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Buyer Management


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Steve Devine, Making Auctions Work For You

With a 94 per cent auction clearance rate in a tough property market, Steve Devine from Devine Real Estate in Sydney must have some tricks up his sleeve.

Working with a number of consistent processes and strategies ensures those consistent results, Mr Devine said. “It is the process that gets us to that success at the end of the day... and it’s the little things that often make the difference,” he said, as he outlined his plan that gets results.

1) Auction Psychology

For an auction to work, the agent must first believe it is the right method for a vendor to sell. Rationalisation is an important tool when dealing with vendors and buyers alike. The vendor might not be happy with the price they get at auction, but once they’ve sold they can negotiate harder at the other end on their purchase. It is important to keep reminding those involved of what their goals are. “Vendors are far more forgiving if you can help them rationalise why it makes sense for them to sell and move on, rather than not to sell at all. If they don’t sell, you’re not going to be flavour of the month anyway. It’s therefore better to have the hard chats with them throughout the campaign, in order to help them move forward and get on with the rest of their lives,” Mr Devine explained.

2) Time Frame

Although most properties sold by Devine Real Estate went under the hammer, some were sold before or after auction, but the same sense of urgency is used to drive the sale. “Whether we sell it before auction, on auction day or on the odd occasion where we pass a property in and it sells afterwards, it’s all about setting a deadline and getting it moved in the quickest and most effective time frame,” Mr Devine explained.

3) Pricing

There are three prices in the property marketplace - the benchmark price (or what the property is worth), the price the vendor hopes to get and the interest level, which is where the buyers are. “It is just really a question of the true value sitting somewhere within that parameter,” he said.

4) Buyer Management

It’s essential to find out how serious a buyer is and where they’re willing to price the property. This enables you to concentrate on the ones who want your help to secure the purchase. This can be done by testing them through clever conversations that gauge their level of interest or by asking for their solicitor’s details to send the contract directly. “If they’re not going to spend $100, or whatever it’s going to cost, for their solicitor to peruse the contract, well you’ve got to ask the question, 'how serious are these people?'."

5) Vendor Education

Keep the vendor focused on their destination when they sell their property, not the money. They are selling their home for a reason, especially in a tough market, so keep that reason top of mind by reinforcing the benefits they will have when moving on. “It’s about how selling is going to change their life, what it’s going to be like when they move to the new house, the new location or in fact what it will be like when they get rid of the debt. Whatever their circumstances are, get back to the basics of why they are selling,” Mr Devine advised.

6) Reserve Meeting

When broaching the reserve meeting, tell vendors you are coming around to discuss the strategy for the auction, part of which is setting a reserve. However, Mr Devine said he didn’t put too much emphasis on the reserve. “I tell my vendors from day one, we’re going to be setting a higher reserve, so that takes the pressure right away from them and gets them focused, not on price which is totally irrelevant, but on what it’s going to take to get them moved forward,” he said.

7) Auction Day

Bearing in mind the vendor is nervous once their auction day actually arrives, Mr Devine tests them by finding out how they would react if bidding stopped below their ideal price, and asking whether they would want to pass the property in or have him halt proceedings to get further instructions from them. Invariably they will say yes to a discussion at the lower figure. “What I’ve now established is a vendor who may have set a reserve at a million dollars is clearly going to be meeting the market at $880,000. For the whole three or four weeks he could have been steadfast - I don’t have to sell, I’m not going to sell unless I get my price but then, at that final meeting, bang, they’re in there. It’s then that they’ll really let you know what the true facts are,” he said.

8) Getting the right auctioneer

An auctioneer in a good market can look good without too much effort, but it is when the market takes a downward turn that a good auctioneer comes to the fore. “A good auctioneer is one who’s going to put the buyers at ease,” he explained, but added the real key to success was the agent and the auctioneer being on the same page. “Most auctioneers don’t know what buttons to press because the agent hasn’t been the conduit to pass that information on, so it’s that relationship you have with the vendor, with the buyer, with the auctioneer; it’s that all working together in unison,” Mr Devine explained.

9) Vendors and buyers at auction

Having a good team behind you can make all the difference at the auction. The agent needs to deal with the vendor, auctioneer and outline the strategy with the buyers, but who is working with the buyers on the day to gain the best result? “If you’ve got more than one buyer, work with the team and have some competition within your office. What goes around comes around - there mightn’t be anything directly [for them] but at the next auction we’re going to help them out,” he said.

10) Post Auction

In the few times a property doesn’t sell at, or before, auction, Mr Devine will consider a re-auction. This means he reviews the price, changes the marketing and opens the property mid week and on Saturdays. “We’ll go back to those buyers who, for whatever reason, may not have been involved, give them hope and let them know that we’re not just forgetting about them and then focus on the market reviews to get the price to get it sold,” he said.

And it works, because as Mr Devine's clearance rates show, the small numbers that are passed in generally sell within one or two weeks of the auction date - I guess that means he knows what he’s talking about!

 

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Steve Devine, Making Auctions Work For You