Lucas Cannan: Welcome to Think Tank live. Today we are going to be talking about auction day plans and strategies again with me as always is Andrew Coulson and Brian Cannan from Think Real Estate Hello, gentlemen.
Brian Cannan & Andrew Coulson: Hi Lucas.
Lucas: So we're going look at today is, you know, setting up a plan so we can control the auction day or at least have some sort of control. That starts no doubt with preparation. How do we prepare leading into auction day?
Andrew: Well we've been talking about communication with your landlord, with your owners, your vendors, your purchasers, making sure that you're having buyer meetings with them. And we're setting up the communication line. So we're all set and ready to go. As soon as by the time we come around to auction week.
Lucas: And we spoke a lot last week about those buyer meetings and what to say. And certainly getting them ready to you know, getting their deposit organised and getting ready to purchase on auction day for the lucky purchaser. And their strategies as well. What else can we do to to prepare?
Brian: Preparing for your auction day. It's an art. Something you need to get used to, that won't happen just naturally. You need to have the meeting with the buyers first and then you need to have the meeting with your vendor, get an idea of where they're at. So the idea is is that you have an idea where your buyers are you have an idea where your vendors are and then we can start planning for the auction day. So it's preparation for the planning is more important.
Andrew: Once you finished your last open for inspections, the Saturday before the Monday. You're now into preparing for auction week and in the coming auction.
Lucas: And really the questions that you want to have answered in preparation for the day, there's a number of them, there's no doubt about that. We're obviously going to at some point in before prior to the auction needing to set a reserve price, okay, we need to have that reserved setting waiting. There's no doubt about that. But we also need to have a couple other boxes to be ticked. So for example, you know, where you'd like the auctioneer to call for a start, and where you're happy to start for the bid. Why are those two things important? And why are they different?
Andrew: It's all around shaping and as much as we'd like to have as much information as we can to be able to try and predict what may happen at the auction. Try and retain control for those sorts of things. So the more information we have, particularly about our buyers, what they're thinking how many we've got, that's the sort of information that we really need to be gathering and being aware of so that we can then work through that with our seller, and try and be as well prepared as we possibly can.
Brian: Auctions is live theatre. And so as much as we can prepare well, we've also got to be able to think on our feet. And if you do one auction a year, you know, you're gonna be nervous not be able to do that. If you're doing two or three auctions a month, you're gonna get used to the process, and you're going to become very successful at it. But the planning part is just think about what you need to tell your auctioneer before you start the auction will start helping you plan what you need to have ready.
Lucas: So we're going to start with telling or auctioneer obviously, where the reserve price stand, talking about where they would like to call for a start. So you know, if if you've been guiding in a campaign, you know, $1 million to $1.1 million you might be asking your auctioneer to call or nominate a figure to start because that first bid is the hardest.
Brian: Yeah, but let's go back to reserve price when you give them a reserve price, it should be is that flexible? Is this the minimum they going to take, or is this their goal price, and if you don't get that goal price, is there some flexibility there. And that's really important to know.
Andrew: It's not a major concern if your vendor's giving you a high number but they're prepared to vary I think a lot of people get a little bit worried about "oh my reserve's that but what's their second choice reserve" or "where will they look to sell it"?
Brian: A lot of owners like to have control so and they talk to friends and people and they say put a higher reserve on it means you do have control, we all know we can't sell until we reach the reserve. So they'd like to know that they've got control and they'll be able to make the decision at the time. But let the auctioneer know if there's flexibility there and if you know a little bit how much, then also let them know that.
Lucas: So I mean, when you're sitting in that reserve setting meeting, which we're going to talk about later in the series, you might as you said, set up that goal price and and be okay or be comfortable on the fact that you don't know what the bottom line is. But be okay with you know, you're going to get it come during the auction. You know, at some point in time.
Brian: It doesn't matter that you don't know their bottom line it's probably more importantly, they know where the buyer's line is and that's what's more important?
