Auction - Local Agency Manual

AUCTION

A proven method of sale thatdelivers results

LOCAL AGENCYM A R K E T I N G

B o o k l e t 9

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ISO I400I

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9706 LONGLIFE

ECF

ELEM

ENTAL CHLORINE FREE

89 Hoddle Street Richmond VIC 3121

Phone : 1800 032 332 Fax : 1800 832 332

[email protected]

www.fngateway.com.au

NATIONAL OFFICE

F I R S T N A T I O N A L

D I S T R I B U T I O N L I S T

P R I N C I P A L ( S )

S A L E S

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

O T H E R

C O N T E N T S

INTRODUCTION 2

AUCTION CAMPAIGN STRUCTURE 3

PRE-L ISTING COVER LETTER AND KIT 4

L ISTING PROPOSAL 5

THANK YOU LETTERS 6

SALES TEAM OPINION OF VALUE 10

COMMUNICATION PLAN 12

REPORT LETTERS WEEK FOUR 15

WHAT IF ? DURING AUCTION DAY 21

CAMPAIGN AUCTION SUMMARY 26

AUCTION

2Download resources from www.fngateway.com.au

INTRODUCTIONMany 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. Its

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 its 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 Nationals 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 Estates 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.


A U C T I O N

CAMPAIGN STRUCTUREThe structure of an ideal auction campaign should always incorporate the following

key components:

PRE-LISTING & LISTING SUBMISSION1. Pre-Listing cover letter and Pre-Listing Kit.

2. Listing Proposal.

POST-LISTING3. Thank you letter from principal.

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

5. Thank you letter from salesperson.

6. Sales team opinion of value.

ACTIVE CAMPAIGNWeek 1

No letter required.

Call vendor to confirm first inspection date and time.

Week 2

Week One Activity Report

Week 3

Week Two Activity Report

Auction Reserve Letter

Week 4

Week Three Activity Report

Auction Invitation Letter

What if? (Auction scenario letter)


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.

GATEWAY RESOURCESearch Pre-Listing Submission and then download.

P R E - L I S T I N G C O V E R L E T T E R

& KIT

GRAB THE LETTERS YOU NEED FROM GATEWAY. JUST GO TO

WWW.FNGATEWAY.COM.AU


L I S T I N G

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 clients 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 competitors.

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.

GATEWAY RESOURCESearch Listing Submission and then download.

PROPOSAL


T H A N K Y O U

LETTERSOnce a property has been listed for auction it is recommended that thank you letters

be sent to the vendor from both the agencys 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 its also recommended to send a letter to the vendors 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.

GATEWAY RESOURCESearch Thank You Letter From Principal and then download.

Search Thank You Letter From Salesperson and then download.

Search Letter To Solicitor and then download.


Address

Your Street

TownPO BoxVIC 3196

Contact

P (03) 9418 9111

F (03) 9418 9122

E [email protected]

u

W yourcompany.com.au

First National Group of Ind

ependent Real Estate Agen

ts Limited

ACN 005 942 192

Your Company

18 January 20XX

Matthew Warner

72 Marbury Close

Heathcroft NSW 2604

Dear Matthew,

RE: 72 MARBURY CLOSE, HEAT

HCROFT NSW

On behalf of everyone at First N

ational Your Company, thank you

for choosing to list your

property with us. I can assure you

that we will do everything possi

ble to help you achieve a swift

and satisfying sale.

I believe weve developed a team

who posses an honest and enthu

siastic dedication to meeting our

commitment to excellence and r

esults. Joe is an experienced and

consistently successful Sales Agen

t

and I can guarantee that with the

support of our team, Joes efforts

will achieve the best price possible

.

First National Your Company is c

ommitted to the delivery of the h

ighest standard of service in

the profession. We pride ourselve

s on the systems we use, and our

ongoing commitment to you.

Our Quality Assurance ISO 9001

accreditation assures we are alw

ays updating and reviewing our

procedures to make sure we rem

ain at the forefront of agency pra

ctice.

