EASY FOR AGENTS
By Ray Wood
Why Auction works for Agents.
If you consulted the top Advertising Agency in your city to help you grow your brand and real estate business, they would ask you a series of questions to come up with the best marketing campaign.
All questions essentially lead to the same point; establishing your USP or Unique Selling Proposition.
What is it about your business that’s different?
What do you offer other agents don’t?
What’s your dynamic point of difference?
Why would I choose you or your product or service over everything else?
An auction campaign will harness the market forces of buyer demand.
As opposed to a traditional listing campaign that begins with a high and often optimistic asking price, an auction builds momentum from a lower, more conservative base price estimate.
Every owner deserves the opportunity to sell for the highest possible price good agents know how to market effectively taking into account any number of variables.
Typically, an agent will list a property higher asking price and request price reductions from the seller if the asking price fails to attract buyer interest.
But here’s the thing: What damage is this causing to the eventual selling or contract price?
If an interested buyer can see a property listing price continue to fall, does that not send a message that the owner’s asking price is unrealistic and failing to attract interest.
The buyer would then naturally assume the seller is perhaps not genuine and if no other buyers are interested, why should they make an offer?
Compare that scenario with an effective Auction campaign that begins with a more conservative price.
Let’s remember, every buyer shops on price, and the competition for every seller is other similar properties on the market.
A conservative and more realistic Auction marketing estimate will generate more buyer inquiry. More buyer inquiry will convert to more physical viewings and more viewings will convert to more potential bidders on auction day.
By the way, this isn’t some new fad or gimmick of the month. Selling real estate by Auction has been a proven and very popular marketing method in many parts of the world for more than 100 years.
A sale by Auction is unconditional
Another huge advantage for seller and agent to keep in mind is that a sale at Auction is unconditional. Buyers need to complete their due diligence and arrange things like a mortgage or building inspection before bidding.
What can possibly be simpler for agent and seller? No conditions, a pre-determined auction date and time and a proven marketing process where everyone understands the rules. There is nothing complex here!
Agents are already pricing low to engineer multiple buyer interest.
In recent times, some agents in North America have intentionally priced their listings lower in order to engineer multiple buyer interest.
But in most cases, they only allow the buyer to make one offer.
As an agent, how many times have you arrived at the listing agent’s office to find a number of other buyer’s agents all trying to advise their clients as to the best bid they should make?
This is crazy when there’s a clear and obvious alternative: Ask for a starting bid and let competing bidders slug it out to be the winner.
How some agents sabotage an auction
When an auction fails, it’s almost always where the selling agent how quoted the property to high to potential buyers. This will happen when the agent doesn’t understand the process and thereby can’t explain the process to their client the seller, or where the seller has insisted the Auction marketing estimate be unrealistically high.
How to handle that bully offer
A good auction agent will control the process.
For one thing, the agent will advise all buyers the property is for sale by auction and supply the auction date and time.
They will also be sure to ask each interested buyer if they wish to be informed in the event the property is going to be sold prior to the advertised Auction date.
When that bully offer comes along, you can discuss it with your client the seller and see what they think.
Then it's a marketing judgment call between selling agent and owner.
If you already have multiple interest the seller has the option to begin fielding offers (unconditional of course) from buyers or let the Auction run its course and see what happens on the day.
In fact, an Auction is a way better environment to deal with multiple offers because there’s every chance the Auction campaign will have attracted more buyers.
Keep in mind, at the end of the day, your Auction selling client is not committing to ANY price until there is an acceptable offer on the table.
Buyers understand an auction works by making a series of incremental bids
The concept of buying at Auction will not be new to any buyer. Everyone knows an Auction works when any number of interested parts submit incremental bids.
So when you recommend a sale buy auction to your client you’re actually leveraging the power of an accepted purchasing process that really no different to eBay and any other online auction site.
Isn’t this bait pricing?
Just as a traditional ‘for sale’ listing begins at a high and often unrealistic price, an Auction approaches things from the opposite end.
Let’s keep in mind, real estate has no recommended retail price but history tells us there is normally one buyer prepared to pay more than everyone else. That’s how a free market works and selling by Auction plays to this feature.
The auction process gives multiple buyers, who are all competing on the same terms, a fair and level playing field to put their best foot forward. It’s completing transparent and open.
Ray Wood is a Co-Founder at Fairfast. He is a fourth generation real estate agent and auctioneer. His book, How To Sell Your Home For More has sold more than 300,000 copies over 17 editions. Check out Ray's popular real estate podcast at TopAgentsPlaybook.com