Auction floor tips for agents, from an auctioneer
20 August 2018

By Clarence White

I’ve been lucky in my career to work with high performing auction agents. It’s no fluke that these agents tend to sell more often under the hammer and for higher prices than their competitors. 

Their success strategies are simple, but they understand exactly what to do, when to do it and how to communicate with buyers and sellers.

Securing an opening bid

The best start to an auction is if a paddle goes straight up once the auctioneer calls for an opening bid. 

It is a strong message to all bidders that they must compete to secure the property. It is also a powerful statement to onlookers that the agent has done their groundwork and prepared their buyers.

The good news is, this scenario is easy to create. The secret lies in pre-auction conversations with buyers by the agent or the auctioneer. 

For example:

Agent/Auctioneer: Mr Buyer, I thought I might kick things off around (pick a figure approx. 10–15 per cent below the likely result) today, would you feel comfortable getting me started at that level?

Buyer: Yes.

Agent/Auctioneer: Could I call on you for an opening bid?
Or
Buyer: I don’t want to start today/I might just see what happens.

Agent/Auctioneer: Mr Buyer, you realise that if everyone does that we all just stand around and stare at each other? Wouldn’t you rather take control from the start? Research shows the opening bidder ends up being the buyer in 80 per cent of auctions?
When to work the floor

As the selling agent, timing your approach to buyers during an auction is crucial. 

If you’re too early you risk killing the momentum. If you’re too late you risk stalling the auction. If you don’t approach your buyers at all, frankly, you’re not doing your job.

So when is the right time? 

Generally, if things are humming along, leave the buyers alone. If it ain’t broke, don’t fix it.

Approaching a buyer when they are already bidding well will just annoy them.

The time to make your first approach is the moment things stall. When the auctioneer trial closes (once, twice, third) and no bid is forthcoming, you should head out immediately to speak to the underbidder(s). 

If you can’t get them to bid, then approach any registered parties who have not yet bid. If none of those parties are willing to bid, approach the highest bidder for an increased bid. 

Even if there has been spirited bidding and we are above reserve, always approach the underbidder before you give the auctioneer instructions to sell, just to see if you can give them a little encouragement to go one more. If nothing else, you are ensuring you did everything to secure the best price for your client. 

In my opinion, there is no excuse for not working the floor during an auction. Just because we are above reserve does not mean we stop working for the best result. 

Sometimes a friendly word of encouragement is enough to get another $5,000, $10,000 or even $20,000 from a bidder. That’s what we get paid to do. Plus, you’ll look good in front of the crowd if you can achieve it.
Nobody bids or bidding stops below reserve

This scenario is more common given the changing Sydney market.

There’s no one magic antidote for this moment. You need to read the play. But here’s a few things I have seen good agents do:

Agent: Mr Buyer, why don’t you put in a bid at X level? It’s below the reserve and we won’t be selling it to you at that level but at least you will earn the first right to negotiate with us after the auction. That means you’ll have the first opportunity to buy it at the reserve price. Wouldn’t that put you in a strong position?

Very often getting that one bid causes someone else to bid and things move forward.
Agent: Mr Buyer, at the current level there really isn’t a decision for the owners to make as we are well below the reserve. There’s no way they would consider selling at this level. I’d like to take the owners something that gives them a decision to make today. Could we increase your bid to X and let’s at least ask the question of them and give them a decision to make?

Again, this approach puts the power back in the hands of the buyer, and often inspires them to dig deeper.

If these strategies don't work, you can place a vendor bid. There are three ways to do this:
  1. Pick a low figure designed to encourage the bidders to start bidding. 
  2. Pick a medium figure a strategic distance below the reserve that the buyer might bid above. This approach helps determine whether the buyer is close to where they need to be to secure the property. Even if you still pass it in, if you get a bid, you have set a reasonable starting point for post-auction negotiations. If not, you know your buyer is nowhere near the reserve.
  3. Place a high vendor bid close to the reserve and shoot for the stars. This strategy could kill the auction completely. Conversely, with luck and persuasiveness, you may be able to encourage a bid above it. More likely though, a buyer will say “I won’t go that high but I will give you this” and you have the option then to retract the vendor bid and replace it with a bid from the floor. If you use this strategy, you must read the buyers carefully. It is a rocks or diamonds play. 
When to call it on the market

Stop it. Just stop doing it. The more agents and auctioneers do this, the more it conditions the market to wait for this cue before they know there is a real imperative to bid. 

It makes both our jobs harder. 

Instead, educate your buyers before the auction that the auctioneer won’t be calling the property on the market. It will be called up three times then sold. If they want to own it, they need to be in front when that happens. 

That said, your auctioneer should always make a clear final statement of intention to sell once it appears all bidding has been exhausted and they have trial closed.

If you have instructions from your vendor to sell, approach the auctioneer and let them know discreetly. This avoids disrupting the momentum of the auction and allows the auctioneer to determine the best time to make it clear the buyers are playing for keeps.

The phrase “on the market” shouldn’t be used and the auctioneer should always be the one to make any statement to confirm that you are selling. 
Adopting these strategies is easy

These strategies are easy to introduce into your auction day practice.

For high performing agents these are basics. But you would be surprised how many agents either don’t do these things or don’t get the execution quite right. And it can often mean the difference between a sale and passing in or tens, even hundreds, of thousands of dollars in the result.

I love working with agents who are as passionate about perfecting their process as I am. I’m never satisfied unless I walk away knowing together we got the best result for the client.
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