{"id":14866,"date":"2017-11-29T01:00:17","date_gmt":"2017-11-28T14:00:17","guid":{"rendered":"http:\/\/www.realestatetalk.com.au\/?p=14866"},"modified":"2017-11-29T01:00:17","modified_gmt":"2017-11-28T14:00:17","slug":"avoiding-bidding-wars-justin-nickerson","status":"publish","type":"post","link":"https:\/\/channels.realty.com.au\/realtytalk\/avoiding-bidding-wars-justin-nickerson\/","title":{"rendered":"Avoiding bidding wars \u2013 Justin Nickerson"},"content":{"rendered":"

The country\u2019s best auctioneer (winner of the Australasian auctioneering competition), Justin Nickerson<\/strong> spends time with us to tells us how to avoid bidding wars at auction.
\nTranscript:<\/strong>
\nKevin:<\/strong>\u00a0 I\u2019m joined now by Auctioneer of the Year for Australasia, the best auctioneer in Australia and New Zealand as judged by the various institutes, Justin Nickerson. I\u2019m keen to know from Justin about bidding wars, how do you avoid them, but more particularly, how successful are auctions nowadays? Are we finding more selling before the day of auction?
\nJustin:<\/strong>\u00a0 Yes, at the moment, we\u2019re actually finding it\u2019s a quite high percentage of things that sell prior. You generally find that in a changing market where the market is either going up or going down. That\u2019s when you sell a lot more prior. At the moment, we\u2019re experiencing a lot of situations where sellers don\u2019t really want to risk what\u2019s on the table prior to auction.
\nKevin:<\/strong>\u00a0 When you say the sellers don\u2019t want a risk, in other words, they\u2019re not confident that those people would go to auction and bid?
\nJustin:<\/strong>\u00a0 I think they\u2019re not confident that their result will be improved on auction day. The agent\u2019s advice obviously plays a big part in this, but in a lot of cases, an agent is probably saying \u201cLook, we found our buyer. They\u2019re extending themselves to try to buy prior to auction. If we take them to auction and they feel that maybe the competition levels aren\u2019t there, they only way they\u2019ll go as backwards. They won\u2019t feel the confidence that they\u2019re going to auction and then get pushed by somebody else.\u201d
\nKevin:<\/strong>\u00a0 This highlights for me a question, and you may not even want to answer this, but in terms of the skill of the agent, surely, a skilled auction agent would want to go to auction.
\nJustin:<\/strong>\u00a0 In most cases. Look, in the training we do, we say you never try to sell things prior, but it happens as a by-product from time to time. But generally, the really good agents will recognize in the last four to five days out from auction, if they only have one buyer or they have one buyer who might have cleared their way out from the rest of the buyers, they\u2019re probably a pretty good candidate that you might take that one and sell it prior.
\nBut we\u2019ve always advocate that should never be your first port of call. Your first port of call should always be going through to auction day, but from time to time the right situation might pop up where you do sell them prior.
\nKevin:<\/strong>\u00a0 Under competition, that\u2019s when you get the opportunity to get a premium price or a price that you might not get under other circumstances. You lose that opportunity if you\u2019re going to negotiate with one buyer prior to auction, surely.
\nJustin:<\/strong>\u00a0 Absolutely. We always say the two ingredients you need to get the best price are an emotional buyer and competition, and you do lose competition. You might have perceived competition, but you don\u2019t have real competition if you don\u2019t go through to auction day.
\nKevin:<\/strong>\u00a0 Because quite often even with private trading, this is where there is no auction or tender involved, you could have competitive offers. That\u2019s when you see it\u2019s almost like a silent auction then, when you have two people competing against each other.
\nJustin:<\/strong>\u00a0 We had two yesterday, Kevin. We had registered bidders there who just wouldn\u2019t partake, multiple registered bidders who just didn\u2019t want to engage. Then you pass the property in, and straight away, they\u2019re behind closed doors and filling out their offers immediately after. It does become almost like an auction after the auction, but you lose that transparency as a buyer of actually seeing where your competition is at.
