An auction is an effective method of sale for a property and can achieve great results for both a Real Estate Agent and their client. Here are some tips to ensure that you’re up to speed on auctions so you can prepare the most effective campaign.
What are the benefits of selling property at auction?
The main benefit of going to auction is that it doesn’t involve a lot of negotiation. In an ideal scenario, interested parties simply place bids and the highest bidder wins once the price reaches the reserve. Auctions require the highest bidder to go unconditional at the drop of the auctioneer’s hammer, so for a seller who wants to sell quickly, it gives the best chance of a clean sale.
Of course, auctions aren’t always so clean. The highest bid may not reach the reserve price, so negotiations need to take place after the auction between the owner and buyer to bridge the gap. But as long as your client is fully aware of how an auction works and they’re prepared for all eventualities, this shouldn’t be an issue.
Make sure you have all the information about the property you need
To effectively execute an auction campaign, you need all the information about the property on hand. This way if you’re asked questions by a buyer you’re ready with the answers. It’s important to make some time to sit down with the seller and ask all the relevant questions a buyer might ask.
Some typical questions might be:
- How big is the land?
- What way does the house face?
- Have there been any improvements made to the property?
- Why is the owner selling?
- What is the price guide for the property?
- What do I need to do to be ready to bid at auction?
An agent who is knowledgeable about the property and the area will get a better result for their seller if they arm a buyer with the information they need to make an informed decision.
Clearly explain the costs involved in an auction campaign
Many sellers think that an auction is an expensive method of sale but it’s not the case. The only added fee will be the charge for the auctioneer, otherwise the advertising spend should be exactly the same for a listing with a price.
The main difference with an auction campaign is that the marketing is typically condensed into a shorter period of time, say three or four weeks, so campaigns need to have maximum reach.
Choose an auctioneer who will add value
The auctioneer you use needs to have the relevant experience but also be able to add value. This means knowing when to push for an extra bid, and when to hold back to let the buyer have breathing space to think.
The chosen auctioneer needs to be professional and engage well with the market. They also need to be able to determine the right bids to ask for, whether it’s a $1000 bid or a $10,000 bid. Ultimately the auctioneer should have the seller’s best interests in mind.
Brief your client on all the possible outcomes
It’s important that your client is prepared for all the possible outcomes that may occur on auction day. This is so they’re not disappointed when no one bids or they don’t have any bids that reach the reserve price.
Briefing them beforehand on the different scenarios will make them more aware of what their responses might be so they can achieve a sale. For example, have them think through a few different price options so they’re prepared to negotiate with the highest bidder. Just because a property is passed in, doesn’t mean a sale can’t be achieved.