The excitement and stress of auction day are unparalleled for both buyers and sellers.
This high-stakes environment brings a unique blend of anticipation, anxiety, and opportunity.
Understanding the complexities and dynamics at play can make a significant difference in achieving a successful outcome.
In our latest blog, we dive into what happens in the final week leading up to the auction and the intricacies of the day itself from the perspective of real estate agents, to give you the inside scoop. We’ll explore the meticulous preparations, potential hurdles, and behind-the-scenes activities that define the auction process.
The Vendor’s Journey: Pre-Auction Visibility
A well-managed auction campaign keeps the vendor well-informed throughout the sales process.
Good agents provide weekly reports, tracking online engagement, open house attendance and buyer inquiries.
They also keep tabs on serious buyers, noting those who request contracts or make specific inquiries about terms.
This visibility ensures that by auction day, the vendor has a clear idea of the potential buyer pool, even if nerves are still running high.
Agents need to adapt their communication style to fit the vendor’s preferences. Some vendors prefer detailed written reports, while others might opt for a more casual, verbal update.
The key is ensuring that the information is accurate and transparent, giving the vendor confidence as they approach auction day.
Final Week Hurdles
The final week before the auction is critical. Any major changes in interest or unexpected issues can significantly impact the outcome.
Problems like bad building inspections, contract issues, or financing delays can cause potential buyers to drop out at the last minute.
Agents need to manage these situations delicately, sometimes adjusting expectations or ramping up efforts to reassure remaining buyers.
Some specific challenges that can arise in the final week include:
1. Building and Pest Inspections: A bad inspection report can scare off potential buyers. Agents need to have a strategy in place to address concerns quickly and transparently.
2. Contract Issues: Discovering easements, zoning problems, or other legal issues late in the campaign can derail interest. Ensuring all documentation is thorough and accurate from the beginning can mitigate this risk.
3. Buyer Circumstances: Buyers might drop out due to personal reasons, such as losing a job or being transferred interstate. Agents need to keep a backup pool of interested parties and stay in close communication with all potential buyers.
4. Market Changes: Comparable properties hitting the market can shift buyer interest. If a similar property is listed at a lower price nearby, agents must adjust their strategy to maintain interest in their listing.
Auction Day: Behind the Scenes
On auction day, several key activities happen behind the scenes that buyers might not be aware of:
1. Setting the Reserve: Often, the reserve price (the minimum price the seller will accept) is not finalised until the morning of the auction. This flexibility allows vendors to adjust based on recent sales or last-minute advice from their agent.
2. Halftime Show: During the auction, there may be a pause where the agent refers the current bid to the vendor. This is a crucial moment where the vendor decides whether to accept the current offer or hold out for more. The agent’s role here is to provide a reality check and strategize the best approach to achieve a satisfactory sale price.
3. Negotiations: If the property is passed in (fails to meet the reserve price), the highest bidder is typically invited inside to negotiate. This can be an intense process, with agents working to bridge the gap between the vendor’s expectations and the buyer’s offer. Skilled agents use this time to understand the bidder’s limits and motivations, often securing a deal that satisfies both parties.
Buyer Interactions and Tactics
Buyers may bring various strategies and behaviors to auctions:
1. Heckling and Disruption: Some buyers or spectators may try to disrupt the auction with comments or questions. Skilled auctioneers are prepared for this, using quick wit and experience to maintain control and keep the auction on track.
2. Low Balling and Incremental Bids: Attempting to bid in small increments to slow the pace can backfire. Auctioneers have the authority to set minimum bid increments and can refuse bids that don’t meet these criteria.
3. Intimidation: Some bidders try to intimidate others to reduce competition. While assertive bidding is a common tactic, it must be done within reason. Auctioneers can refuse bids from those who are too disruptive.
Key Takeaways for Buyers
1. Respect the Listing Agent: The agent has significant influence over the campaign. Being respectful and transparent about your interest can work in your favor.
2. Inquire About Early Offers: Always ask if the property might sell before auction day. If early offers are being considered, ensure you’re ready to act quickly.
3. Be Auction Ready: Have your finances in order, complete all necessary due diligence and be prepared to bid confidently. This preparation can make a crucial difference if the auction takes an unexpected turn.
Want to Learn More?
Don’t miss out on this episode where the Property Trio unveil all the ins and outs of auction campaigns, to help you prepare for a successful purchase.
Listen to the Property Trio podcast
Take a listen to these episodes for more in-depth insights on preparing for a property purchase, understanding the laws involved and how to approach interactions with real estate agents.
#20 – Bidding Tactics 101
#29 – Congenial negotiation tactics and how to apply them in the right situation
#77 – Understanding the real estate agent behaviours that buyers don’t like
#102 – How to determine property market values by using comparable sales
#117 – Understanding the real estate agent behaviours that buyers don’t like – Part 2
#133 – Purchasing Laws in Each State: Part 2 – The problems with underquoting and how to solve it
Reach Out to Us for Expert Advice
Running an auction is a complex and dynamic process, with many moving parts and potential pitfalls. Whether you’re buying or selling, preparation and understanding are key to a successful auction experience.
Schedule a meeting with us to discuss your mortgage strategy, plan your next purchase, refinance your existing loan, or develop a comprehensive Property Plan aligned with your objectives.
