Auction - Local Agency Manual by First National Real Estate

LOCAL AGENCY M

B o o k l e t

AUCTION

06 LONG 97 L

E IF

TAL CHLORINE EN F M

E RE

ELE

ISO I400I

IS O

A proven method of sale that delivers results

ECF

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F I R S T

N A T I O N A L

NATIONAL OFFICE D I S T R I B U T I O N P R I N C I P A L ( S )

L I S T

89 Hoddle Street Richmond VIC 3121 Phone : 1800 032 332 Fax : 1800 832 332 marketing@firstnational.com.au

S A L E S

P R O P E R T Y M A N A G E M E N T

O T H E R

www.fngateway.com.au

AUCTION C

INTROD UC TI O N 2 A UC TION C AMPAI GN ST R U CT U R E

PRE -LISTING CO VER LET T ER AND KI T

LISTING PROPO SAL

TH A NK YOU LET T ER S

SA LE S TE A M O PI NI O N O F VALU E

C OMMUNIC AT I O N PLAN

RE PORT LE T T ER S – WEEK F O U R

‘ W HA T IF?’ DU R I NG AU CT I O N DAY

C A M PA IG N AU CT I O N SU MMAR Y 2 6

INTRODUCTION Many real estate agencies fail to implement an approach to the auction sale process that instils confidence in sales staff and home owners alike. Yet auction is a method of sale that is statistically proven to provide better outcomes, faster turn-over, and a greater commitment from vendors to see their property sold. There are also certainly circumstances where auction is the only legally acceptable method of sale so all agents need to develop professional skills that enable them to compete for auction business effectively. First National Real Estate has developed a standard approach that assists agents to run an ideal auction campaign. It’s designed to ensure every chance of success for you and your customers. Building a successful auction culture in an agency requires commitment and team effort. Everybody needs to understand and appreciate the challenges involved in achieving successful outcomes consistently. So it’s essential that staff are supported with ongoing training and step-by-step guidelines that can be followed with every campaign. A high standard of verbal and written communication forms a central part of the auction process so sales staff must be equipped with proforma correspondence they can use. Without a comprehensive communication plan, vendors are unlikely to be ready or willing to sell on auction day. This booklet outlines the progress of a fictional four week campaign and provides examples of written communication from estate agent to vendor. It forms the basis of First National’s recommended approach but may of course be altered to suit your needs. Copies of the letters referred to in this document can be downloaded from Gateway and adapted for your use. Tips will guide you to their locations. First National Real Estate’s auction strategy is designed to strengthen member office profiles by up-skilling sales staff and unlocking the benefits of being seen as a strong, competent auction agency in your local community. It provides a structure, simplifies the reporting process to vendors, streamlines office procedures and will lead to more sales for your agency and better outcomes for your customers.

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3 A U C T I O N

CAMPAIGN STRUCTURE

The structure of an ideal auction campaign should always incorporate the following key components: PR E - L I S T I N G & L IST ING SUBMISSIO N 1.

Pre-Listing cover letter and Pre-Listing Kit.

Listing Proposal.

POS T- L I S T I NG 3.

Thank you letter from principal.

Letter to solicitor (applicable in states where solicitors/conveyancers prepare a contract of sale)

Thank you letter from salesperson.

Sales team opinion of value.

A C T I VE C AMP A IGN Week 1

Week 2

No letter required.

Week One Activity Report

Call vendor to confirm first inspection date and time. Week 3

Week 4

Week Two Activity Report

Week Three Activity Report

Auction Reserve Letter

Auction Invitation Letter What if? (Auction scenario letter)

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4 P R E - L I S T I N G

& KIT

C O V E R

L E T T E R

Once an initial inquiry from a potential vendor has been received, a pre-listing kit with covering letter should be delivered as quickly as possible. Both documents are generic and their purpose is to provide potential clients with a positive impression before meeting you at the appraisal, which would usually be one or two days later. By providing these documents, First National agents demonstrate their professionalism and strong desire for the business. An effective pre-listing kit outlines the profile of your agency, the skills and successes of its salespeople, and the benefits of listing with you. An example pre-listing submission is found on Gateway. It outlines the methods of sale available to the vendor, the focus being chiefly on sale by auction. Sending this information in advance of your appraisal appointment helps position the client to understand and prefer the auction alternative. For a full explanation on how to create an effective Pre-Listing Kit please refer to LAM Booklet Three - Pre-Listing Kit. Contact National Marketing on 1800 032 332 for a free copy.

G ATE WAY R ESOUR CE Search â&#x20AC;&#x2DC;Pre-Listing Submissionâ&#x20AC;&#x2122; and then download.

