Hammer Talk – Get the opening bid with ease
The hard work has been done through the campaign, you have delivered multiple buyers all ready to purchase, they have registered and you can hear the nervous butterflies in their stomach. The auctioneer calls for an opening bid and then there’s dead silence.
It’s the sounds of silence heard around the country each Saturday, but what if there was an easier way?
This week we sat down with Mark Vella of Starr Partners Blacktown, the current Auction Listing Champion client for Axford Auctions to discuss how he gets an opening bid so easily auction after auction. Below is what we learnt.
If we look at the reason why buyers hold back initially at auction it can be put down to psychology. We are an insecure society always seeking the approval of others. Seeing that somebody else sees value in something similar to us gives us confidence that we are doing the right thing. Let’s face it, we are all just children in adult’s bodies and the more somebody else wants something, the more we want it.
Mark Vella is the finest exponent in the market place right now at getting an opening bid with ease and he puts it down to one simple thing; preparation.
Agents spend 4 weeks marketing a property, working closely with buyers and keeping the seller well informed of feedback and expectations. Yet when we get to the floor of an auction there is a feeling of handing it to the auctioneer and almost saying “I’ve done my job, your turn now.” This couldn’t be further from reality. The best results come from agents and auctioneers working closely together through the process.
The strategies we discussed in the previous article How to get more bidders to your auction now reap their benefits. Trust has been built and the buyer just needs to be guided in the right direction. Just like the strategy of meeting with a buyer a few days prior to the auction, Mark does the same with the buyer minutes prior to the auction.
The conversations in the days leading up to the auction prepare the buyer on how to react, whether to bid first and quick or to immediately react to another bidder. We will discuss where an auction should start later in this article.
The key to getting the quick start is to go to your two strongest buyers and suggest they start at the same figure, be it $700,000 for example. Mark will stress the importance of, “as soon as the auctioneer asks for a bid you immediately launch in with that figure, it won’t buy the property but will send a clear message to your rivals that you are serious and as soon as someone else bids, immediately go for $25,000 more”.
If we look at the psychology side of this, there is no better look at an auction than as soon as an auctioneer asks for a bid, two people immediately raise their paddle without any hesitation. To the other buyers it makes the home look desirable, to the owners of the property it comforts them and to all the spectators, gee it just looks good. Don’t forget, an auction is your best listing presentation.
With the set-up of both buyers understanding the importance of quick reactions to other people bidding not only have we secured with ease the open, but also the second bid within 20 seconds. Now it’s a case of building momentum and under the direction of a high quality auctioneer the result will be well controlled.
Let’s now look briefly at where an auction should open. There are times where it is appropriate to open low, and times to open high.
Although every auction is different let’s look at 3 common scenarios, all with a reserve of $900,000 and buyer feedback of the same.
1-3 Bidders. Our strategy here all depends on how confident we are in the buyers. Most likely the setup conversation would be seeking an opening bid very close to the reserve and even in some cases push for an opening bid higher than our reserve.
4-7 bidders. Our strategy at auction can be more flexible. We would be comfortable starting anywhere from $750,000-$800,000, confident that the buyers have the legs to build momentum and eclipse our expectations. Starting lower here is not a concern as the more people that are involved, the more desirable the property looks.
10+ bidders with strong feedback in advance of our expectations. The start is irrelevant. A high-quality auctioneer will control the bidding whether it starts at our reserve or at $500,000. Let them battle and enjoy the auction (they don’t come around too often).
The key lessons are preparation and strategy. Implement them and watch your auction efficiency improve out of sight.