{"id":10489,"date":"2017-02-15T01:00:17","date_gmt":"2017-02-14T14:00:17","guid":{"rendered":"http:\/\/realestatetalk.com.au\/?p=10489"},"modified":"2017-02-15T01:00:17","modified_gmt":"2017-02-14T14:00:17","slug":"what-auctioneers-get-up-to-david-holmes","status":"publish","type":"post","link":"https:\/\/channels.realty.com.au\/realtytalk\/what-auctioneers-get-up-to-david-holmes\/","title":{"rendered":"What Auctioneers get up to – David Holmes"},"content":{"rendered":"

We look behind the scenes of an auction to discover how auctioneers prepare for an auction, how they structure the call and what tactics they use to get a sale.\u00a0 Auctioneer David Holmes<\/strong> joins us.<\/p>\n

Transcript:<\/strong><\/h4>\n

Kevin:<\/b>\u00a0 This week in the show, I want to take you behind the scenes. How does an auctioneer structure an auction? Who are you up against when you\u2019re going to buy at an auction? And to help me with this dialogue and with this understanding, David Holmes from Metro Auctions joins me.
\nGood morning, David.
\nDavid:<\/b>\u00a0 Good morning, Kevin. Great to be here.
\nKevin:<\/b>\u00a0 David, one of the things that I\u2019ve noticed about the auctioneers who I\u2019ve met \u2013 and I\u2019ve been an auctioneer myself \u2013 is that adrenaline rush that they get. I guess in a way, they\u2019re not putting on an act but they\u2019re on stage, so they really have to put on a bit of a performance, don\u2019t they?
\nDavid:<\/b>\u00a0 Most definitely. Our job is to either make the property sell or to make it more saleable, and we have a duty of care to the vendors there to sell the property, to speak of all its very positive attributes, and to engage the crowd and to make them want to buy. The best part about an auction, obviously, is competitive bidding, even in an oversupply situation.
\nKevin:<\/b>\u00a0 But you have to get the people there to bid, and that\u2019s always the difficult part.
\nDavid:<\/b>\u00a0 Yes, most definitely. It has a sense of urgency around it, I think, especially in an oversupply situation. You\u2019re putting a date on the sale, so the control of the transaction is back in the hands of the seller or the vendor. They\u2019re actually saying that they want to sell on a particular date, at a particular time, via their particular terms. So even though there might be fewer buyers, those buyers are still flushed out to that particular date and forced to act or forced to play on that day or soon after.
\nKevin:<\/b>\u00a0 In an oversupply situation, you can\u2019t take away from the fact that if there\u2019s a big choice, someone is going to say, \u201cWell, that\u2019s okay; that can go to auction but I have a big choice. I\u2019ll just go along and see what happens.\u201d Or do you find that a good agent\u2019s going to make the difference in getting people to bid?
\nDavid:<\/b>\u00a0 Absolutely. A good agent is going to engage buyers and get them there on the day. We still see that in South East Queensland, a property that has gone through an auction process has significantly less days on market than a property that has just been marketed via a price. So no-price marketing \u2013 i.e. auction or tender \u2013 is still going to yield a better result \u2013 especially auction \u2013 by far less days on market.
\nAgain, it flushes out people to a date. And even if they\u2019re unable to purchase under auction conditions on the day, we see a lot of transactions happening in those 14 days directly after an auction.
\nKevin:<\/b>\u00a0 There\u2019s no doubt \u2013 I\u2019m not questioning at all what you said, because I know it\u2019s true \u2013 that an auction will sell faster than a property marketed at a price, and I sometimes wonder whether that\u2019s because the pressure comes back onto the agent. They have the timeframe. I know we talked there about the buyers; there\u2019s a deadline for the sale, which is the auction date. But by the same token \u2013 having been an agent and run auctions \u2013 there\u2019s a lot more pressure in running an auction campaign than there is for one that has a price on it.