Everything we do at First Nation

al Real Estate Your Company is a

bout serving the best interests o

f

our clients and, as such, should y

ou have any queries please feel f

ree to contact me on 9999 3333.

Yours faithfully,

Insert Name

Principal

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

TownPO BoxVIC 3196

Contact

P (03) 9418 9111

F (03) 9418 9122

E [email protected]

u




ts Limited

ACN 005 942 192

Your Company

18 January 20XX

Matthew Warner

72 Marbury Close

Heathcroft NSW 2604

Dear Matthew,


HCROFT NSW

Thank you for entrusting me with

the sale of your home. Rest assu

red that I will work tirelessly to

obtain the highest possible price f

or your property.

Over the next four weeks I will c

ommunicate market feedback to

help you to make an informed de

ci-

sion on auction day.

It is a requirement that I submit a

ll offers received during the camp

aign. Please bear in mind that by

submitting an offer to you, I am n

ot necessarily recommending you

accept it.

KEY DATES:

Your first inspection will take pla

ce on Thursday 3 February 20XX

.

Your auction will take place in roo

ms/on site on Thursday 24 Februa

ry 20XX and will commence at 7p

m.

Open for inspections are schedule

d for Thursdays between 12pm a

nd 1pm and at the same time on

Saturdays for the duration of the

campaign.

I will be in contact shortly to arra

nge a convenient time to allow ou

r sales team to view your proper

ty.

This will enable them to talk conf

idently about it and enable effecti

ve cross-marketing.

We have written to your solicitor

confirming your request for a sa

le of contract. Would you please

contact Smiths Legal on 02 9525

3333 to ensure that your contrac

t will be available for our first buy

er

inspection? (State Specific delet

e if inappropriate)

Finally, I appreciate that in the sel

ection of an agent you had a choic

e, so thank you for choosing

First National Your Company.

Yours faithfully,

Joe Salesperson

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

TownPO BoxVIC 3196

Contact

P (03) 9418 9111

F (03) 9418 9122

E [email protected]

u




ts Limited

ACN 005 942 192

Your Company

18 January 20XX

Attention: Solicitor Name

Solicitor P/L

Smith Street

Heathcroft NSW 2604

Dear Sir,


HCROFT NSW

We have been instructed by Matt

hew Warner to sell the property

at 72 Marbury Close, Heathcroft

and herein enclose a copy of the

Auction Agency Agreement.

The propertys first open house

inspection is scheduled for Thur

sday 31st January with the

auction to

be held on Thursday 28

th February 20XX.

We confirm our clients request

that you prepare an Agreement

for Sale for the above property

and

forward the original and counter

part, along with four photocopi

es, to our office prior to the firs

t

open house inspection.

We wish to advise that First Na

tional Your Company are unable

to provide your office with a co

uncil

zoning certificate.

Should you require any further i

nformation, please do not hesita

te to contact our office on 9999

3333

or myself direct on 0411 XXX X

XX.

We thank you for your assistance

and look forward to achieving a s

uccessful result for our mutual cli

ent.

Yours faithfully,

Joe Salesperson

E X A M P L E : L E T T E R TO S O L I C I TO RE 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

10

Download resources from www.fngateway.com.au

Many real estate offices find that there are two distinct benefits associated with having

the whole sales team visit a vendors property.

Theentireteambecomesfamiliarwiththebestattributesofthepropertyandcanconfidentlypromoteit.

Theirindividualopinionsofvaluecanformthebasisofearlymarketfeedbackforthevendor.

A visit from the whole sales team reinforces your agencys desire to leave no stone unturned in the promotion of the

vendors 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 teams inspection a letter should then be sent to the vendor providing the teams 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.

GATEWAY RESOURCESearch Sales Team Opinion of Value and then download.

S A L E S T E A M

OPINION OF VALUE

11


Address

Your Street

TownPO BoxVIC 3196

Contact

P (03) 9418 9111

F (03) 9418 9122

E [email protected]

u




ts Limited

ACN 005 942 192

Your Company

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

25 January 20XX

Matthew Warner

72 Marbury Close

Heathcroft NSW 2604

Dear Matthew,


HCROFT NSW

I would like to thank you for the o

pportunity to show our entire sa

les team through your property.

