The mindset issue

How the perception of sellers, buyers AND agents play out in auctions.

Real estate buyers and sellers continue to embrace auction as a method of sale, but this is no one-day event. The auction process begins with the auction marketing program, which the seller and the marketing agent plan together, and the sale of the property can occur before, on or after auction day itself.

While auctions have been attributed with creating feelings of apprehension for buyers and sellers, extensive national and state legislation regulates all auction practices and protects sellers and bidders, making it the most transparent and fair way to buy and sell property.

For the seller, their property is exposed to qualified buyers with a genuine desire to own the property. They are also able to set terms and conditions of the sale and settlement that suit their own circumstances.

Buyers today have many avenues of research and the deadline of an auction event allows them to be thoroughly informed and have finance organised so they can be purchase-ready on the day.

Seeing their competition in action on the day helps their own bidding decisions and gives them confidence around their decision. If they’ve wanted to put in an offer before, they can; they are in a knowledgeable position to make an offer postauction; and should they be the successful bidder, it is finite, and they own the property.

Dene Tucker, principal of RE/MAX Auction Services, says agents can be guilty of having auction misgivings.

“When I pose the question ‘What things stop us from listing auctions?’, I typically get the following type of responses from agents who have had little or poor experience with the process:

- Auctions are too much work. - I don’t have the skills. - I can’t ask sellers to pay for marketing. - I’m worried there’ll be no bidders. - I’m worried about the seller’s reaction if it doesn’t sell at auction.

“I’ve learned that the number one reason most agents don’t list auctions is their mindset.

“In most cases, if not all, they have never carried out an auction campaign because they’ve chosen to believe outside influences and so don’t believe in the process.”

Dene finds it ironic that auctions are so much a part of the culture in Auckland, Melbourne and Sydney and he asks “So why is it that so many agents in those cities do auctions?

“Are they smarter than others? Unlikely…

“There is no plausible ‘reason’ as to why, just an almost endless list of ‘excuses’.”

He hears:

- It won’t work in our market. - Clearance rates in our area are awful. - Our buyers don’t like auctions. - Our sellers won’t pay for the marketing. - Buyers won’t wait three or four weeks.

“Far too much opposition to the auction process comes from agents and it’s a reflection of their belief systems.

“In my opinion, not offering auction to all sellers as a bonafide solution is like a doctor not offering a patient the full suite of cures for an ailment.”

Dene says the strongest real estate offices and the most successful agents understand and believe in the concept of creating maximum exposure for their sellers, thereby creating competition and premium price outcomes.

They also tend to have a high print media and portal profile.

“It’s fair to say that whenever you get two or more people wanting to compete for something, the price goes up.”

Dene says, when it comes to agents, fear is the most common barrier to auctions. Fear of mentioning it to a seller. Fear of asking for marketing money. Fear that no one shows interest. Fear of no bidders. Fear of the seller’s reaction if the auction is a fizzer. Fear of failure.

“Yet, the overall success rate of auctions when viewed across all three opportunities to sell, far outweighs the success rate of Private Treaty and Expressions of Interest (EOI) listings.”

He says agents experienced in the auction process show evidence of the following:

- They formulate a strong print media and internet campaign that creates a sense of urgency and has the required ‘reach’. - They accept that not every auction will sell under the hammer. - They possess a ‘sell it or make it saleable’ attitude. - They discuss all the possible outcomes with the seller from the outset. - They manage the buyer interest correctly and understand how to strategically build hope with buyers. - They communicate regularly with the seller with relevant feedback including price feedback.

“With such agents, there is no reason why you won’t get a result either before auction, on the day or not long afterward.

“And therein,” says Dene, “lies the key to all this. Most agents - and consequently, the public - think that “I’m confused… Your property sold a week after auction day. How is that a failure?

“Here’s the thing… every day in every real estate market across Australasia, there are failures in property negotiations. I’ve touched on some reasons already, but the scenario is always the same.

For one reason or another, agents have failed to create a willing seller/ willing buyer outcome.

“And here’s a fact. Hot buyers and cold sellers don’t gel. The auction process brings together educated, informed buyers and sellers so things can move to the negotiation and settlement phases.”

Every property is different, and every seller has varying needs and expectations when selling their property, which is why they should work with an agent who has experience and knowledge in all methods of selling, the agent who will work with the seller to determine the best way to market and sell the property and achieve the greatest result.