G RA B THE LE T T E R S YO U N EED F ROM G AT E WAY. J U S T G O TO W W W. F N GATE WAY. CO M .AU

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5 L I S T I N G

PROPOSAL

Depending on whether you have prior knowledge of a property, a comprehensive listing proposal is either prepared for delivery at the appraisal appointment, or is written and delivered as soon as practicable following the appraisal appointment. The proposal should list the advantages of selling through your agency, the different methods of sale and their key features, various marketing alternatives, your marketing plan recommendation and finally, your opinion of value. A formal listing proposal provides detail about the approach you will take to the sale of your potential client’s home. The proposal favours the recommended method of sale as auction but allows the client to reach this conclusion themselves. It also promotes the advantages of using your company rather than your competitor’s. An example Listing Submission is available for download from Gateway. It incorporates three marketing programmes, each with different budgets. For advice on how to create a quality Listing Proposal, please refer to LAM Booklet 4 - Residential Listing Proposal.

G ATE WAY R ESOUR CE Search ‘Listing Submission’ and then download.

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6 T H A N K

Y O U

LETTERS

Once a property has been listed for auction it is recommended that thank you letters be sent to the vendor from both the agency’s principal and the salesperson. Such letters reinforce to the vendor that they have made the right decision by choosing you and your company to market their property. Both letters are generic but reinforce the process of professional communication you have already established though the delivery of a pre-listing kit and cover letter. Naturally it is preferable for minor amendments to be made to the letters to personalise where possible. Remember that each letter sent throughout the campaign will help to build stronger rapport with your vendor, but letters should never be considered to be a replacement for personal telephone contact and face-to-face meetings throughout the campaign. In some states of Australia it’s also recommended to send a letter to the vendor’s legal representative, at this point, requesting the preparation of the necessary legal documentation required to sell a property at auction i.e. Contract for Sale of Land Three example letters are shown overleaf. They can be downloaded from Gateway.

G ATE WAY R ESOUR CE Search ‘Thank You Letter From Principal’ and then download. Search ‘Thank You Letter From Salesperson’ and then download. Search ‘Letter To Solicitor’ and then download.

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7 E X A M P L E : T H A N K YO U F RO M P R I N C I PA L Address Your Street Town PO Box VIC 3196

Contact 9111 P (03) 9418 9122 F (03) 9418 au ompany.com. E info@yourc .com.au ny pa om urc yo W

n Your Compa 18 Januar y 20X

ner Mat thew War lose C ry bu ar 72 M 2604 SW N t of cr Heath , Dear Mat thew RY CLO RE: 72 MARBU

FT N SW SE , HEATHCRO

g to list your you for choosin k an th , a swift ny pa Your Com lp you achieve First National possible to he at ng ne hi yt yo er er ev ev ill do On behalf of you that we w us. I can assure proper ty with r sale. to meeting ou and satisfying stic dedication ia us th nt en ge d A an s honest sful Sale istently succes who posses an ns am co te d a le. an d ib d pe ss ce lo po en deve st price an experi I believe weâ&#x20AC;&#x2122;ve results. Joe is ill achieve the be d w s an rt e fo nc ef lle s eâ&#x20AC;&#x2122; ce ex am, Jo commitment to ppor t of our te that with the su e te an in ar gu n ca and I dard of service the highest st an of u. y yo er to liv t de en e ed to th commitm d our ongoing pany is committ an r om e, ou C g us ur in e w Yo ew l s vi e system g and re First Nationa always updatin ourselves on th e e ar id e pr w e s W re n. su n as the professio 01 accreditatio practice. ssurance ISO 90 front of agency re fo e th at Our Qualit y A n ai m re e w make sure st interests of procedures to t serving the be ou ab is ny pa on 9999 3333. te Your Com to cont act me ional Real Esta ee at fr N el t fe rs Fi se ea at do ies pl Ever ything we u have any quer such, should yo as d, an s nt ie our cl , Yours faithfully

Insert Name Principal

t Real Estate

dependen l Group of In First Nationa 2 19 ACN 005 942

ited

Agents Lim

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8 E X A M P L E : T H A N K YO U F RO M S A L E S P E R S O N Address Your Street Town PO Box VIC 3196

Contact 9111 P (03) 9418 9122 F (03) 9418 au ompany.com. E info@yourc .com.au ny pa om urc yo W

n Your Compa 18 Januar y 20X

ner Mat thew War lose C ry bu ar 72 M 2604 SW N t of cr Heath , Dear Mat thew FT N SW SE , HEATHCRO k tirelessly to that I will wor d re su as st Re home. the sale of your usting me with tr en . r ty fo er u op yo Thank for your pr informed decipossible price t es gh hi e you to make an th lp he to obtain ck ba ket feed mmunicate mar weeks I will co ur fo xt ne e Over th mind that by n day. Please bear in n. ig pa m sion on auctio ca e ring th rs received du cept it. I submit all offe at th t mending you ac en m m co ire re ily ar ss ce It is a requ ne t no fer to you, I am submitting an of