The team was most impressed w

ith the quality of the home and th

e contemporary open and

easy living floor plan. They all fel

t most intending buyers would s

ee the rear garden area with its

entertaining area and lap pool as

outstanding features of the prop

erty.

The only concern raised was the

highway location however, inten

ding buyers will certainly be awa

re of

this when first inspecting the pro

perty.

The opinion of price ranged from

$235,000 to $245,000 based on

each sales persons comparative

market analysis.

Our sales team is excited about t

he opportunity to market your h

ome and is currently contacting

their buyer databases to alert pr

ospective purchasers.

Ill be in contact with you again so

on regarding the progress of you

r auction. In the meantime, pleas

e

do not hesitate to call me any tim

e for further information or advic

e.

Yours faithfully,

Joe Salesperson

12


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 ones 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

Nothing (phone contact)Week 2

Week 1 Inspection Report

Week 3

Week 2 Inspection Report

Auction Reserve Letter

Week 4

Week 3 Inspection Report/Auction summary

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.

GATEWAY RESOURCESearch 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.

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

13


Address

Your Street

TownPO BoxVIC 3196

Contact

P (03) 9418 9111

F (03) 9418 9122

E [email protected]

u




ts Limited

ACN 005 942 192

Your Company

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

7 February 20XX

Matthew Warner

72 Marbury Close

Heathcroft NSW 2604

Dear Matthew,

RE: PROGRESS REPORT ON TH

E FIRST WEEK OF THE SALE OF

72 MARBURY CLOSE, HEATHC

ROFT

Following our inspection on Satu

rday, a total of 16 groups have at

tended inspections to date.

As your agent one of our most im

portant functions is to research b

uyers feelings about the current

market value of the property. Th

e following comments from those

who viewed the property were

made:-

Positive comments were made in

relation to

1. The large overall size of the ho

use

2. The pleasant aspect to the no

rth

3. The large rumpus room

However, some negative commen

ts were made concerning

1. The highway location

2. General background noise lev

els

3. The general presentation of th

e neighbouring property

4. The mould showing on the bat

hroom ceiling

Those who were prepared to offe

r their opinion on value indicated

it to be in the range of $235,000

- $245,000. Comments made to o

ther members of our sales team

from prospective purchasers have

indicated a similar range.

In addition to the inspections, th

e following marketing activities ha

ve taken place:

Brochures have been printed a

nd distributed

A letterbox drop, door knock

and phone calls inviting people to

attend the Open for Inspection

was conducted

All buyers on our database hav

e been alerted to the sale

At this stage, there have been 2 r

equests for a sale contract. With

our marketing program and inspe

c-

tions continuing, my goal is to bu

ild upon current interest and kee

p you informed of progress.

Yours faithfully,

Joe Salesperson

14


Address

Your Street

TownPO BoxVIC 3196

Contact

P (03) 9418 9111

F (03) 9418 9122

E [email protected]

u




ts Limited

ACN 005 942 192

Your Company


14 February 20XX

Matthew Warner

72 Marbury Close

Heathcroft NSW 2604

Dear Matthew,


E 2ND WEEK OF THE SALE OF

72 MARBURY CLOSE, HEATHCR

OFT

We are now midway through our

marketing program with our seco

nd week of inspections completed

.

We have received consistent tele

phone enquiries from our market

ing and a total of 26 groups have n

ow

inspected the property.

Comments on the current value o

f the property have been consiste

nt with those previously reported

. As

discussed, we have received one o

ffer to purchase the property for

an amount of $230,000, and a fur

ther

two contracts have been issued. T

his brings the number of contract

s issued to four, and there are seve

ral

additional parties indicating an inte

ntion to return for second inspec

tions.

Continued concern has been expr

essed in relation to the highway

location, background noise and

neighbouring property. I have atte

mpted to counter this by emphas

ising the positive features of

the property.

As we move into the final stages

of our campaign, I will keep you

closely informed of the comment

s and

views expressed by all interested

parties so an accurate assessment

can be made prior to auction day

.

