AUCTIONEERING

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AUCTIONEERING
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WHY AUCTION?

• Market Forces Operate
• Current Market Value
• Negotiations in Public
• Expedient and Forthright
• Control

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WHEN AUCTION?

• All property
• Influencing Factors
• Perceived and actual demand
• Location
• Style
• Proposed price range
• Vendor
• purchaser

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WHEN AUCTION?

• Identify Purchasers
• Avoid Disputes

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BENEFITS OF AUCTION TO A VENDOR

• Auctions
• Compress the marketing periods
• Achieve time efficient results
• Do not preclude a sale prior to auction
• Are ideal where the value of the property is
  difficult to ascertain

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BENEFITS OF AUCTION TO A VENDOR

• Real Property Auctions
• Settlement 30 days
• 10 deposit on fall of the hammer
• Conditions allow the vendor flexibility
• Cooling-off rights do not apply
• Generally unconditional contract
• Where potential for conflict exists, auction
  eliminates the risk
• Competition ensures the highest price

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BENEFITS OF AUCTION TO THE PURCHASER

• Control over the price
• Buying at the current market value
• Forewarned of the terms and conditions
• Held in the public arena competing buyers
  public
• Confidentiality through proxy bidding
• Offer and acceptance is immediate vendor
  committed

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BENEFITS OF AUCTION TO THE AGENT (1)

• Significant control
• Vendor is more committed
• Marketing program completed prior to vendors
  final decision on price (reserve)
• Conditional buyers are held over
• Binding contract without cooling-off period

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BENEFITS OF AUCTION TO THE AGENT (2)

• Agent and vendor nominate preferred settlement
• Auction flushes out interested parties and
  establishes the level of actual interest
• Vendors view the level of actual interest
• Auction day reflects the reality of market
  conditions
• Enhanced promotion and image

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ROLE AND RESPONSIBILITIES OF THE AUCTIONEER

• Be familiar with the property
• Facilitate a sale transaction
• Control the auction proceedings
• Clearly understand the vendors wishes
• Obtain the best possible price

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LAWS RELATING TO AUCTION

• Auctions bound by the same conditions and
  obligations as a contract of sale
• All auction legislation is in addition to the
  basic law of contract
• Every auction governed by terms and conditions of
  sale
• Terms and conditions displayed 30 minutes prior
  to auction
• Vendor bids allowed under varying conditions from
  state to state

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AN AUCTIONEERS RIGHTS

• Receive instructions in writing
• Remuneration
• Indemnified
• Accept offers
• Settle disputes
• Sell, pass in or hold over
• Sign contracts

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VENDOR EXPECTATIONS OF AN AUCTIONEER

• Act professionally
• Conduct the auction
• Work in a committed manner
• Understand the necessary legislative and contract
  details
• Provide unbiased, informed, and forthright advice

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BOOKING AN AUCTION (1)

• Consider the type of property
• Consider to whom the property would appeal
• Consider most accessible open times
• Confer with vendor
• Consider number and availability of people needed
  to assist

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BOOKING AN AUCTION (2)

• Select day and time
• Check auction will not clash with other
  appointments of major events
• Book auction
• Book venue, if applicable

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ARRANGING AUCTION PERSONNEL

• Determine size and type of auction
• Predict number of people likely to attend
• Identify any special characteristics
• Ensure sufficient auction personnel available to
• Answer questions
• Generate excitement
• Supervise the crowd
• Assist in watching for bids during auction
• Assist with administration

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AUCTION DOCUMENTATION (1)

• Auction file
• Any changes to terms and conditions prior to
  auction
• Accepted and confirmed by vendor
• Noted in writing and signed by vendors

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AUCTION DOCUMENTATION (2)

• Note variations to terms and conditions
• Generally by mutual consent between vendor and
  purchaser
• Must be made in writing prior to auction
• After an auction should be made via a
  supplementary agreement
• Laws relating to the documents required vary from
  state to state