RY CLO RE: 72 MARBU

ry 20XX. ce at 7pm. ursday 3 Februa Th on e ac pl and will commen ke X ta X ill 20 w ry n ua tio br ec 24 Fe Your first insp same time on site on Thursday e in rooms/on 1pm and at the ac d pl an ke ta pm ill 12 w n n betwee Your auctio for Thursdays are scheduled ns tio ec sp in r . Open fo e campaign. your property e duration of th les team to view sa r ou Saturdays for th w lo al e to marketing. a convenient tim tly to arrange effective crossor le sh ab t en ac d nt an co it I will be in nfidently about you please them to talk co ntract. Would co of le sa r This will enable a r request fo r our first buye be available fo confirming your ill r w ito ct lic ra so nt ur co your n to yo to ensure that We have writte 02 9525 3333 on l ga Le â&#x20AC;&#x2122;s ) ith te ria contact Sm lete if inapprop sing te Specific â&#x20AC;&#x201C; de k you for choo inspection? (Sta choice, so than a d ha u yo t agen selection of an iate that in the Finally, I apprec . Your Company First National

KEY DATES:

, Yours faithfully

Joe Salesperso

t Real Estate

dependen l Group of In First Nationa 2 19 ACN 005 942

ited

Agents Lim

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9 E X A M P L E : L E T T E R TO S O L I C I TO R Address Your Street Town PO Box VIC 3196

Contact 9111 P (03) 9418 9122 F (03) 9418 au ompany.com. E info@yourc .com.au ny pa om urc yo W

n Your Compa 18 Januar y 20X

Attention: Solic

itor Name

Solicitor P/L Smith Street 2604 Heathcrof t N SW Dear Sir, RY CLOSE , H

N SW EATHCROFT

t lose, Heathcrof 72 Marbury C at ty er op pr e to sell th thew Warner ructed by Mat st in en y A greement. be nc ge ve We ha Auction A e th of py co a ose auction to st Janu ar y with the and herein encl 31 ay sd ur for Th n is scheduled house inspectio en op st fir â&#x20AC;&#x2122;s The proper ty th bruary 20X X . ursday 28 Fe e proper ty and be held on Th le for the abov Sa r fo t en m ee r to the first are an A gr our of fice prio t that you prep to es s, ie qu op re â&#x20AC;&#x2122;s oc nt ot ie r cl ur ph We confirm ou t, along with fo and counterpar al in ig or e th d forwar spection. ith a council open house in e your of fice w id ov pr to le are unab Your Company First National at th se vi ad We wish to 33 te. fice on 9999 33 zoning certifica cont act our of to e at sit he t do no rmation, please any further info ire qu re u yo Should X XXX. ct on 0411 X X utual client . or myself dire result for our m ul sf es cc su a g achievin ok forward to sistance and lo as ur yo r fo u We thank yo

RE: 72 MARBU

, Yours faithfully

Joe Salesperso

t Real Estate

dependen l Group of In First Nationa 2 19 ACN 005 942

ited

Agents Lim

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10 S A L E S

T E A M

OPINION OF VALUE

Many real estate offices find that there are two distinct benefits associated with having the whole sales team visit a vendor’s property. •

The entire team becomes familiar with the best attributes of the property and can confidently promote it.

•

Their individual opinions of value can form the basis of early market feedback for the vendor.

A visit from the whole sales team reinforces your agency’s desire to leave no stone unturned in the promotion of the vendor’s property. It shows that you are already working hard to make sure that everyone on the team knows about the property, not just one salesperson. As with prospective buyers who inspect the property, the sales team will give their thoughts, both positive and negative, and express their opinion of value. This may assist the listing agent to determine the most likely target market but also helps highlight any pricing issues from the outset. Following the sales team’s inspection a letter should then be sent to the vendor providing the team’s opinion of the likely range in which the market will express interest. This commences an education process that will help the vendor to accept that the auction outcome is representative of market value. The example letter shown overleaf can be downloaded from Gateway.

G ATE WAY R ESOUR CE Search ‘Sales Team Opinion of Value’ and then download.