Since your last report, the followin

g marketing activities have taken p

lace:

Social media marketing

Customer contact database m

arketing

Telephone contact following u

p week one interested parties

I will continue to monitor all part

ies with a view to maintain their in

terest in attending the auction.

During the week a property at 22

Perite Street, which is a block fro

m you, sold for $920,000.

If you have any queries regarding

this information, please do not he

sitate to contact me.

Yours faithfully,

Joe Salesperson

15


Address

Your Street

TownPO BoxVIC 3196

Contact

P (03) 9418 9111

F (03) 9418 9122

E [email protected]

u




ts Limited

ACN 005 942 192

Your Company

E X A M P L E : AU C T I O N R E S E RV E C OV E R L E T T E R

22 February 20XX

Matthew Warner

72 Marbury Close

Heathcroft NSW 2604

Dear Matthew,

RE: AUCTION RESERVE FORM

Please find your reserve form att

ached.

Would you please complete the f

orm and return it to me prior to

the auction.

Yours faithfully,

Joe Salesperson

16


Address

Your Street

TownPO BoxVIC 3196

Contact

P (03) 9418 9111

F (03) 9418 9122

E [email protected]

u




ts Limited

ACN 005 942 192

Your Company

E X A M P L E : AU C T I O N R E S E RV E F O R M

Date:

The Auctioneer

First National Auction Services

Insert address

Insert address

Dear Sir

RE: AUCTION OF 72 MARBURY

CLOSE, HEATHCROFT ______

__________________________

THURSDAY 28TH FEBRUARY 20X

X ________________________

_________________________

I/we refer to the Auction authori

ty signed by me/us for the sale at

auction of the above property.

I/we hereby wish to nominate tha

t the reserve price for the prope

rty at the auction to be held on

the above date will be $_______

______________. Should the bid

ding not reach the reserve price

nominated then please have the a

uctioneer refer the highest bid to

me/us for decision.

I/we acknowledge that under the

Property, Stock and Business Ag

ents Act 2002 (the Act) that the

auctioneer is prohibited from taki

ng bids at the auction from perso

ns who have not registered to bid

,

even though the bid may be abov

e the reserve shown above. I/we

will not make any requisition or

claim against the auctioneer refus

ing any bid in accordance with his

obligations under the Act.

I/we acknowledge I/we have the r

ight to one bid only and that the

auctioneer must announce at the

time it is taken if we so elect. If n

ecessary I/we authorise the aucti

oneer to place our vendor bid at

$_____________________ unle

ss otherwise instructed.

I/we further authorise the auction

eer to sign the contract for sale o

f land on my/our behalf should w

e

not be available to do so.

Yours faithfully

__________________

__________________

17


In week four, you send:

Week3InspectionReport

AuctionInvitationLetter

WhatIfAtAuctionletter

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.

GATEWAY RESOURCESearch Week 3 Inspection Report and then download.

Search Auction Invitation Letter and then download.

Search What If At Auction Letter and then download.

WEEK FOURR E P O R T L E T T E R S

18


Address

Your Street

TownPO BoxVIC 3196

Contact

P (03) 9418 9111

F (03) 9418 9122

E [email protected]

u




ts Limited

ACN 005 942 192

Your Company


21 February 20XX

Matthew Warner

72 Marbury Close

Heathcroft NSW 2604

Dear Matthew,


E THIRD WEEK OF THE SALE O

F

72 MARBURY CLOSE, HEATHCR

OFT

We are now in the final week of

our auction marketing program. I

am pleased to report that our

marketing has continued to draw

an excellent response. To date 48

groups have inspected the

property and 4 sale contracts hav

e been issued.

I am confident that we have reach

ed all possible buyers in the mark

et for this type of property.

As you are aware, people have re

sponded well to the large overall

size of the house, pleasant aspect

to

the north and the large rumpus r

oom.

However, there has been continu

ed concern in relation to the high

way location, background noise,

presentation of the neighbouring

property and bathroom ceiling m

ould.

Since the start of marketing we h

ave received one offer of $230,00

0, which, as discussed at the time,

we declined on your behalf.

