The Three Phase Auction Plan

The Three Phase Auction Plan

How you use the time in the lead-up to auction day is critical to the outcome of the auction. Simon Thomas suggests structuring the pre-auction period with strategic activities divided into three phases.

"Do you need to re-shape the campaign, is the advertising hitting the target audience, are you getting genuine inspections or mainly neighbours?"

"Address any concerns they may have and overcome them rather than allow them to brew over the next few weeks leading up to auction day."

There have been numerous articles written over the years in relation to the benefits of auction or the key reasons why property sellers would choose the auction method to sell their home or investment. Now is an opportune time to look beyond the benefits. You’ve listed the property for auction. What are the strategies or processes behind a successful auction campaign that will put you, the agent, in control and a better position to achieve a positive outcome on auction day?

In my experience, there are three key elements required for a successful auction campaign: Organise; Review; Finalise. Follow this structured approach and you will give yourself every opportunity for great results for your clients and continued auction success for your business.
 
Organise – setting up for the sale
Campaign length – don’t assume the length of the marketing campaign will be the same for all properties you list for auction.  Ask yourself how many potential buyers would you meet in any given week for that type of property? Family home, apartment, unit, townhouse, small acreage, hobby farm, lifestyle property, rural property or commercial/industrial. Adjust the length of the campaign accordingly (three to six weeks) to meet enough people (minimum of 20). Remember the vast majority of buyers attending the open houses will find the property unsuitable to their needs. There is a fine line between maintaining a buyer’s interest and losing it altogether.

Promotion – ensure the copywriting describes the property to attract the targeted audience, the buyers. So often agents write ‘fluff’ advertising to satisfy the vendor and wonder why they have no interest or there have been limited enquiries and inspections. Tap into the vendor’s motivation to sell and with their permission, promote this throughout all advertising mediums (print, board and internet).

Interest – have a process in place to handle interest in the early stages of the campaign. Practice scripts and dialogues with your colleagues regarding questions you may get from buyers at open houses, how to handle early offers and how to qualify a buyer’s level of interest. An example is, “Would you like us to keep you informed if we were to receive any offers on the property prior to auction?” This is a great way to qualify buyers. Make notes on your open sheets and keep a separate list of ‘hot interest’ that is easy to refer to.

Feedback letters – must be weekly and summarised (one page is sufficient as vendors don’t want to read a novel!) Include website enquiry, number of inspections, buyers’ names, brief comments, their level of interest (nil, low or moderate) and importantly their feedback on price. Ask potential buyers “What would you pay?” rather than “What do you think the property is worth?” Also qualify how long they’ve been looking to establish if their opinion on price is relevant. Have they bid at auction recently? Have they made an offer recently? 

Activity – keep the vendor informed of recent sales in the area (shows them that the market is active) and new listings (their competition in the marketplace).  This will change regularly throughout the marketing period so keep your client fully informed.

Next stage – analyse the initial marketing period and have your first face-to-face meeting with your client to discuss activity to date including price feedback and any offers received. Address any concerns they may have and overcome them rather than allow them to brew over the next few weeks leading up to auction day.

Review – mid campaign
Situation – it’s a great idea to rate the property each week in terms of the interest you have. The guide I have used successfully is Rating A (multiple bidders), B (limited bidders) or C (no bidders). This is a reminder about what you need to do to improve the rating of each auction listing. Use an auction running sheet for the sales team to discuss in your regular meetings.

Feedback letters – ensure they are cumulative and consistent. There is now a pattern emerging for the vendor in terms of price feedback and level of interest.

Buyers – number of second and third inspections or other buying signals (e.g. requests for building and pest inspections, queries on settlement terms or acceptable deposit). Discuss offers to date and those buyers that are showing the most interest and relevant information on them (rent in the area, scaling up from apartment, first home buyers, moved from interstate or investors etc.)

Activity– as discussed previously, keep your vendor informed of activity in their area, their price range and the general market in terms of sales and fresh listings new to the market. What other factors have affected the market since listing? (Interest rates, changes to legislation in your State, employment stability, the general economy etc.)

Summary – do you need to re-shape the campaign, is the advertising hitting the target audience, are you getting genuine inspections or mainly neighbours? Is the number of inspections reflecting that type of property in that area? This is the time to make adjustments if required.

Next stage – second face-to-face meeting to analyse, review and address any concerns.

Finalise – auction week
Situation – A, B or C? Analyse this early in the final week. Follow up everyone who has enquired or attended the open houses throughout the campaign. This will assist you to compile a thorough buyer summary and final auction report for your client.

Buyer summary – a comprehensive list of names, comments and price feedback (which will show a definite price range of interest). This shows your client that you have been diligent in following up all contacts and that the campaign has been comprehensive.

Auction report – an overall summary indicating the interested parties you believe will bid on auction day, the price range where you believe you will have competition and a suggested reserve price which, according to the feedback, will give your client the best opportunity for a successful result on auction day. Emphasise the unconditional nature of the contract/sale. 

Activity – recent sales and new listings (updated)

Strategy meeting – final meeting in your office (to avoid disruptions in their home). Items for discussion include the bidders (their background, level of interest etc), offers to date, overall price feedback, your client’s expectations (reserve price) and Plan B (the ‘what if’ discussion – what are their options if their expectations are not in line with the market?)

Final steps – twilight open house (gives the potential buyers a different perspective of the home); letter box drops/invitations to attend the auction and ensure you call everyone! 

SOLD! Or next stage – promotion post-auction is critical to continue the momentum you have built up to auction day. Discuss the outcome with your client after the auction, outlining the three stage approach to auction. Price the property with them on the day and be prepared to be aggressive with the pricing (based on buyer feedback) to enable a result in the next few weeks rather than the next few months. Ensure you price the property IN the market, not simply ON the market!

Happy selling!

Simon Thomas is a freelance auctioneer, sales trainer, business coach and mentor. His client list reads like a Who’s Who of the Australian real estate industry. Simon uses his experience, enthusiasm and passion for the industry to train and coach agents to reach their full potential. www.simonthomas.com.au