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11 E X A M P L E : S A L E S T E A M O P I N I O N O F VA L U E Address Your Street Town PO Box VIC 3196

Contact 9111 P (03) 9418 9122 F (03) 9418 au ompany.com. E info@yourc .com.au ny pa om urc yo W

n Your Compa 25 Januar y 20X

ner Mat thew War lose C ry bu ar 72 M 2604 SW N t of cr Heath , Dear Mat thew RY CLO RE: 72 MARBU I would like to

FT N SW SE , HEATHCRO

thank you for

the opportunity

e sales team show our entir

oper ty.

through your pr

open and contemporary home and the e th of area with its ity en al e rear gard with the qu th d e se se es ld pr ou im w t yers mos The team was ost intending bu . . They all felt m an of the proper ty pl es or ur at flo g fe in g in nd ta easy liv ts ou as ea and lap pool y be aware of entert aining ar rs will cert ainl ye bu g in nd te wever, in ay location ho was the highw d ise ra n er nc The only co proper ty. inspecting the â&#x20AC;&#x2122;s comparative this when first ch sales person ea on d se ba 45,0 00 $235,0 00 to $2 e ranged from ic pr of n io in The op acting market analysis. currently cont ur home and is yo t ke ar m to ity t the opportun is excited abou hasers. rc pu e iv ct Our sales team aler t prospe to s se se ba ta da meantime, plea their buyer auction. In the ur yo of ss re e prog on regarding th vice. ith you again so w t rmation or ad ac fo nt in r co he in rt fu r Iâ&#x20AC;&#x2122;ll be fo e tim y e to call me an do not hesit at , Yours faithfully

Joe Salesperso

t Real Estate

dependen l Group of In First Nationa 2 19 ACN 005 942

ited

Agents Lim

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12 C O M M U N I C A T I O N

PLAN

In the first week of the campaign, the first two open for inspections and any private appointments will take place. Therefore, the first report is not written until the beginning of week two, when all of week one’s activity can be summarised. Contact your vendor before the first open house inspection to check on their progress with presentation and to remind them of the open times. In weeks two, three and four of the campaign, inspection reports are written and posted to your client on Mondays, immediately following the weekend open house inspections. Salespeople are requested to also telephone vendors, immediately following inspections, to report the number of groups in attendance and any interest shown. To not do so leaves the vendor wondering what happened and shows disrespect for the trust that has been invested in you. Letters to be sent: Week 1

Week 2

Nothing (phone contact)

Week 1 Inspection Report

Week 3

Week 4

Week 2 Inspection Report

Week 3 Inspection Report/Auction summary

Auction Reserve Letter

What if at auction? Auction Invitation Letter

The weekly Inspection Report lists all the people that have inspected the property and their comments. These reports provide the essential feedback that will help the vendor to understand their position and make an informed decision on auction day. Such feedback performs a vital role in establishing a sense of trust between the vendor and you. Examples of the reports that are required throughout the campaign are shown in the next few pages. Download them from Gateway.

G ATE WAY R ESOUR CE Search ‘Week 1 Inspection Report’ and then download. Search ‘Week 2 Inspection Report’ and then download. Search ‘Week 3 Inspection Report’ and then download. Search ‘Auction Invitation Letter’ and then download. Search ‘Auction Reserve Letter’ and then download.

Download resources from www.fngateway.com.au

13 E X A M P L E : W E E K 1 – I N S P E C T I O N R E P O RT Address Your Street Town PO Box VIC 3196

Contact 9111 P (03) 9418 9122 F (03) 9418 au ompany.com. E info@yourc .com.au ny pa om urc yo W

n Your Compa X 7 February 20X ner Matthew War lose C 72 Marbury 2604 SW N t of Heathcr , Dear Matthew

E SALE OF T WEEK OF TH RS FI E TH N REPORT O CROFT RE: PROGRESS te. CLOSE, HEATH RY spections to da U 72 MARB ve attended in ha ps ou gr 16 l of Saturday, a tota t the current inspection on ’ feelings abou rs ye bu ch e ar Following our se ns is to re e property wer portant functio who viewed th im e t os os th m r om ou fr one of mments As your agent e following co e property. Th th of e lu va t marke made:e in relation to ents were mad Positive comm e house erall size of th 1. The large ov rth aspect to the no 2. The pleasant mpus room 3. The large ru ng made concerni mments were co e tiv ga ne e However, som location 1. The highway vels ground noise le g property 2. General back the neighbourin of n tio ta en es pr l iling 3. The genera $235,000 e bathroom ce showing on th in the range of be to it d te ca 4. The mould rchasers have value indi prospective pu eir opinion on th om r fr fe of am te to s le ed our sa e prepar r members of Those who wer ts made to othe en m om C . 00 - $245,0 ilar range. taken place: indicated a sim g activities have tin ke ar m g in , the follow for Inspection’ the inspections nd the ‘Open distributed te d at an In addition to to d te le in op pr pe viting have been d phone calls in • Brochures , door knock an op dr x bo er tt • A le sale alerted to the was conducted and inspecbase have been ta da r ou keting program on ar rs m ye r bu ou ll A ith • ss. ract. W rmed of progre for a sale cont en 2 requests d keep you info be an ve st ha re e te in er t th en At this stage, build upon curr , my goal is to tions continuing , Yours faithfully n Joe Salesperso t Real Estate

dependen l Group of In First Nationa 2 19 ACN 005 942

ited

Agents Lim

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14 E X A M P L E : W E E K 2 – I N S P E C T I O N R E P O RT Address Your Street Town PO Box VIC 3196

