At auction time, it’s all about the buyer
Peter Matthews, expert auctioneer for Ray White Drummoyne and Managing Partner of Ray White Lower North Shore, shares his invaluable tips on getting the best real estate auction results.
In Australia and New Zealand, selling at auction has been increasingly popular due to rapid price increases and high market demand. Selling at auction creates a sense of urgency, with buyers vying for the property to reach that ‘best possible’ price. With no cooling-off period, once the hammer falls – the sale is final.
Experienced property auctioneer and Managing Partner of Ray White on Sydney’s Lower North Shore, Peter Matthews, has hosted over 15,000 auctions and was named No. 1 Auctioneer at the Real Estate Institute NSW Awards in 2011/2012.
Real estate auction
Peter has seen an evolution in auction strategies during his career and has witnessed just how much more informed homebuyers have become when making property purchases. It is for this reason his key tips for holding a successful real estate auction concentrate on the buyer.
The more the merrier
An auction will be a success for the vendor if there are several serious bidders pushing up that final price. “The agent’s job is to create a competitive environment that forces buyers to pay more,” Peter says. “There needs to be as many people bidding as possible on the day.”
Finding the right bidders comes through strategic marketing to drum up interest and hosting impressive open homes. It’s vital to form strong relationships with potential buyers as this will mean serious offers on the day. “Do be careful,” Peter warns, “buyers can say anything. You need to see the ‘colour of their money’ and establish that there will definitely be competition on auction day.”
Manage vendor expectations
According to Peter, there are three reasons why a house won’t sell at auction:
- because it isn’t promoted properly.
- because the agent doesn’t do enough to confirm bidders
- because the seller won’t settle for a reasonable price.
During the lead-up to an auction there is a lot of back and forth in order to figure out where to set the reserve and to get an idea of what the top bid is likely to be.
“Obviously a good auction result is a price that gets over the reserve, but how the reserve is established is very important,” Peter says. “If a property is worth a million dollars but the feedback from buyers is that they’ll only pay $950,000 then the vendor needs to be aware of that before they set their minimum price.”
Real estate auction
To close the deal you need to educate both the vendor and buyers about the auction process.
Practice makes perfect
Peter recalls how many failed bidders he speaks to after auctions who say they gave up because “the other guy was obviously not going to back down”. In reality it was simply that the winner came across as more confident and managed to intimidate the other buyers, perhaps through body language or because they bid in larger increments.
Preparing and informing serious bidders before an auction is key. Peter recommends taking buyers to other auctions before the actual day so they know how everything works and can rehearse so they have the edge. “Buyers should practise live. They have to bid and lose before they work out their best strategy and go on to be the successful bidder.”
Keep the bidding firm
Peter advises against drawing out the auction process with small increments as this can cause people to lose interest and drift away. His general tactic is to start in increments of $20,000 and keep it going for as long as possible before dropping to increments of $10,000 then $5,000.
“It’s a long haul if you start with increments that are too low. I generally look for bolder bids in big chunks to make sure the reserve is met and surpassed,” Peter explains.
Auction is the best approach for selling a home Peter believes. “Vendors often end up getting thousands more than they hoped for and buyers get a true understanding of what other people are willing to pay for the property.”
In his experience, a well-prepared vendor with a properly marketed home will sell on auction day no matter what the weather. “If people are motivated to buy, they’ll get involved and continue until they reach their top figure – rain, hail or shine.”
As seen on campaigntrack.com, by Clea Sherman