.
GETTING THE AUCTION UNDERWAY
Never intimidate, condescend or use negative language to extract an opening bid. Ideally, pre-arrange a confident bidder to ‘show their strength’ and suggest a figure for them to start the bidding on the day.
A very low opening bid is fine – use it against the bidder when trying to get the next bid out of someone else. For example, ‘They may not have much to spend and could be trying to pick it up cheaply – smash them out of the park with your first bid.’
If available and appropriate, use your team! Support staff, assistants, the principal or other agents (if your office has a strong, team-based ethic) should be used when multiple buyers are in play. Running around from buyer to buyer makes it very difficult to establish any credibility and other bidders will feel like you’re not there to help them – that you’re there to get them to spend money.
Try to get your other staff to establish rapport with buyers prior to the auction through other open houses, personal contacts or on auction day itself. This establishes trust with bidders and makes it easier to convince them to bid.
Where there are only one or two registered bidders, talk to other people in the crowd to create theatre. Create competitive tension. Ask buyers who decided not to register an obvious rhetorical question: ‘Decided not to register today?’ Perhaps thank prospective vendors for coming. Any excuse to talk to someone, do it.
If bidding stalls and you feel the auctioneer struggling to keep the flow going, go up to them and whisper in their ear. Ask them how their weekend was. You might already be $50,000 over reserve but it creates theatre and makes it look like you’re very close to meeting the vendor’s price expectations.
CLOSING THE SALE
At every auction – without fail – go in and talk to your vendor before selling the property or passing it in, unless otherwise instructed. Create the idea in the heads of the buyers that they’re close to reserve, but not quite there yet. Besides, there’s no better feeling than chatting to your vendors when you’re way over their expectations, then going back out and getting even more money for them.
The agent should never publicly announce that the property is on the market. Leave it to the auctioneer. Use it as a formality right towards the end of the auction when you genuinely believe there is no more money that anyone has to give. No buyer wants to feel like they are paying too much for a property – and it’s difficult to try and ask for more money off a buyer if they know they’re already way above the vendor’s expectations.
Look confident and in control, but not cocky. You are an actor on stage and allowing any feelings of stress, anxiety, relief or elation to show will generally discourage bidding in some way.
Where you have an unrealistic vendor and are short of the reserve, consider pulling out the reserve letter when trying to negotiate with buyers. For example, if bidding is stalled at $900,000 and the reserve is $970,000, showing them an adjusted reserve of $940,000 does wonders for your transparency and credibility. This can prove the difference when trying to extract a higher bid.
If the property sells, go up and thank the under-bidders immediately – you’ll have the next half-hour to congratulate the successful purchaser. Your under-bidders may feel defeated, flat and frustrated at missing out on another one. Assure them you will help them find something and actually do it. You should already be keeping an eye on the local market as it is, so if you see a property that you think suits them give them a call. That level of service will pay dividends later on.
Follow up all the neighbours that came through – through door-knocking, calling, email or searching them on RP Data. They may not want appraisals straight away but an excellent auction day result with quality follow-up service and promotional activity (letterbox drops, market monitors, and so on) is how you establish a true local reputation.
In a quiet, close-knit, cul-de-sac street, consider handwriting cards thanking neighbours for their co-operation and patience throughout the marketing campaign. Attach a small gift if you see fit. Don’t pump it with branding and promotional material – it’s unnecessary and ruins the gesture. This is a much more impressive technique than simply door-knocking and offering an appraisal.