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TERMS AND CONDITIONS GUIDELINES

• Similar terms and conditions across Australia
• Most variations relate to
• Settlement period
• Amount of deposit
• Clarify any questions
• Remind bidders of insurance
• Know and fully understand the details of each
  condition
• State whether or not the auction is subject to a
  reserve

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SETTING A RESERVE

• A reserve is the minimum price, as nominated by
  the vendor
• A reserve price is protection against
  underselling
• Provide a guide to prices achieved for similar
  types of property
• Reserve may be amended during the course of an
  auction

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HANDLING AN UNREALISTIC RESERVE (1)

• Provide the vendor with sample prices achieved
  for similar properties
• Provide details of competing properties I the
  current market
• Suggest to the vendor that the price may be
  unrealistic and provide reasons

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HANDLING AN UNREALISTIC RESERVE (2)

• Suggest some options
• Ask the vendor how they arrived at their price
• Provide the vendor with an opportunity to amend
  the reserve during the auction

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MARKETING AN AUCTION (1)

• Marketing campaign short and sharp
• Essential points to include in all advertising
• Details of property
• Special features
• Location of auction
• Date and time of auction
• Inspection times
• Telephone number for further details from
  agent/auctioneer
• Legal requirements

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MARKETING AN AUCTION (2)

• Auction is a process of increasing bids private
  treaty is the complete reverse
• Auction day must be the intense focus of the
  entire marketing strategy

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LIAISING WITH THE REAL ESTATE AGENT

• Details confirmed in writing
• Maintain regular contact
• Agent should provide a complete information file
  to the auctioneer
• Details of council rates, utilities rates,
  zoning, reasons for sale and key points
• Formulate a bidding plan with agent

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LIAISING WITH THE VENDOR (1)

• Prior to an auction, the auctioneer should meet
  with the vendor to
• Explain the auction procedure
• Discuss any specific requirements
• Clarify any particular points or concerns
• Obtain details of any special features
• Discuss your auction plan

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LIAISING WITH THE VENDOR (2)

• Advise the vendor of your proposed approach and
  what they should expect
• Establish or confirm a reserve price
• Outline reserve options and possible outcomes

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AUCTIONEERS NOTES

• Notes should be
• Brief
• Easy to read
• Summarise the essential points
• Property description
• Terms and conditions
• Variations to standard conditions
• Settlement and deposit details

• Statutory information
• Rates and taxes
• Zoning
• Boundaries
• Insurance
• Cooling off
• Agent details
• memberships

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THE DAY PRIOR TO AUCTION

• Advertisement prepared and lodged
• Suitable heading
• Details of advertisement brief
• Contact interested parties
• Prepare auction kit

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THE AUCTION KIT should contain

• The auction board/casement box
• Terms and conditions of auction
• The contract, with copies
• Statutory documents
• Local government searches
• Auction brochure
• Your company identification
• Auction brief supplied by agent

• Auction flag
• Gavel
• Rostrum/podium/PA system, if required
• Sandwich board(s) to display as appropriate
• Company flag
• Insurance cover note details/form
• Receipt book
• Sold stickers
• Auction bell

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THE MORNING OF THE AUCTION

• Check advertisement in the paper
• Confirm date, time and location have been printed
  correctly
• Telephone the remaining people who have expressed
  interest to remind them
• Check auction kit prepared
• Arrive on site well ahead of time

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PREPARING THE PROPERTY ON THE DAY

• Auction day is show day
• finishing touches add to atmosphere of house
  auction
• Fresh flowers
• Lights on
• Soft background music
• Fresh coffee brewing
• Definitely no pets
• No small children
• Childrens toys and bicycles out away
• Winter fire burning
• Summer air conditioner on
• Ask neighbours to defer any noisy projects
• the more people the better

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PRE-AUCTION MEETING WITH THE VENDOR