Contact 9111 P (03) 9418 9122 F (03) 9418 au ompany.com. E info@yourc .com.au ny pa om urc yo W

n Your Compa XX

14 February 20

r Matthew Warne se lo C ry bu ar 72 M 2604 SW N t of cr th ea H , Dear Matthew

OF OF THE SALE E 2ND WEEK TH N O RT REPO . CROFT RE: PROGRESS tions completed CLOSE, HEATH week of inspec 72 MARBURY nd co se r ou ram with w marketing prog groups have no ay through our w id m w no e and a total of 26 g tin We ar ke ar m r from ou one enquiries nsistent teleph co d ive ce re As We have usly reported. operty. ith those previo w t en r inspected the pr ist he ns rt fu co a ve been 00, and ount of $230,0 the property ha am of e an lu l r va ra fo t ve ty en se er rr the cu the prop d there are Comments on fer to purchase ued to four, an of iss e s on ct d ra nt ive ce co ve re ber of discussed, we ha brings the num tions. en issued. This be ve r second inspec ha s fo ct rn ra tu re to n two cont io nt te in nd noise and ies indicating an tion, backgrou ca lo ay additional part w gh hi to the ures of e positive feat sed in relation emphasising th s been expres ha by n is er th nc r te co d un Continue attempted to co operty. I have d neighbouring pr e comments an informed of th y el os cl the property. u y. yo da ction ill keep ade prior to au r campaign, I w ment can be m al stages of ou ss fin se e as th te to ra in cu e ac As we mov ed parties so an d by all interest ace: views expresse es have taken pl arketing activiti m g in w llo fo e report, th Since your last ia marketing ed m • Social marketing ntact database rested parties • Customer co week one inte up g in ction. w llo fo ntact tending the au • Telephone co r interest in at ei th n ai nt ai m view to parties with a for $920,000. to monitor all from you, sold I will continue k oc bl a is ch , whi 22 Perite Street me. k a property at ee w e th g ate to contact in ur D se do not hesit ea pl n, io at rm ing this info queries regard If you have any , Yours faithfully n

Joe Salesperso

t Real Estate

dependen l Group of In First Nationa 2 19 ACN 005 942

ited

Agents Lim

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15 E X A M P L E : A U C T I O N R E S E RV E C O V E R L E T T E R Address Your Street Town PO Box VIC 3196

Contact 9111 P (03) 9418 9122 F (03) 9418 au ompany.com. E info@yourc .com.au ny pa om urc yo W

n Your Compa XX 22 February 20 ner Matthew War lose C ry bu ar 72 M 2604 SW N t of cr Heath , Dear Matthew

RESERVE FORM RE: AUCTION tached. reserve form at Please find your

ion. ior to the auct turn it to me pr re d an rm fo e se complete th Would you plea , Yours faithfully

n Joe Salesperso

t Real Estate

dependen l Group of In First Nationa 2 19 ACN 005 942

ited

Agents Lim

Download resources from www.fngateway.com.au

16 E X A M P L E : A U C T I O N R E S E RV E F O R M Address Your Street Town PO Box VIC 3196

Contact 9111 P (03) 9418 9122 F (03) 9418 au ompany.com. E info@yourc .com.au ny pa om urc yo W

n Your Compa Date: The Auctioneer es Auction Servic First National Insert address Insert address

________

____________

Dear Sir

____________ HEATHCROFT

RY CLOSE, OF 72 MARBU _________ RE: AUCTION ____________ __ __ __ __ __ ________ X __________ TH FEBRUARY 20X 28 ove property. THURSDAY ction of the ab au at le sa e th for signed by me/us uction authority A e th ld on to r fe I/we re ction to be he operty at the au pr e th e price r rv fo se e re ic t reach the e reserve pr no th g at in th dd e bi at e in ould th ish to nom ________. Sh I/we hereby w us for decision. ____________ $_ est bid to me/ be gh ill hi w e te th r fe re er ne the above da e auctio please have th Act) that the nominated then s Act 2002 (the nt ge A s bid, es sin k and Bu t registered to e Property, Stoc s who have no th on r rs de pe un or at om n fr th isitio dge auction I/we acknowle t make any requ ng bids at the ove. I/we will no ibited from taki ab oh n Act. pr e ow is th sh r er e de rv ne auctio e the rese ligations un ov ob s ab hi be ith ay w m ce d e bi cordan even though th g any bid in ac ctioneer refusin au e th at the t ns ai ag claim must announce the auctioneer at th d at bi d an or ly nd on e our ve one bid ctioneer to plac ve the right to au ha e e th I/w ise e or dg th le e au I/we acknow If necessary I/w if we so elect. instructed. ise rw he time it is taken ot __ unless __ __ __ we __ __ r behalf should $_________ land on my/ou of le sa r fo ct contra er to sign the ise the auctione or th au r he rt I/we fu e to do so. not be availabl Yours faithfully ______ ____________ ______ ____________

