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Auction Craft

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Auctions are an ever-popular method of selling property in Australia. In Melbourne, Sydney and Canberra more than one third of all listings are taken to auction.

As one of Australia’s most successful auction agents, Danny Grant is a master of the craft. Working in Sydney’s Lower North Shore with his wife Diane, Danny has had an incredible 90% average Auction clearance rate for the past seven years. He was recently awarded the title of Ray White NSW's number one residential sales agent and has qualified as one of the top one percent of Elite agents in the entire Ray White International Network.

Danny says, “The purpose of an auction is to extract from the market the best price, and the only way to really do that is with competition. It's very difficult to duplicate auction day competition - after or before.”

Believe in the power of auctions

Going to auction will not work unless you truly believe in the auction process. An agent drives the whole show so how you think can change everything. If you don’t believe in the power of auctions – no one else will. Danny says, “Say what is important. State an opinion. Anything you believe in is easy to sell.”

Win the listing

Winning listings is the foundation of your whole real estate business. Auctions work when there is competition and you have to demonstrate your ability to market a property beautifully and create a fever for the property. Danny says, “The better you market a home, the more emotionally connected buyers will be to it, the more serious vendors will see you are about selling the home, and the more it will make you stand out amongst other agents in the area.”

Once you have laid the groundwork by demonstrating your power to market and enticing your prospective vendor with captivating images, then move to what Danny calls, ‘Staircase to Price’.

Staircase to Price

Remember:

  1. Never guarantee what is going to happen
  2. Guarantee that it will not be sold without competition

As part of his Auction Craft, Danny has a very important Staircase to Price visual to assist discussions on price. Every vendor wants the highest price they can possibly get and what you have to do as an agent is explain that you will have to focus on the buyer in order to move a price to where the vendor wants it to be. You have to move the buyer from thinking about price logically to emotionally. Danny says, “No-one is ever going to buy anything unless they've got some emotional attachment, and that's when price comes in.”

The Staircase to Price communicates how you as an agent will work for a vendor to move a price up. Using the visual, draw a line scaling upwards shows three different prices.

  1. The minimum on the Agency Agreement
  2. Where feedback could be on the third week of the campaign, and
  3. Where it could get to on auction.

Danny says, “What it does is it gives the vendor that visual and communicates the idea that, ‘I'm actually going to try and push, and work buyers up in price as much as I can’. It’s a very effective tool.” Don’t worry if you are lowest quoter in your area. It's irrelevant because the client knows what you are going to push for. Danny says, “If I get it priced right from the start, the client knows that price is irrelevant. Whenever I get a listing, they always say, ‘I liked your strategy’."

3. Overcome objections to money spend on advertising

You must be able to handle objections to money being spent on advertising. Marketing is not about getting 50, 60 extra buyers from print media; it's capturing two or three buyers to compete against each other. If you just get one more buyer from an extra element of marketing, that could be a $5,000 bid or $50,000 worth of bids at an auction. Through marketing Danny says, “Buyers think we need to look at it and that this is a great property before they've even come through the door – that’s the excitement built up purely around marketing.”

Auction Day - the big day

If you have laid all the groundwork, the auction day will flow naturally. Pre-register buyers if necessary and have the reserve conversation as close as possible to the auction.

1. Have some competitions

Give away a bottle of champagne for the first bidder, which can also serve to kick-start the bidding.

2. Look after the vendors

Tell the vendors to take off as they would for an open house, and just come back five minutes before the auction starts.

3. Greet the bidders as they walk through the door

Take names and numbers at the front door so you can greet the bidders as they come in. Check off how many bidders you have, and say, ‘My staff are in the kitchen. They're taking care of registrations, and I'll see you afterwards’.

4. Meet with the auctioneer

Meet with the auctioneer out the front of the property away from the crowd.

5. Stand next to the auctioneer

A member of your team should be taking names and numbers, or be on the phone for somebody, registering bids. Look to see where all your buyers are in the crowd.

6. Acknowledge the buyers

Understand the power of perception and making a connection. Before the auction starts, pick your moment and go to who you think is your best buyer and go and shake his or her hand; wish them luck.

7. Choose your moment to chat with a buyer during an auction

8. Stay still once reserve is reached

Don’t move once the property is above reserve. Danny says, “Sometimes we're hundreds above reserve - I don't move because the buyers are looking at what I'm doing. What I mean by not move is turn on my heel and go and see my vendor to make sure that it's on the market. If I do that at an even figure and it's $2.5 million, they're going to know that they're probably paying a little bit too much from here, because Danny didn't go and see them a long time ago. If there's a certain point that it's flowing a little bit, I'll approach the under bidder. The highest bidder doesn't need my help, because they're already doing all right.”