Lucas: Yeah. So then we're going to talk about, you know, you're going to the auctioneer is going to ask, you know where they'd like to call the figure. So if you're quoting $1 million to $1.1 million, if you'd like the auctioneer to call $1 million to start to get that first bid, because we know it's the hardest. But starting is important as well, because often a buyer, you know, how many times have you seen it? They they offer a figure sub a million say, but would you be comfortable starting at our figure? Or what figure would you be comfortable starting at? What's your take on on the difference between the two and where the auction starts?
Andrew: Again, it's it's about that relationship that you've got with your vendors. Hopefully, you've built the trust that they are confident that you can control, you know what you're doing, you're going to be working with the auctioneer. Sometimes when we arrive, our clients asked us to have a bit of a chat with the vendors because it's good to have an independent sort of voice say, Listen, don't be too concerned about where it starts. It's where it finishes that counts. We want to make sure that all the interested parties get involved and show that there's competition. So we want to start at a reasonable sort of level that's going to enable that competition to take place.
Brian: Yeah, I think they're the two words, we've got to look at momentum and competition. So if we, you know, if you've got an experienced buyer come to your auction, quite often they'll start high. And that means that momentum is hard to fulfil in the auction. And competition is hard to fill in the auction. So some of the things we've got to look at there is that, you know, when buyers come to auction, they come thinking logically. Now our job as auctioneers and as agents is to get them from logic to emotion. Well, having one bid doesn't change it, having two bids doesn't change it. Third bid, hmm, might start a little bit. The fourth bid, I've always found now we're moving from thinking logically to emotionally. So if if we don't allow them to have those bids, all the buyers to have those bids, then that momentum is not going to build up. We're not going to get that competitive price that the owner's hoping for.
Lucas: But I also like the position of trust there as well. Because if we don't frame that to our owners prior to the auction, and they're not comfortable starting at $950k, or wasn't prepared for the opening big t be at $950k, how's that gonna play out to the auction? Especially when you go out? You know, you're asking them what's your bottom line, or what is it you're prepared to sell at.
Andrew: And this is where if they're going to be setting a high or wanting a high opening number, it may be because they haven't got the trust that you're unable to control it or get into that sort of number otherwise, and they need to be instilling that confidence, get that confidence that yeah, you can do that. But we've just got to work with the the buyers that we've got there.
Brian: So the strategy around that, first of all, is how many buyers do you have? And if I've got 10 to 15 buyers that are going to raise your emotion involved who cares where it starts. Doesn't make any difference. I want them to make more bids, more bids we get in the lower end. The more we're going to get at the higher end. Now if I've only got one or two buyers, then we may need to look at the strategies not to start too far away from the zoo, because the competition a bit harder to get. So that's the first thing, try to know how many buyers are going to turn up. And I know that sounds so easy, and at times it's not, but that's where the relationship with the buyer counts.
Lucas: So certainly depending on the scenario, but we want to at least frame with our owners, so they're ready and prepared for what the auction might start at, even though we call for a slightly different figure. But then we're also going to talk about increments from that point of view as well. Because if we started at, say, $950k, and we're all on the same page in that regard. The next question is, well, what's next? What's the first increment that you will be you'll be willing to accept, you're happy to go straight to $960 does it have to be $975k, or a million, and we need to open that dialogue up. Why's that so important?
Brian: If you're owner's disappointed at the start of the auction, and it takes a while and you haven't prepared them when you go in and ask them a bit later on. Do you want to sell, they're still having that mind of disappointment from the start. So that's a bit of negativity you don't want right from the start of the auction. That's where they've got to be. You see owners, you see them on TV and starts and they're like I can't believe it started that low. You've got to prepare them for that, because they're still thinking that while the auction is going along, and that negativity is gonna bear out when you ask, Are you ready to sell? They're still thinking, why'd you start so low?
Lucas: That's right and they may even ask you.
Lucas: Instead of where we are now, they say, but why did you start at $950k? Why did you take $960k straightaway? Whatever it may be. So we but what is your take on if you do start at $950k obviously, situation comes into play here as well. You know, depending on how many buyers you might have.
Andrew: And quite often the area will dictate that if you're in an area, some areas, an increase of $2k - $2.5k can be they're thinking, this is $2500 that's been hard earned and they're pretty keen on limiting that. So depending on the areas, depending on the environment, we've got to be aware of who's there and how they going to work? Obviously, we're wanting to get it rolling, get it moving, hopefully in good sized increments, depending on how far we've started from the expectations, but that's what we're trying to do is get everybody involved.