• Final explanation of the auction procedure
• Discuss final specific requirements the vendor
  may have
• Clarify points or concerns
• Clarify special features of the property
• Confirm important contract detail
• Establish or confirm a reserve price
• Brief the vendor on your auction plan
• Discuss possibility of mid-auction conference

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PRIOR TO THE AUCTION COMMENCING

• Agent should be working the crowd to generate
  interest and excitement in the bidding
• Security
• Ideally have only one entrance/exit for auctions
• Place staff strategically to keep watch on
  items and assist with potential buyer questions
• Lock the property during auction

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PREPARING THE CROWD

• Ensure your audience cannot stand behind you
• Avoid ordering people around
• Empathise
• Ensure potential buyers have all the necessary
  information they need for bidding
• Make sure everyone is gathered in the right
  location
• Project your voice so that everyone can hear

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COMMENCING THE AUCTION (1)

• Make a definite entrance to your stage
• Select a prominent place to conduct the auction
• Position yourself in a commentary position, with
  one or more clerks as assistants
• Ensure that you can be seen and heard by all
  attending

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COMMENCING THE AUCTION (2)

• Do not stand too far from the crowd
• Position yourself with any noise behind you
• Ensure that you do not have the sun or any strong
  lights shining directly into your eyes
• Eye contact and body language are critical

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WELCOME

• Start the auction on time
• Welcome people to the auction
• Indicate that the auction is commencing
• Introduce yourself and your auction team
• Indicate their role during the auction
• Say where you are from
• If applicable, acknowledge agent or any special
  circumstances

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LEGAL DESCRIPTION - Real Property (1)

• read legal description of the land
• Refer to the schedule of contract regarding
  inclusions and exclusions
• Refer to important statutory details
• Refer to other support information
• Refer to matters affecting the property
• State whether or not subject to reserve

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LEGAL DESCRIPTION Real Property (2)

• Mention the deposit as a percentage of the
  purchase price
• Provide brief summary of conditions of the
  auction
• State that the vendor has the right to bid
• Clarify that an auction contract is unconditional
  and that no cooling off period applies
• Advise that the property is sold as is
• Mention that the purchaser is responsible for
  insuring the property

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HIGHLIGHTING THE FEATURES

• Briefly remind people of features
• Build interest and excitement keep it brief
• whats in it for me?
• Convert features to benefits
• Auctioneer liable for misrepresenting

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PAUSING FOR QUESTIONS

• Ask for questions in reference to
• Conditions of sale
• Method of offering
• Queries
• Keep replies brief
• Alternatively, identify your staff present

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COMMON QUESTIONS POTENTIAL BUYERS ASK (1)

• What is included or excluded
• Statutory details
• Zoning
• Never give warranties
• Possible variations to contract
• Deposit
• Settlement date
• reserve

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COMMON QUESTIONS POTENTIAL BUYERS ASK (2)

• What you expect the property to sell for
• Minor questions
• The age of the property
• Previous uses
• Potential uses
• Valuer generals assessment
• Always be tactful when answering questions

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BIDDING PLAN (1)

• 4 situations which can arise
• No bids
• One bidder
• Several bidders
• Only representatives of the vendor or agent
  present

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BIDDING PLAN (2)

• Some bidding responses from potential purchasers
  are
• To attempt to open the bidding too low
• To attempt to open the bidding with unusual
  amounts
• To open the bidding on or above the reserve
• To attempt to reduce nominated bid increments
• To attempt to offer an amount less than has been
  recognised

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START THE BIDDING

• Better for the buyers to start the bidding
• Where no bid is forthcoming, the auctioneer
  should then nominate a starting bid
• Avoid opening the bid too low
• Nominate the bidding increments
• NB be aware of the legislation as it applies in
  your state

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DISPUTES

• A bidder may ask for other bidders to be
  identified
• A bidder may question whether other bids or
  bidders are genuine
• A bidder may wish to withdraw his/her bid
• A bidder may request bidding to be re-opened
  after the fall of the hammer
• An auctioneer may refuse to recognise certain
  bids or bidders

