Keys to managing buyer expectations before an auction

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As auctions are growing as a method of sale it is important buyers are educated about the process

Topic – Smarter Auctions

Mentor – James Bell

  • Supply them with good content
  • Get them to go to other auctions in the area
  • Explain to them well in advance if it is a one bidder auction
  • Organise a buyer meeting prior to the auction

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Transcript:

Kevin: We always have to remember that auctions are made up of more than just the seller, more than just the buyer. There’s the auction auctioneer, there’s the sales agent, and of course, the crowd, but we’re going to focus this week on getting smarter with our auctions, getting the auctions to move a lot quicker but understanding that we need to deal with a number of issues as we go. So we’re going to break them down. The first one is going to be about managing buyer expectations prior to an auction. I guess the temptation would have been great if we’re talking about auctions to talk first off about sellers, but we’re not. We’re going to talk about buyers. Joining me to do just that is James Bell. Now, James had his own agency at Wishart he’s now with The Auction Group. That’s the correct name isn’t it, James? You’re The Auction Group?

James Bell: It certainly is Kevin.

Kevin: The Auction Group and he’s now a full time auctioneer. Following his passion, James welcome to the show. Good to be talking to you again and we featured you just recently in the series that we’re doing for Business Depot as well if I had my time again, interesting chat. Well we did go into a little bit about auctions but not as much as we’re going to this week. So thank you once again for your time. It’s great to talk to you.

James Bell: Absolute pleasure.

Kevin: Let’s talk about managing buyer expectations before an auction. What would be your advice to someone? And why is it important?

James Bell: When we think managing the expectations, when we look at the two predominant methods of sale and I think that if I could just speak about Queensland for a moment that the method of sale is certainly growing as agents adopted as an alternative to single, private treaty. I think the private treaty buyers, they sort of self make the decision to put in an offer on a property whereas with the auction campaign really you’re trying to guide them and give them, rather than turning them into a buyer you’re turning them into a bidder. So for me it’s a completely different process. And I think the first thing you need to do is understand that a lot of buyers don’t have the education around what the auction actually is.

James Bell: So for me it’s supplying them with good content around what to expect on the day and that needs to start from day one. So typically when I ran an auction campaign and buyers came to on a Saturday, on a Monday they’d get an email from me with some video blogs about buying a property at auction. A week later they might be followed up with a discovering your bidding strategy, just provide them with all that information and confidence that they can actually participate in the process as well.

Kevin: Yeah. You make some very good points there, especially about and I never thought about educating the buyer in that way. By giving them some standard instructions on what to expect. You know you talk about getting the buyer comfortable with moving from the concept of being a buyer to being a bidder. There’s an education process and I, you know, I’m getting to a point here so bear with me James, if you could, sorry about these …

James Bell: Not a problem. Not a problem.

Kevin: For an agent to become good at auctions they’ve also got to become comfortable and educated on it as well and I sometimes wonder and I mean you went from Queensland to New South Wales to study how to be an auctioneer.

James Bell: Yeah.

Kevin: Maybe a few agents need to become more comfortable with how to run auctions and we might get more auctions in some of the states where they’re not commonly held.

James Bell: Look, I think quite simply for me auction it’s just a, it’s a different form of a negotiation platform. And fundamentally it shouldn’t change the way you handle buyers in terms of, you know, getting feedback and things like that as you would normally do in any platform that you choose to use in the marketing of a property. But the key is that education peaks.

James Bell: I think sometimes agents who choose the auction method for themselves, you’re right, they just don’t understand that it’s a different platform for negotiation and that’s simply all it is. I think they get caught up in just trying to discuss it, is it a three stage platform where you can sell before, at, or after. I think that can all be removed and the simple taught process is all it is, is just a different negotiation.

Kevin: Well speaking of that negotiating with the buyer or preparing the buyer for that, pretty important to have a meeting with them prior to the auction. In that case, what do you normally go through with them James? With the buyer?

James Bell: Look, for me it’s about, by that stage I would have already assessed that they are a bidder at the auction. So running a simple question past them, you know we’ve got the auction coming up in a week’s time, we’re preparing all the documentation around registration, if I can just ask you one thing. Are you comfortable with a 10% deposit? And if not, that’s okay. I just need to get that approved by my seller prior to the auction. But all I’m trying to do at that stage is just gauge their commitment for the property and they might say, “No, no, we’re very comfortable with 10%,” or “No, we would prefer 5%, would you be out to get approval from your seller?”

Kevin: Would you ask them at any point what they’d be prepared to pay for it?

James Bell: Oh definitely. And look, I would only ever give feedback to my owners on price from those that I deem that are legitimately interested in the property. I think for me it’s been a big change in the last two years around the way that we ran our auctions as though we were after being in Sydney is I think we try and cover off on everyone’s feedback whether they’re a buyer for that property or not. And the development of just concentrating on our feedback on those that are interested, those that are willing to purchase the property have given our owners a much greater sense of what is going to play out on the day.

Kevin: Wonderful stuff. Tomorrow we’re going to focus on sellers, getting the seller expectation right. It’s one thing to have the buyers there but if the seller’s expectations not in line then you’re not going to get a sale. My guest is James Bell from The Auction Group. James, talk to you again tomorrow morning. Thanks mate.

James Bell: Thanks Kevin.

 

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