Danny might suggest that, "’Look, my buyers work to round figures. Perhaps if you do another 10, if you do 10 and they bid 10, it'll cost you nothing’. Those sorts of things. It's surprising how that little nudge will get another bid, and just be very careful with when you are doing that, going back and forth with different buyers. I don't think that's a great look. You don't need to do that; you should know when you're looking at your buyers who the best bidders are and who's competitive and who hasn't had a bid. You just need to look at buyers that have pulled out, what body language they have, and what expressions they have and work with the ones who need help as well. I try not to do too much.”

9. A vendor bid does not indicate the reserve

 

Danny says, “It (the vendor bid) can change on the fly, I'll always say to my vendors that it's going to change. The reason is that we might think that there's two great buyers, and then suddenly they don't do anything that day. There might be a certain buyer that I've got to deal with in a different way, so the vendor bid will change. Sometimes I won't use it at all. It just depends on every situation, but no, it's not an indication of reserve. I explain to the buyers why we're putting in a vendor bid and normally we're doing it because we don't want to pass it into the highest bidder. We want everyone involved afterwards, so we’re trying to work out further depth of interest.”

10. Sold to settlement - keep in touch

Danny says, “I don't want them to feel like I've forgotten about them - I'm still here. That can be when all the pressure's off, and you can just be two people chatting, and it's at a different level. I always enjoy the conversations that I have with vendors and purchasers after it's all happened.”

11. If a property doesn't sell - maintain contact

If a property doesn’t sell at an auction as part of his Auction Craft technique Danny makes multiple contacts with the vendor to maintain the relationship.

Pull Out

An auction is not just the big day - it is a four-week campaign

Over a four-week period from listed to settled you must:

  1. Focus on each week. Mistakes in auctions don't happen on auction day, they happen on week one or week two. If the first week doesn't go well - that's a quarter of the campaign done.
  2. Run a faultless campaign and maintain a high emotional bank account with the vendor.
  3. Commit to following the campaign through to auction.
  4. Be transparent - this builds trust and confidence.
  5. Maintain communication and have the hard conversations early on. You only need 20 seconds of courage:
    • Keep vendors aligned with the campaign and buyer feedback
    • Talk about comparables
    • Talk about a minimum
    • Explain what a bank would value the property for
    • Explain the premium price and that you are going to try and get the premium
    • Don't give any guarantees on price
    • Listen to where the feedback is
    • Tell the client
  6. Present the property in the most emotionally engaging way possible
  7. Find more than one buyer
  8. Attract buyers
  9. Transition these buyers from seeing the property logically to engaging and wanting the property emotionally. You cannot sell without competition
  10. If the campaign s not going well, and you are feeling it is not going well, the vendor needs to feel that as weel. Do not give them false hope. Do not take responsibility for the market. It is what it is and you have to adjust to the market and what it's doing
  11. Set a good reserve; you can't guarantee what's going to happen. Have the hard conversation
  12. Understand the power of perception from listing through to settlement. How are you percieved at all stages of the campaign will impact on the result
  13. It's not all about the 12 minutes of auction and your clearance rate - it's about what is best for the vendor

Pull Out

The Listed To Auction campaign

  1.  Collect more information on the property if required
  2. Provide a laminated calendar of events
  3. Create an outstanding property buyer book
  4. Perpare a canned response for incoming auction enquiries
  5. Communicate with your vendor - often
  6. Schedule your communications
  7. Always conduct frst-class open homes and buyer appointments
  8. Prepare a smart suitcase with everything that is needed in it for open homes
  9. Prepare a fast facts laminated sheet for the property
  10. Prepare an open and upfront quoting laminated A4 sheet that conveys your commitment to ethics and transparency
  11. Contract - know everything and all that you can
  12. One final touch
    Once the open home is finished, Danny has little black cards on which he writes how many people came through the open house, that the house looks great and it presented really well.
    He says, “We also leave them a little brown paper package that's home-baked cookies that Diane's actually cooked. It's a recipe she's known for 30 years, and we've got a little special label that says, ‘From the kitchen of the Grant team’. Everyone loves those cookies, so everyone looks forward to getting them. It's just a nice little treat to leave at the end of an open house.”
  13. Read the market - having the courage to tell the vendor
    This is critical in being successful on auction day. You need to get your vendor's attention. They must be aligned with how the campaign is going.
  14. Prepare a detailed weekly report and feedback on price

Quotes

Going to auction will not work unless you truly believe in the auction process.

Maintain communication and have the hard conversations early on.

You only need 20 seconds of courage.

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