• May arise during the bidding or after the fall of
  the hammer
• Should be settled quickly, firmly and fairly
• Disputes sometimes arise in these areas

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CREATING ATMOSPHERE (1)

• Use voice control to create a sense of urgency
• Body language can enhance your sense of urgency
• The auctioneer should stay in the same location
  but should move to create an impression of
  excitement

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CREATING ATMOSPHERE (2)

• In some cases the clerk can be mobile to
• Work the crowd
• Move through the crowd
• Attract the auctioneers attention
• Assist the auctioneer in checking or clarifying
  bids
• Assist purchasers with bids

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MID-AUCTION STALL

• After an initial flurry, bidding may slow or
  stall
• Create a feeling of impending sale
• Focus on the people who have indicated the
  strongest desire for the property
• Offer to increase the bids by lower incremental
  amounts and nominate the amount
• Remind bidders it would be a pity to miss out on
  such a property
• Reinforce the disappointment shown after the
  auction by those who were too rigid

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MID-AUCTION CONFERENCE (1)

• If the bidding slows under the reserve, a
  conference with the vendor may be advisable
• The auctioneer is not authorised to sell for less
  than the reserve
• The auctioneer should indicate options to the
  vendor
• If there is a reduction in the reserve price, not
  it on the auction reserve form and have the
  vendor sign it

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MID-AUCTION CONFERENCE (2)

• A conference with the vendor can reinforce the
  feeling of urgency
• Never indicate that a reserve price has been
  reached during the bidding
• Predictability decreases effectiveness
• Keep the bidding going
• If the auction is competitive, there is no point
  in holding a conference

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THE AUCTIONEERS FINAL CHALLENGE

• The last opportunity to obtain the highest
  possible price for the property
• The last opportunity to obtain the reserve price
  and sell the property at auction
• At this stage it is important to
• Reinforce the major features
• Advise potential purchasers it may be the last
  chance they have to bid
• Use a series of adjectives to enhance the
  property
• Invite interested bidders to make another bid

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CLOSING UNDER THE RESERVE (1)

• The auction must be closed-off if the bidding
  does not reach reserve price
• Conclusive announcement
• What has happened
• What will happen next
• If bidding stops under the reserve, announce that
  the reserve price has not been reached and the
  property will be passed-over to a former bidder
  or passed-in from auction

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CLOSING UNDER THE RESERVE (2)

• If passed-over the highest bidder may raise the
  offer to accept the vendors price or may
  negotiate
• If passed-over, the auction contract conditions
  will generally apply
• If passed-in, the auction is concluded a further
  contract may arise where private treaty
  conditions generally apply
• Conclude the auction with a sense of finality
• Finish on a high and positive note

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CLOSING UNDER THE HAMMER

• Call the final bid three times
• Call the bid slowly and clearly
• Confirm that underbidder is out
• Offer smaller increments
• The closing of the sale must be decisive
• Hit the gavel down firmly on the contract or
  lectern

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DEBRIEFING THE VENDOR (1)

• After the auction, explain to the vendor the
  procedures that will follow
• Under the hammer
• Introduce the parties if appropriate
• Organise signing of the contract
• Obtain deposit and issue receipt
• Remind the purchaser of insurance
• Confirm settlement
• Confirm when you will contact them again
• Obtain contact numbers for all parties
• Place sold notice on sign

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DEBRIEFING THE VENDOR (2)

• Under the reserve
• Discuss reasons for passed-in auction
• Detail level of interest
• Follow up interested parties
• Seek instructions on price
• Discuss marketing plan with agent

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FOLLOWING UP BIDDERS

• Identify all bidders or interested parties
• After the auction, approach all bidders or
  interested parties to confirm their level of
  interest
• After debriefing with the vendor, contact
  interested parties again to negotiate an offer
  for the property