Is it necessary to have a professional auctioneer sell your property, or can you let your agent DIY and still achieve the same success? Director at EYS Auctions who’s overseen over 5,000 auctions, Brenton Ilicic advocates using a professional.
Brenton says, “There’s quite a low barrier to entry to become an auctioneer – this means any real estate agent can lay claim to be an auctioneer. It also means they may not have very good experience, track record or skill at getting you the best price for your property in an auction environment.” Whilst they have your best interests at heart and want to see the property sell for a good price, the fact is they may not necessarily have the skill to get the maximum price for your property.
Auction as performance art
In Melbourne, arguably the auction capital of the world, where an auction is a piece of performance art, Brenton believes the energy, awareness and ability to prolong the auction on the day is crucial.
If you’ve never been to an auction, you should really go – you can watch an auction live online here but nothing beats being there in person.
The excitement is palpable and when bidding heats up, the bidders are swept away in the emotion of buying their next home. The price starts to climb, bidding becomes more competitive and reaches fever pitch and then, sometimes, it begins to slow again as we head towards the upper price range for the property.
Now picture this – the auctioneer runs off mid auction. There’s silence. Energy starts to ebb. The bidder who just moments ago was caught up in the thrill of the experience begins to realise they’ve probably hit their limit.
There’s a pause.
The pause is a hole in time in the auction. Nothing is happening. It’ll ruin the spontaneity and emotion – worse it gives bidders time to start second guessing themselves.
Brenton says, “This pause can stall momentum and potentially have a negative effect on your selling price.”
Why then would the auctioneer disappear mid auction? Unfortunately, this is what happens if the selling agent is also the auctioneer. It could be that they need to speak to the vendor to discuss dropping the reserve price, refer a bid to them or discuss the prospect of passing in. If the selling agent is trying to run the auction, speak with the vendor and encourage under bidders to get involved they’re going to be conflicted and unfocused. It could cost thousands if not tens of thousands on the final selling figure and compromise your auction.
In Brenton’s eyes, it’s better to have someone different to the selling agent running your auction, even if it’s another agent that works in their firm. Freeing the selling agent up to be speaking to the vendor, encouraging bidders and doing all of the behind the scenes work necessary for a successful auction.
Creating a high performing team for your auction
It’s all about creating a high-performance team for your property sale. A great analogy is a surgical team. Every member of that team has a specific assigned role. The anaesthetist is there to do a single job. The surgeon is there to do their job. At no point is either of them going to walk out and start doing the nurses role, that position is already filled.
And whilst going to auction to sell a property is certainly not a life-threatening proposition, your family’s future is in their hands nonetheless. The difference between selling your home now for a great price or in 3 months’ time for 10% less can have a pretty huge impact in financial terms.
Creating a high performing team takes time. It takes years of training and specialisation on the part of the auctioneer but also takes time for the vendor and the selling agent. In the 30 days leading up to auction, a world class auctioneer spends time with both vendor and selling agent. The selling agent does a lot of the heavy lifting from listing to auction day, then like a relay team the auctioneer takes the baton for the final 100m sprint.
EYS Auctions have auctioneers that cover all areas of Melbourne and know their area, whether it be north, south, east or west. Brenton’s team facilitated just under 1,200 auctions across the 2017/18 financial year. They then analyse this live data every week – for example the week of writing the team had 57 auctions over the next 10 days and analyse immediately what passed in, who had to price drop and who sold above reserve.
The team at EYS Auctions have observed that the market across Melbourne is dropping. It’s dropping at such as pace that sales data from 3 months ago is no longer relevant. The data no longer predicts what your property is going to sell for.
When there is a lag in the market is when you need someone who truly knows what they are doing. It’s knowing how to draw an auction out, how to keep bidders engaged. It’s knowing when to accept tiny bids and when to turn them down to keep momentum. More often than not, those small bids become bigger bids. Having said that, Brenton has sold a property on a $1 bid, so the team are confident knowing when to ask for those smaller bids.
Taking the time to review their auctions every week and create practical learnings is one of the keys to EYS Auctions success. They analyse what did and didn’t work, how to improve for the next one and what changes are occurring in the market.
This then informs the advice they give to their vendors and selling agents. They are able to give advice on when to drop the reserve to meet the market and make more now, rather than not meeting the market and selling at a loss later.
In our view, when the price of using a professional auctioneer can range from $500 to $2,000. The question is not what it costs you to have an auctioneer but what it’s going to cost you to not have one.