t Real Estate

dependen l Group of In First Nationa 2 19 ACN 005 942

ited

Agents Lim

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17 R E P O R T

L E T T E R S

WEEK FOUR

In week four, you send: •

Week 3 Inspection Report

•

Auction Invitation Letter

•

What If At Auction letter

The activity report and auction summary outlines the likely level of interest at auction and suggests where the strongest buyer has indicated what their highest bid may be. The ‘What If’ letter outlines the types of auction scenarios that can unfold at auction and helps prepare the vendor. Nothing, however, can prepare your vendor as well as a pre-auction meeting. It is essential to sit down with your client and run through the Week 3 Inspection Report/Auction Summary to ensure they fully understand. It also gives them the opportunity to ask questions and be absolutely clear about the process. The Auction Invitation Letter provides a template by which you can raise further awareness of the auction and generate opportunities to meet neighbours who may be thinking of selling.

G ATE WAY R ESOUR CE Search ‘Week 3 Inspection Report’ and then download. Search ‘Auction Invitation Letter’ and then download. Search ‘What If At Auction Letter’ and then download.

Download resources from www.fngateway.com.au

18 E X A M P L E : W E E K 3 â&#x20AC;&#x201C; I N S P E C T I O N R E P O RT Address Your Street Town PO Box VIC 3196

Contact 9111 P (03) 9418 9122 F (03) 9418 au ompany.com. E info@yourc .com.au ny pa om urc yo W

n Your Compa XX 21 February 20 ner Matthew War lose C 72 Marbury 2604 SW N t of Heathcr , Dear Matthew

OF K OF THE SALE E THIRD WEE TH N O RT PO RE RE: PROGRESS CROFT CLOSE, HEATH RY U RB A rt that our M 72 pleased to repo am I . m ra og ting pr spected the r auction marke groups have in ou 48 of k te ee da w To al . the fin sponse We are now in an excellent re inued to draw nt co s d. ha ue g iss tin marke have been sale contracts of property. property and 4 t for this type ke ar m e th in yers d all possible bu we have reache at th t sant aspect to en id nf I am co the house, plea of e siz l al er ov e large ded well to th le have respon op pe e, ar aw e As you ar s room. the large rumpu ound noise, the north and location, backgr ay w gh hi e th n to ncern in relatio ceiling mould. en continued co be om s ro ha th e ba er d th , an ty er op However pr g the neighbourin d at the time, presentation of hich, as discusse w , 00 ,0 30 $2 r of ceived one offe ting we have re ke ar m of t ar st Since the your behalf. ,000 and we declined on d between $230 en sp to g in ill w they are $232,000. indicated that limit of around property have a e g th tin g es tin gg ec su sp People in rongest buyer perhaps our st to recommend $245,000 with ction day and au on e ur ed e proc k to explain th u later this wee yo to ng ki ea I will be sp le price. aximise your sa r company to strategies to m for selecting ou u yo k an th n, ce agai le price and on ing a strong sa ev hi ac to d ar I look forw ur property. in the sale of yo represent you , Yours faithfully n Joe Salesperso t Real Estate

dependen l Group of In First Nationa 2 19 ACN 005 942

ited

Agents Lim

Download resources from www.fngateway.com.au

19 E X A M P L E : A U C T I O N I N V I TAT I O N L E T T E R Address Your Street Town PO Box VIC 3196

Contact 9111 P (03) 9418 9122 F (03) 9418 au ompany.com. E info@yourc .com.au ny pa om urc yo W

n Your Compa ur, Dear Neighbo

CROFT NSW CLOSE, HEATH RY U RB A M 72 ction RE: AUCTION erty at insert au the above prop n io ct au ill w tate ational Real Es at 7pm, First N This Thursday u are not intervenue address. ction even if yo au e th t in nd te at al estate marke vite you to the current re portunity to in of op r is to th ca di ke in ta t to grea We would like tions provide a ty yourself. Auc er op pr e th in ested your area. nt. sult for our clie a successful re to d an n io ct at the au to seeing you I look forward Kind regards,

Insert Name Your Company First National

t Real Estate

dependen l Group of In First Nationa 2 19 ACN 005 942

ited

Agents Lim

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20 E X A M P L E : “ W H AT I F ” AT A U C T I O N Address Your Street Town PO Box VIC 3196

Contact 9111 P (03) 9418 9122 F (03) 9418 au ompany.com. E info@yourc .com.au ny pa om urc yo W

n Your Compa XX XX February 20 ner Matthew War lose 72 Marbury C 2604 SW Heathcroft N , Dear Matthew

