By Kirsten Craze
In a sellers’ market it is not uncommon to see an increase in homes selling prior to auction day. But due to such high demand in some markets, auction campaigns are being fast-tracked. Two agents who see the value in shortening campaigns explain the increasingly popular strategy.
Why move the auction date?
Betty Ockerlander of McGrath Epping, and Committee Member of the Residential Sales Chapter of REINSW, said she typically brings forward between 25 to 35 per cent of her auctions.
“I do it if there is a consistent stream of new properties coming on the market. You can think you have the makings of a successful auction by day 20 or 21, but one, two or three new competing homes may come to the market and steel our thunder. Many buyers in our area sit on the fence waiting to see if something better appears. As soon as a new listing appears, they jump ship to see if that is better (or cheaper with a considerably lower below market guide). So, it is better to bring ours forward while we don’t have competition to divide our potential bidders,” she said.
“If there is a higher-than-average level of interest in the first week or two it is not often sustainable to wait until day 23 when we hold the auction. It is better to hold the auction before the interest curve drops and you only have leftover buyers,” she added.
This year alone, Lynette Malcolm of Chadwick Real Estate and fellow Committee Member, said she had successfully moved five auctions forward.
“I had a property where we were guiding $6.5 million based on comparable sales. It launched in January with a four-week campaign planned. We started to get multiple offers prior to auction so we brought it forward by two weeks. It sold under the hammer for $7.42 million,” she said.
What both parties get out of it
“Instead of buyers making offers prior to auction, they get a process that's more transparent and they're not blindly making offers. And what the vendors get is competition,” Ms Malcolm said.
Ms Ockerlander, who has already brought forward eight auctions in 2021 that have all sold over reserve, agreed that there are benefits for both sides of the transaction.
“For buyers there is less waiting for an outcome so they can look at other homes. For vendors, they’re able to retain the high interest that is generated in the first two weeks of marketing without losing buyers to other homes that come on. It’s about keeping the excitement in the buyers before they cool off,” she said.
How to keep all parties happy
Both buyers and sellers have a lot of hopes pinned on auction day, so when agents shuffle the date, feathers can get ruffled.
“The message to agents is to keep the process transparent. We need to make sure we're being fair and equitable so all buyers should be called back and given a fair chance - whether the choice is to sell prior to auction, or the more transparent option of moving the auction date forward,” Ms Malcolm said.
“We really need to get on top of a fast-changing market and ensure the methods we're using are not only in the best interest of our vendors, but remember that buyers aren’t used to this market either. So, we need to educate them on what process is going to unfold so that everyone is being treated equally,” she added.
Ms Ockerlander said it is vital that agents communicate with all buyers.
“I haven’t had any nervous or anxious buyers - most are more relaxed about the change of date as they know they will have an answer sooner. Otherwise, many buyers stress, waiting the length of the whole campaign and then talk themselves out of it - or see something else,” she said.
The importance of procedures
When agents don’t follow their processes, they can get on the wrong side of buyers.
“We obviously work for the vendor, but we can't have scenarios where agents become complacent. It's really important for the reputation of our industry that we're not just resorting to taking the quickest, easiest route; and there are ‘volume agents’ out there who would be tempted to keep volume up while the market’s good,” Ms Malcolm said.
“I can imagine that a prospective purchaser could be upset if not informed that an auction is being brought forward. There has to be a process,” Ms Ockerlander said, outlining her method of operation when bringing forward an auction date.
- Ensure you have real buyers who are in a position to bid (there will always be some in the early stages of looking and won’t be pre-approved yet). You can’t always wait for everyone to be approved, but you need enough buyers to not lose someone to another home;
- Give vendors up to date information and seek their approval for the next steps to proceed;
- Set an easily accessible time and give sufficient notice to all parties - at least three to seven days;
- Advertise the new time online and in your newsletter;
- Email or text all interested buyers;
- Call all contract holders; and
- Text everyone again just before the auction.