\nDavid:\u00a0 <\/b>Yes, absolutely. But I think at the end of the day, the vendors then have an overwhelming weight of information. Perhaps they\u2019ve had some offers prior to auction day. Perhaps there was some active bidding on the day and maybe it still didn\u2019t sell or even if it got passed in. But again, it\u2019s flushed out some buyers to that date.
\nYes, there\u2019s pressure \u2013 I understand \u2013 on the agent, but then you actually have some ready, qualified, buyers who have actually fronted up on the day, said that they can bid to buy, and then you can continue working with those buyers in the coming days and likely get a deal done.
\nKevin:<\/b>\u00a0 It must be frustrating for you as an auctioneer working with agents who just simply don\u2019t understand how to work the auction system and get the buyers there. They think, \u201cOh well, all the magic\u2019s going to happen on the day of the auction. It\u2019s all up to the auctioneer. Pull that rabbit out of your hat and let\u2019s see what you can do.\u201d
\nDavid:<\/b>\u00a0 It would be easy if I drove around with a courtesy bus full of buyers at every auction. There is pressure, and a good agent knows how to engage the buyers, knows how to get them there on auction day, has the correct dialogue, and also follows a process by which to get those buyers there.
\nKevin:<\/b>\u00a0 Has it made it harder for you not being able to take bids off trees and people who aren\u2019t there?
\nDavid:\u00a0 <\/b>Low-flying birds and moving trees and leaves flying through, yes. At the end of the day, I think it\u2019s probably become a more transparent process. In the interests of trust and reputation, I think that\u2019s a very, very key thing. Clarity and transparency for our buying public is very important.
\nThe ability to use vendor bids \u2013 which is I guess what you\u2019re aiming at now, and they have to be disclosed \u2013 I should think is a very positive thing. We probably refer to them sometimes more as momentum bids.
\nKevin:<\/b>\u00a0 Dummy bids.
\nDavid:<\/b>\u00a0 Well, momentum bids. We declare the vendor bids, Kevin. It\u2019s not like the old days. What you\u2019re actually doing is you\u2019re actually saying, \u201cHey guys. You\u2019re getting closer to the zone.\u201d This is a very clear indication, a signpost on the road of negotiation, if you will, as to where you might be able to purchase the property. We\u2019re going to give you a very clear indication where you need to go.
\nKevin:<\/b> That\u2019s the key thing isn\u2019t it? You\u2019re not going to be able to buy it under the reserve unless the auction is stopped and the reserve is lowered. Therefore those vendor bids \u2013 or those momentum bids, as you call them \u2013 are fairly irrelevant in terms of their importance to the buyers. It\u2019s an indication to the buyer that you\u2019re not going to be able to buy it at that figure, so come on, let\u2019s start negotiating. That\u2019s what it\u2019s all about, isn\u2019t it?
\nDavid:<\/b>\u00a0 Absolutely. It would be no different to me under a price-marketed property, stopping and having a chat to the buyer who might have put in their initial offer and me coming back saying, \u201cActually you\u2019re not going to buy it at that price. Here\u2019s the counteroffer from the vendor.\u201d Although obviously we\u2019re not revealing the reserve price, of course, but just going back in that argy-bargy process of negotiation and then finally nutting out the deal.
\nKevin:<\/b>\u00a0 Does the auctioneer have that much influence on the day? And how much skill is required to actually get the property sold? Because if you have no bidders there, you\u2019re not going to sell it, are you?
\nDavid:<\/b>\u00a0 Absolutely. If there are no bidders there, we have a tough road ahead, and if there\u2019s no crowd there, obviously. We always talk about three potential outcomes \u2013 the possibility that I\u2019m standing there with the agent and there\u2019s no one else, which is not great, the possibility that we sell well over reserve with plenty of competitive bidding and plenty of registered bidders, which is the ideal scenario, but oftentimes, we\u2019re left in a place where we have to do a little bit of extra negotiation \u2013 we have some registered bidders, we have a decent crowd, but we just don\u2019t get to where we need to go.