Brian: So if it starts a bit lower yes, I always like to go in higher increments but you know, some buyers, and also depends on the buyer. So first time home buyer property, or if it's a more experienced buyer, you can ask for higher increments, investment that I'll go with you. But, you know, I've opened it up in person wants to go in $1,000 increments, you know, and I'll take it sometimes. And people say, well, would you take that because the next bid could be $4k the next bid's $1k and the next bids $4k next bid $1k and then the $1k goes to a $5k, and my job is to build them up from the $1k to the $5k. But what I'm wanting is momentum. If I don't take the $1k and no one else comes in then the auction's closing down, if I've got momentum, you can build the bids back up again. I've seen auctions start low, build high, go low and build high again. You've got to have faith in the system.
Lucas: So, and you're 100%, right? Even if the auction slows down by taking a $1k, you can take a $4k from the other party and keep those increments up. But right from the start, as you said, you know, don't be nervous necessarily, in taking a smaller increment from $950k - $960k because a good auctioneer and a great agent who knows the buyers, who knows how the situation's going to unfold, can bring those bids back up to a higher increment.
Brian: That can be their strategy to try and slow the auction down. And our job is not to allow, but our job is also keep the momentum going.
Andrew: Yeah, hopefully, if if we've got good instructions from the agent that's said, this is what the buyer's expectations are. This is how many buyers we've got. This is where I'm expecting them to go to, then obviously, that assists us a great deal in being able to build that momentum and keep it going. And hopefully, that's what they then get the rest of the team to understand.
Brian: Well, that's important. So once you've made your plan, you need to share that with your team.
Lucas: And we also have a concept out there that's known as the floor manager, what is the floor managers role? And what is, now for those people who may not know, what they do on the auction day?
Andrew: We see the floor manager's role very, very similar to what we as auctioneers, we watch the bidding, we see who's dominant, who's submissive, who's still going strong, who's reaching the end. And we can easily see where the bidding is going. Sometimes an experienced agent who's standing at the front is able to advise now's the time to go and have a chat to your owner and see what their plans are. Go and have a chat to that person. They're strong, they need encouraging to keep going, go and have a chat to those people. So it's, it's a good way of being able to monitor how the auction's flowing, what we can do to keep it rolling along and keep that momentum going.
Brian: Yeah, so let's let's go back to the beginning, you build a plan. You share that plan with your team, and part of that plan could be that you might nominate some of the other salespeople to be with buyers. So you're not crossing between buyers, some people get upset about that. And then you get a floor manager and the floor manager is to manage the auction. If you're out there, and you're talking to someone, you go into that space, and other things can be happening around you that you haven't caught, because you're concentrating on that. When you turn around, you're not sure what's going on, the floor manager's there to fill you straight in and tell you where you're to head next. So they read the auction and help you to what you've got to do next, to make it work.
Andrew: It's more than just agents moving around the floor and looking a little bit busy. You're actually coming over to the floor manager, and they can give direction as to go and speak to this person go and do this. And it again, creates that, you're creating that theater. The the crowd are out there watching and saying, Oh, look at this, look at that. You're just creating that anticipation.
Brian: Floor manager will orchestrate the auction. And we'll have all the salespeople know what they've got to do, where to be and what to say.
Lucas: And that's the big thing because you know, as we said before, if, if your owner, you know is setting a goal price and hasn't told you maybe what their figure they're happy to sell at just yet, as an agent or lead agent, you might be running in and out and it takes you two or three or four nos before you get the yes, you're inside you're speaking with the owner and you haven't necessarily seen what every buyer has done. Little things, just little tiny things, have they made a call? Have he made something else and the floor manager is able to oversee the whole process.
Brian: Floor managers help momentum, they can move you into the owner and ask you to start asking questions about are they ready? Okay, before the bidding slows down, because you can come back out and keep the momentum going. There's a number of techniques that you can use to do that. So the floor managers helping that momentum, you know, the days have gone where you should be waiting for the bidding to stop and then go to your owner, you should be in to the owner and getting the first of 2 nos out of the way that's where the floor manager will help you do that, because you can get tied up again and forget to do that.