ON OS AT AUCTI TIAL SCENARI N TE PO – ?’ confronting for RE: ‘WHAT IF n can be equally io ct au an at th ever the same. point out o auctions are I would like to tw , es no ch as oa t, ic pr ed ap n day rd to pr As your auctio ns are always ha buyers. Reactio as es. l el w as s vendor potential outcom e process and th on d fe ie br fully you so you are sist. b is to prepare jo y ion that will as m at , rm ew fo th in at e M m so ed os cl day. ease find en eeting on Tues Accordingly, pl pre-auction m r ou at be ill ese w e to discuss th ns, a good tim tio es qu y an e. fic ve of If you ha 4.30pm at our scheduled for The meeting is , Yours faithfully

n Joe Salesperso

t Real Estate

dependen l Group of In First Nationa 2 19 ACN 005 942

ited

Agents Lim

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21 ‘ W H A T

I F ? ’

DURING AUCTION DAY

Potential scenarios and our advice about how to handle them are discussed below. SPI RI TE D B I DDING The marketing campaign has attracted two or more enthusiastic buyers. The bidding is fast and furious at first, but then slows down as the bidding nears the reserve price. Recommendation Once the bidding approaches the reserve price, your agent may ask you if the property can be ‘called on the market’. This indicates to buyers that their bidding has reached a price that you will accept, and that the property will be sold ‘under the hammer’. Experience shows that once buyers know that the property is ‘on the market’, they sometimes get a ‘second wind’ and the bidding momentum remains spirited, leading to a result exceeding the original reserve. Some buyers will hold back and not start bidding until the auctioneer announces that the property is ‘on the market’. We recommend you take the salesperson’s advice, as the momentum of your auction is critical to obtaining a strong price.

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22 ‘ W H A T

I F ? ’

DURING AUCTION DAY

SL OW B I D DING Sometimes the bidding can be very slow or lack evident enthusiasm. Your agent will be working hard with the buyers to encourage them to bid. Quite often, we can encourage the bidding towards reserve price, or close to it, or the salesperson may suggest placing a ‘vendor bid’ to lift the price. Alternatively, if the bidding is close to the reserve price the salesperson may suggest the property be placed ‘on the market’. Recommendation You have three options at this point if bidding is under the reserve price: •

LOWER YOUR RESERVE PRICE Auction day is a pressure point for buyers to make a decision. If bidding is close to the reserve price then lowering your reserve and placing the property on the market may stimulate the under bidder to increase their bid, as they know the property is at risk of being sold to their competitor.

•

NEGOTIATE WITH THE HIGHEST BIDDER AFTER AUCTION If the bidding falls short of the reserve price, our suggestion is to ‘pass the property in’ and negotiate with the highest bidder. A high percentage of sales are successfully negotiated following auction.

Note:

If the sale is negotiated with a bidder after auction and the contracts are exchanged prior to midnight on the same day, the sale is deemed ‘unconditional’ (no ‘cooling off period’ applies). If the sale takes place the next day then the normal 5 business day ‘cooling off period’ applies unless contracts are exchanged with a 66W Certificate which can only be authorised by the buyer’s solicitor.

ON LY ON E BIDDER AT AUCT ION This is a difficult situation, but not impossible. You only require one genuine buyer to make a sale happen. Recommendation Because auction day is a pressure point for buyers, it is recommended that the property be submitted to auction. If the buyer is genuine, a sale can often be negotiated during the auction. If a sale price has been negotiated, the purchaser will be asked to call out a bid (the negotiated price the seller will accept) then the auctioneer will advise that the property is ‘on the market’. The auctioneer then ascertains that there are no further competitive bids and allows the hammer to fall. The property is then deemed to be sold unconditionally.

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23 ‘ W H A T

I F ? ’

DURING AUCTION DAY

NO BIDS Sometimes interested buyers will attend an auction, register their intention to bid, but then fail to make a bid during the course of the auction. Recommendation We can place a vendor bid to try and encourage the prospective purchasers to bid. If no bids are made then we will ‘pass the property in’ and talk to the interested parties.

V E N D OR B I D PL ACED In most states, the Auctioneer is allowed to place one bid on behalf of the vendor. This is known as the ‘vendor bid’. The Auctioneer must announce, prior to making the bid, that it is a bid on behalf of the vendor. Recommendation A vendor bid is best used in the initial stages of the auction, rather than later. It is used in an attempt to lift the bidding a little higher. Only an incremental increase is recommended. If a substantial vendor bid is made close to reserve, it is possible that buyers will be discouraged from further bidding, the property will ‘pass in’ on a ‘vendor bid’ and it will not be possible to negotiate with them afterwards. The highest bidder has the ‘first right of refusal’ so it would appear very strange to buyers in attendance if the agent approached them, as under bidders, following auction to try and get them to increase their bid. It is preferable that a vendor bid be used to commence the auction. Once again, this bid must be used judiciously as too high a bid can immediately surpass realistic interest in the property. This is not an issue you should unduly concern yourself with and is best finalised during the pre-auction discussion with the Auctioneer.

