Elite AgentSelling and Marketing Property

How to set a dynamic reserve strategy: Andy Reid

In an unpredictable market, you need to have a pricing or reserve strategy that adapts to market feedback whilst maintaining positive progression with your vendors. Auctioneer and coach Andy Reid looks at why sticking to a set target figure can increase anxiety, while a more flexible framework can be beneficial to you and your vendor.  

It is crazy where you can find wisdom.

I was watching the Disney film Ratatouille with my daughter when the lead character (Remy the mouse) made the most profound comment: “The only thing predictable about life is its unpredictability.”

Think about that and how it applies to real estate. We deal with humans every day, all of whom have completely different life journeys and different decision-making capabilities.

At an auction we can qualify buyers to within an inch of their lives, but ultimately we do not know what each one is going to do on the day in that crucial moment.

So when we make our strategy for the auction call, why do we insist on forcing ourselves and our vendors to fit into a single rigid plan?

Especially since we know one thing… we don’t exactly know what’s going to happen out there!

When we have so many variables, we need to have the ability to ‘read the play’ as it is and adapt to the situation in order to maximise the outcome for our clients.

It also means that we need to collaborate with our vendors and allow them the room to breathe with a change in thinking around auction day.

Here are the three keys to setting up a dynamic reserve strategy:

1. Change the perception around the reserve 

Everyone gets nervous when it comes to talking about the reserve. We panic as agents, fearful that the bar is going to be set ridiculously high. Vendors get really anxious, because they are putting a single figure on their property and, effectively, their future!

Because it is such a finite number, it almost has a feeling of being at the edge of a cliff – that ‘no turning back’ moment before launching into the great unknown. This is where a shift in mindset needs to happen from the very start of the campaign.

So I always refer to it as a comfort blanket – a warm, snuggly blanket that keeps the wolves from the door. It is the clients’ safety mechanism that protects their interests, and by referring to it with more warmth you will melt away much of your vendors’ ‘unnecessary’ anxiety, making the whole topic a lot easier to talk about.

2. Always refer to the greater goal 

Nobody wakes up one morning thinking, ‘I fancy selling my house today!’. Selling property is a vehicle that takes vendors towards achieving something greater in their lives. So any conversation around the reserve needs to relate to that end goal (which I hope you have already ascertained at the appraisal stage!).

Basically, we as agents are employed to provide perspective.
Whenever I ran any sort of campaign, I always made sure that I positioned myself in a way that put the market as a separate entity. I made it clear that we are all dictated to by the market.

So my role was to interpret that market and suggest the best plan of attack out of the various options, always with the vendors’ end goal in mind. It is so easy for all of us to get caught up in the moment, so consistently bringing focus back to what the vendor actually wants to achieve is crucial.

3. The mission: Get on the podium! 

Instead of having the one target figure, explain that you will have three tiers to the strategy (Gold, Silver, Bronze). Not only will there be an increase in flexibility, but it will also allow the vendors to feel a lot more in control over the outcome.

This is how I explain them:
Gold: The dream figure, the amount that will not only buy you the next home but also pay for a holiday, a car and pay off all the credit cards. (Insert tangible items according to their situation.)

Silver:  Still good… but the holiday might have to go on hold; you may have a credit card left but most of that is sorted.

Bronze: You’ve still won, but any lower and you’ll walk away with nothing. This is the minimum amount you need to make your end goal a reality.

By referring to the three tiers as gold, silver and bronze, you will be able to suggest any tier with positivity. For example, “If we need to move to the bronze level we’ve still won a medal, and that medal represents your original core reason for selling.”

If you set this structure from the start of the campaign, not only will you build a more collaborative relationship but there will be a greater sense of control, as opposed to panic, for both you and your vendors.

My advice? Mention this to them during your appraisal.

It will set you apart as an agent with a greater level of strategic thinking, as well as easing the tension and providing structure to that awkward conversation about the reserve.

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