\nKevin:<\/b>\u00a0 Is this when you stop the auction?
\nDavid:<\/b>\u00a0 Yes. We\u2019ll often pause the auction. I think a misconception is that an auctioneer firstly speaks very quickly \u2013 that\u2019s not necessarily true \u2013 and that an auction has to happen very quickly.
\nAt the end of the day, you have a lot of energy and excitement in the first part of the auction, so you\u2019re wanting to get as much competitive bidding going and getting those juices flowing as early on as possible. But at the end of the day, we\u2019re there to negotiate the highest price. Our charter is very clear. We\u2019re there to get the highest price for the vendor. If that takes 10 minutes or if it takes 30 minutes, we need to be able to pause the auction and use the tools that are available to us in order that we can negotiate that highest price.
\nKevin:<\/b>\u00a0 What do you do, though, if you open an auction and you know there are some bidders there but they\u2019re not bidding? What sort of a strategy do you use to get them to bid?
\nDavid:<\/b>\u00a0 I actually sort of plead with them. I just absolutely beg. No, I don\u2019t. But let\u2019s be honest, we watch the TV shows where the auctioneer calls for that opening bid or offer and there\u2019s a Mexican wave of bids; it\u2019s crazy. I can tell you that it\u2019s very different to that. In fact, possibly probably part of the hardest part of our job is getting that first bid away. So oftentimes, we will often put a bid in or suggest a range at which people might start bidding. Once we have that first bid away, we often find that prompts other people.
\nWe\u2019ve probably had years and years or decades where we\u2019ve just held back a little bit and there\u2019s just a culture of \u201cI\u2019m not going to bid at auction; I\u2019m just going to see what happens.\u201d That\u2019s not a great strategy. A buyer needs to turn up and say, \u201cI\u2019m going to put my best foot forward. I\u2019m going to put my stamp on proceedings. I\u2019m going to put a bid forward.\u201d
\nThere was an independent auctioneer company who actually did a study, and those people who put the first bid forward in just under 70% of the cases were actually holding the keys at the end of the day.
\nIt is a 20-second burst of courage. You do need to have that boldness to put that first bid through. But as I said, most of us like what the rest of us like. Once you know and you have that confidence, you\u2019re probably more likely to bid.
\nKevin:\u00a0 <\/b>It certainly doesn\u2019t hurt to have an understanding about how the whole process works, does it? That\u2019s why we say time and time again if you are going to bid at auction, make sure you go along, get to understand how the auctioneer works, understand how the auction process works, and if you\u2019re not really happy with it, then maybe you should engage a buyer\u2019s agent to help you.<\/p>\n","protected":false},"excerpt":{"rendered":"

We look behind the scenes of an auction to discover how auctioneers prepare for an auction, how they structure the call and what tactics they use to get a sale.\u00a0 Auctioneer David Holmes joins us. Transcript: Kevin:\u00a0 This week in the show, I want to…<\/p>\n","protected":false},"author":176692471,"featured_media":10490,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[32,10,11,13,36,23,25],"tags":[101],"class_list":["post-10489","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-buying-a-property-topic","category-kevin-turner-sponsored-channels","category-kevin-update","category-latest-story","category-property-investment-topic","category-selling-a-property-topic","category-sponsored-channels","tag-podcast"],"yoast_head":"\nWhat Auctioneers get up to - David Holmes - Realty Talk<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/channels.realty.com.au\/realtytalk\/what-auctioneers-get-up-to-david-holmes\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"What Auctioneers get up to - David Holmes - Realty Talk\" \/>\n<meta property=\"og:description\" content=\"We look behind the scenes of an auction to discover how auctioneers prepare for an auction, how they structure the call and what tactics they use to get a sale.\u00a0 Auctioneer David Holmes joins us. 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