\nKevin:<\/strong>\u00a0 Also, the seller loses the opportunity to get an unconditional contract, because a sale under the hammer is cash unconditional \u2013 it must settle.
\nJustin:<\/strong>\u00a0 Yes, absolutely right. Although in some cases, post-auction offers can be cash unconditional. You just think for that buyer\u2019s perspective, if you just put your foot forward, you would have made a better chance to do it while the auction is ongoing, but they feel more comfortable going behind closed doors and filling out a bit of paper.
\nKevin:<\/strong>\u00a0 Was the outcome for the seller in that situation \u2013 don\u2019t talk figures \u2013 was the outcome acceptable? Did they actually achieve what they would have hoped for under bidding conditions?
\nJustin:<\/strong>\u00a0 Yes, if they had bid it, they would have bought it, maybe even a little bit less. Without going into figures, the reserve price that was set was actually less than the figure it sold for after in that multiple offer situation. Who knows how it would have unfolded if they actually had the courage?
\nKevin:<\/strong>\u00a0 Selling before auction, too, also opens the possibility that the buyers may want to put some conditions on the contract. That\u2019s always a difficult situation. The figure might be acceptable or even better than acceptable, yet it will have a condition with it. What do you do? Do you take the risk that it\u2019s going all the way through, or do you say no, that\u2019s not acceptable, we\u2019re going to go all the way to auction?
\nJustin:<\/strong>\u00a0 At the risk of sounding like I\u2019m sitting on the fence, it is very much a case-by-case basis, I think.
\nKevin:<\/strong>\u00a0 Of course, it is.
\nJustin:<\/strong>\u00a0 We always say, when you\u2019re negotiating with a buyer, you have to get the buyer to understand that there are two things in play. The first one is the price and the second one is actually the risk factor that goes into it. Sometimes you actually have to compensate the seller for the risk of property not going to auction or for the risk of the terms being not as favorable. That obviously feeds into things as well.
\nKevin:<\/strong>\u00a0 When you do go to auction, how do you avoid a bidding war? Is that possible?
\nJustin:<\/strong>\u00a0 If it\u2019s a really desirable property, probably not, but I think a lot of buyers take a wait and see approach, which is the wrong approach, because on the day you want to be looking as confident and as comfortable as you can to intimidate the other buyers. If you can start bidding, even if you bid quickly, it just sends a message to the other buyers saying \u201cI\u2019m here to buy the property,\u201d which is how you want to present yourself.
\nKevin:<\/strong>\u00a0 What should be the structure for someone who doesn\u2019t want to get caught up in that kind of situation?
\nJustin:<\/strong>\u00a0 Open up at a reasonable figure. The lower that open the auction, the more that you give confidence to the other people who might be there just to see what happens, whereas if you come in at a more aggressive level, then it certainly puts you in a better position to intimidate the rest of the buyers.<\/p>\n","protected":false},"excerpt":{"rendered":"

The country\u2019s best auctioneer (winner of the Australasian auctioneering competition), Justin Nickerson spends time with us to tells us how to avoid bidding wars at auction. Transcript: Kevin:\u00a0 I\u2019m joined now by Auctioneer of the Year for Australasia, the best auctioneer in Australia and New…<\/p>\n","protected":false},"author":176692471,"featured_media":14869,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[32,34,10,11,13,36,22,25,27],"tags":[101],"class_list":["post-14866","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-buying-a-property-topic","category-finance-topic","category-kevin-turner-sponsored-channels","category-kevin-update","category-latest-story","category-property-investment-topic","category-research-topic","category-sponsored-channels","category-trends-topic","tag-podcast"],"yoast_head":"\nAvoiding bidding wars \u2013 Justin Nickerson - 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\/avoiding-bidding-wars-justin-nickerson\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Avoiding bidding wars \u2013 Justin Nickerson - Realty Talk\" \/>\n<meta property=\"og:description\" content=\"The country\u2019s best auctioneer (winner of the Australasian auctioneering competition), Justin Nickerson spends time with us to tells us how to avoid bidding wars at auction. 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