People inspecting the property ha

ve indicated that they are willing

to spend between $230,000 and

$245,000 with perhaps our stron

gest buyer suggesting a limit of ar

ound $232,000.

I will be speaking to you later this

week to explain the procedure o

n auction day and to recommend

strategies to maximise your sale p

rice.

I look forward to achieving a stro

ng sale price and once again, than

k you for selecting our company t

o

represent you in the sale of your

property.

Yours faithfully,

Joe Salesperson

19


Address

Your Street

TownPO BoxVIC 3196

Contact

P (03) 9418 9111

F (03) 9418 9122

E [email protected]

u




ts Limited

ACN 005 942 192

Your Company

E X A M P L E : AU C T I O N I N V I TAT I O N L E T T E R

Dear Neighbour,

RE: AUCTION - 72 MARBURY C

LOSE, HEATHCROFT NSW

This Thursday at 7pm, First Natio

nal Real Estate will auction the ab

ove property at insert auction

venue address.

We would like to take this oppo

rtunity to invite you to attend th

e auction even if you are not inte

r-

ested in the property yourself. Au

ctions provide a great indicator o

f the current real estate market i

n

your area.

I look forward to seeing you at th

e auction and to a successful resu

lt for our client.

Kind regards,

Insert Name

First National Your Company

20


Address

Your Street

TownPO BoxVIC 3196

Contact

P (03) 9418 9111

F (03) 9418 9122

E [email protected]

u




ts Limited

ACN 005 942 192

Your Company

E X A M P L E : W H AT I F AT AU C T I O N

XX February 20XX

Matthew Warner

72 Marbury Close

Heathcroft NSW 2604

Dear Matthew,

RE: WHAT IF ? POTENTIAL

SCENARIOS AT AUCTION

As your auction day approaches,

I would like to point out that an

auction can be equally confronting

for

vendors as well as buyers. Reactio

ns are always hard to predict, as n

o two auctions are ever the same

.

Matthew, my job is to prepare yo

u so you are fully briefed on the p

rocess and potential outcomes.

Accordingly, please find enclosed

some information that will assist.

If you have any questions, a good

time to discuss these will be at o

ur pre-auction meeting on Tuesda

y.

The meeting is scheduled for 4.3

0pm at our office.

Yours faithfully,

Joe Salesperson

21


W H A T I F ?

Potential scenarios and our advice about how to handle them are discussed below.

SPIRITED BIDDINGThe 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 salespersons advice, as the momentum of your auction is critical to obtaining a strong price.

DURING AUCTION DAY

22


SLOW BIDDINGSometimes 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 buyers solicitor.

ONLY ONE BIDDER AT AUCTIONThis 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.

W H A T I F ?

DURING AUCTION DAY

23


NO BIDSSometimes 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.

VENDOR BID PLACEDIn 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.

W H A T I F ?

DURING AUCTION DAY

24


PROPERTY SOLD UNDER THE HAMMERFollowing the fall of the hammer, the property is deemed sold. The purchaser is required to sign the contract, provide their

solicitors 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.

PROPERTY NOT SOLD UNDER THE HAMMERShould 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.

W H A T I F ?

DURING AUCTION DAY

25


W H A T I F ?

GLOSSARY OF TERMS: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 Auctioneers 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 purchasers signed copy, and the purchaser (or their solicitor/agent) holds the vendors

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 buyers 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.

DURING AUCTION DAY

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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 vendors 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 What if? 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.

A U C T I O N

CAMPAIGN SUMMARY

27


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N O T E S

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N O T E S

89 Hoddle Street Richmond VIC 3121

Phone : 1800 032 332 Fax : 1800 832 332

[email protected]

www.fngateway.com.au

NATIONAL OFFICEF I R S T N A T I O N A L

D I S T R I B U T I O N L I S T

P R I N C I P A L ( S )

S A L E S

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

O T H E R

AUCTION

A proven method of sale thatdelivers results

LOCAL AGENCYM A R K E T I N G

B o o k l e t 9

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Auction - Local Agency Manual

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