Andrew: That's right. That's right. We always say that it's easy to get a fire going. Put a log on the fire, keep it going before it goes out, if you wait for a fire to go out and then put a log on to get it going again, much harder. So to keep that momentum going keep that motion, the motion creates emotion. And that creates the bidding again. And hopefully that will just keep it moving on that little bit further.
Lucas: And make that strategy or the tactical decisions and making the right one. And the floor manager plays and the auctioneer in conjunction with that plays a key role.
Brian: Absolutely, the floor manager and the auctioneer could be talking while you're doing things, so they can be related to the floor manager, they can relate what the auctioneer thinks to you as well.
Lucas: I mean, there's only an auction on the weekend where, you know, we had one buyer who was just about I think $20,000 shorter what the reserve was in our owner's minds. And our options were to either make a vendor bid on behalf of our vendor at the reserve price, and then instruct the owner, the buyer should say that we're going to sell beyond that, or because of the floor manager in that particular case, it would seem what the buyer was doing, and his reactions he was walking away then at that level if we put a vendor bid in strategically he could have easily thrown his hands up and walked away and passed the property in.
Andrew: it's about having the team working well together, it's the vendors the crowd everybody's seeing a well oiled machine and it's there to get the result.
Lucas: Now let's talk a little bit about blueprints so we've got all of the cards in a row all the all of the ducks in a row I should say, as an agent what do you do so the auction starts with hopefully got our vendor in line with what we're going to look into call starts the increments when we're happy we've also got some relationships with our buyers as well. What's the blueprint? What's the procedure?
Brian: First, remember it's theatre. So let's have a bit of theatre. When you're there, and the auctioneer is introducing you and your team, you should be there. Okay. But once you start doing that, and once you've been introduced, move out to your buyers move out and have a chat to them. They're nervous as anything so you move out and say look here we go. Here's an opportunity, you know, I hope you get it, congratulate them for being there. I'm here to help you anything, any questions, good luck. And if you want me to bid for you all that sorted out beforehand, but be there with them, okay, when when the bidding starts, don't be with the auctioneer, he doesn't need you to hold his hand, he needs you in the crowd helping to get that first bid.
Andrew: And again, more vocal calls from the agent, letting them know what's going on. It's all creating emotion, the theater, people are looking around at different things that are happening. It's creating a vibrant auction.
Lucas: So we've almost created that blueprint now. Just in that regard. So we've got people, the team with the auctioneer to start, moving out with the team with the buyers. They've maybe even allocated depending on what the plan was the floor manager with the auctioneer, overseeing the process.
Brian: And part of the team, different team members will go to the floor manager just walking around having a chat to him and go back, they mightn't say too much, but there's movement there.
Lucas: Active and the lead agent obviously is going to go between the buyer they're linked with and floor manager and the vendor. Now, what else do we say in regards to last thing? Andrew, you know, you spoke of and yesterday we were talking about control in the auction and controlling the outcome. Can we control an outcome in the auction?
Andrew: I remember some advice I was given by my auctioneer probably 18-20 odd years ago, and I was very, very nervous at the beginning of the auction. And Brian said to me...
Lucas: For those of you who don't know, Brian was the auctioneer.
Andrew: Brian said to me, why are you so nervous? He said, Have you done everything you should have? Have you rang all the buyers? Have you got your vendor at the right place? Have you done everything you could? Well you can't really change it, go out there and do your best. And that was it. And not always can we pull miracles out or really influence the outcome. We do our best. We give it 100% effort. And the result will be there.
Brian: I find that selling an auction. The main thing is the mental state of the agent. Positive, confident to sell, more often you will, if you believe you can.
Andrew: Good advice.
Lucas: We agree. So you've got to do all the work beforehand. And then you've got to let the cards fall the way they fall. And with the preparation and the control that you have and the systems in place, more often than not, you can help them fall in your favour. So we hope that helps everyone out there. On behalf of Andrew, Brian and myself. Thank you. We look forward to joining you in a couple weeks time.
Andrew: Have a good afternoon.