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24 ‘ W H A T

I F ? ’

DURING AUCTION DAY

PROPE RTY SOL D UN DER T H E H AMMER Following the fall of the hammer, the property is deemed sold. The purchaser is required to sign the contract, provide their solicitor’s details, and pay a 10% deposit. If the purchaser is absent, then they must provide the auctioneer a signed authority that enables another party to bid on their behalf. The auctioneer has the authority to sign on behalf of the vendor or purchaser if required.

PROPE RTY N OT SOL D UNDER T HE HAMMER Should a property be ‘passed in’ at auction, the salesperson will negotiate with all interested parties if unable to conclude a satisfactory offer with the highest bidder. If negotiations are not successful following auction, then a price should be set and an ongoing marketing strategy arranged. Recommendation Remain calm if the property fails to sell at auction. An auction creates three opportunities for a sale: PRIOR TO AUCTION AT AUCTION AFTER AUCTION Statistics show that 85% of auction properties are sold within 45 days. This is significantly faster than the Private Treaty method (For Sale). Once a property has been auctioned, the seller has the advantage of knowing the level of interest the property generated and the price the market is are willing to pay. It is very important you listen to your agent who will advise you of market feedback.

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25 ‘ W H A T

I F ? ’

DURING AUCTION DAY

G L OS S A RY OF T ER M S: Vendor The owner/seller of the property Purchaser The buyer of the property Reserve Price A written authority that is handed to the Auctioneer prior to the auction. It states the minimum price at which the Auctioneer is authorised to sell the property. Vendor Bid A bid placed by the Auctioneer on behalf of the vendor. ‘On the Market’ The Auctioneer’s indication that bidding has reached the reserve price. The property could also be deemed to be ‘on the market’ if the vendor revises the reserve price during the auction. Exchange of Contracts Both the vendor and the purchaser sign separate contracts that are physically exchanged so that the vendor (or their solicitor/agent) holds the purchaser’s signed copy, and the purchaser (or their solicitor/agent) holds the vendor’s signed copy. Conditional Exchange of Contracts This means those contracts are exchanged subject to a condition. The most common condition is that of a 5-business day cooling off period. The contract then becomes unconditional once the 5 business days expire. Unconditional Exchange of Contracts This is when a contract is exchanged with no conditions attached i.e. Contracts signed on auction day are unconditional. In the case of a Private Treaty sale, the buyer’s solicitor can sign a 66W Certificate to waive the 5-day cool off period. 66W Certificate This is an optional certificate attached to the contract when exchanged, which waives the 5-day cooling off period. When a solicitor signs a 66W certificate it means that they have explained all the terms and conditions in the contract to the purchaser and that the purchaser understands they extinguish their right to a cooling off period.

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26 A U C T I O N

CAMPAIGN SUMMARY

Having followed the written communication plan outlined in this booklet, agents can rest assured that they have provided the vendor a comprehensive level of professional reporting throughout the auction campaign. It is however important to stress that this alone does not constitute all that is required to position a vendor for sale on auction day. Nothing exceeds the importance of the vendorâ&#x20AC;&#x2122;s belief that every effort has been made to reach all buyers currently in the market for a property like theirs. Should they believe that the auction outcome does not represent true market value, the chances of a sale under the hammer are reduced. Each client requires differing levels of contact but your aim should always be to be providing enough verbal communication that your client does not need to phone you. If your client is phoning you, you have failed to keep them adequately informed and this is almost certainly a predictor that the property will fail to reach reserve at auction. Aim to stay ahead of your vendor and always organise a face-to-face pre-auction meeting to discuss the potential auction scenarios outlined in your â&#x20AC;&#x2DC;What if?â&#x20AC;&#x2122; letter. Discuss reserve price, buyer auction tactics and how best to defeat them. Above all, ensure that your vendor knows how hard the whole agency has worked to promote their property and demonstrate your confidence in achieving the best possible outcome.

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27 N O T E S

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28 N O T E S

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F I R S T

N A T I O N A L

NATIONAL OFFICE D I S T R I B U T I O N P R I N C I P A L ( S )

L I S T

89 Hoddle Street Richmond VIC 3121 Phone : 1800 032 332 Fax : 1800 832 332 marketing@firstnational.com.au

S A L E S

P R O P E R T Y M A N A G E M E N T

O T H E R

www.fngateway.com.au

LOCAL AGENCY M

B o o k l e t

AUCTION

06 LONG 97 L

E IF

TAL CHLORINE EN F M

E RE

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ISO I400I

IS O

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