Once upon a time (10 years ago at least) some agents used to encourage the auction process over private treaty (for sale). Some of the reasons behind auction marketing favouritism was:

-          Auction marketing is normally on a shorter time frame of 4 weeks, therefore increasing sales turnover and profit for the agent.

-          Because of this shorter time frame, advertising was encouraged to be bigger and bolder to get the maximum number of buyers interested.

-          Property agents like to see their names and portrait photos in print. The bigger the advertisement the bigger their profile! This was a time when print media was the unchallenged medium for real estate marketing.

-          It was common for real estate bosses to incentivize auction listings over private treaty listings i.e. agents earn greater split of commission for auction listing.

10 years ago though real estate agents used brick-sized mobile phones too, so obviously things have changed.

Fast forward to 2010, where online advertising is now a huge part of real estate marketing and has helped to reduce marketing costs. It is now common for an auction advertising campaign to be similar in cost, if not cheaper, than a private treaty campaign.

With an auction campaign there is obviously the additional cost of an auctioneer, but marketing an auction campaign is limited to a 4 week period, whereas private treaty has no deadline and can drag on for months.

One of the positive results of this is that agents are now more inclined to promote and encourage the auction process only if it is suitable to the property and clients needs and not for the agents needs.

In the next blog I will cover ‘The Bidder’s Guide to Auction Day’. Until then!

Check out my last post on On-site vs In-room autions.

Grind Espresso – 2 Surf Rd, Cronulla

Residential real estate auctions are all about pulling at the emotional heart strings of a buyer so that they spend, spend, spend, bid, bid, bid!

At an on-site auction buyers can see, touch and smell what their money is buying them, whether it is the view of Sydney Harbour as the boats sail past or the sundrenched north facing backyard for the kids to play in all year round.

Can a powerpoint presentation create the same atmosphere for a property as on-site? Probably not, and they often technically break down, leaving the auctioneer in the lurch with a room full of people.

Saying that, in-room auctions have some advantages over on-site;

• In-room auctions are weatherproof
• Normally have a large audience (although not if your property is scheduled last)
• Are sometimes cheaper for the vendor (economies of scale)

The ultimate experience for an on-site auction is when someone walking past stops to see what is happening and suddenly decides to bid! This does happen and has happened to me several times. Nothing beats the client quickly having a look through the property and registering (which you can do at anytime throughout the auction process). With in-rooms this is less likely to happen….

Auction Series Part 1: Aution Vs Private Treaty

Auction Series Part 2: The Vendor Bid

Auction Series Part 3: How Much Is An Auctioneer?

Other auction articles we’ve covered in the past.

Registering for an Auction

If an Auction, go to Auction

How Much Is An Auctioneer?

A residential property Auctioneer charges anywhere from $400 to $600 and must be booked a month in advance. If you sell prior  most Auctioneers still charge their fee as they set aside  a date on their calendar and times are limited.

An auction can take 5 mins or an hour so bookings have to be made so that the Auctioneer has plenty of time to move from one property to the next on a Saturday. In-room auctions are easier in this case and more auctions can be done so sometimes a lesser fee is charged for in-room auctions.

Some Auctioneers have a driver for Saturday auctions and some have scribbers so that during the auction they can easily refer to the bids.

Auctioneering is a specialised profession. To be an Auctioneer you must be a Licensed Real Estate Agent and you need to do further training to qualify as an Auctioneer. A good Auctioneer needs to be confident, engaging, enthusiastic about the property and should have thorough knowledge of the local area.

For past blogs see part 1 “Auction VS Private Treaty”, or part 2 “The Vendor Bid”.

In NSW, a vendor or seller of a property is entitled to make one bid on their own property at auction. This rule was introduced in 2003 with the theory behind it being that often buyers are reluctant to make the first bid. There is always those anxious few minutes where everyone sits on their hands so the vendor bid is useful to kick things off!

There are rules that apply to the use of a vendor bid:

• A vendor bid cannot be made unless the auctioneer has, before the commencement of the auction, clearly stated that a bid may be made by or on behalf of the seller
• If the vendor bid is used at the auction it must be clearly announced at that time
• If the property passes in with a vendor bid as the last bid of the auction, the result must be published as ‘vendor bid’ and not ‘passed in’. For example, the Sunday Telegraph or Sun Herald will publish the result as $600,000 VB.
• If the vendor bid is not the last bid, i.e. there are other buyer bids following the vendor bid but the property has still not reached its reserve and passes in, then it can be published as ‘passed in’.

Normally the auctioneer submits the vendor bid on behalf of the vendor, and the vendor bid can be made at any point during an auction.

• Is my property unique?
• Is my property hard to price because it is so unique?
• How many other properties are on the market with similar characteristics to my property that buyers would be comparing with?

An agent can tell you exactly what market conditions are like.

• Is there a shortage of your type of property on the market?

For example in the middle of winter less people sell but this can be the best time to sell if your house faces north or west and gets loads of sunshine. If there are more buyers than sellers it is the perfect situation.

• Does your property have a view, or is it in a highly sought after position?

Most agents will promote the auction process if your property has either or both of these features. If your house has a characteristic that will lead people to get emotionally attached and thus carried away at auction, go for the auction!

• Is there any number of properties on the market like yours?

Think about what you would do as a buyer. A buyer will look at everything in their price range that seems comparable and if there are a lot of properties like yours on the market, choosing to go to auction could be a mistake. Remember buyers have to do all their inspections prior to auction day with no guarantee they will get the property. When there is plenty of choice for buyers, buyers will tend to look at properties with an asking price before they look at an auction property and spend money on solicitors, pest inspections etc.

Another reason for a vendor to go to auction is time constraints.

- Do you need to be sold in 4 weeks?

- Are you going overseas for work and in a hurry?

- Are you financially strapped and need out?

The auction process puts an end date on the process.

When you have been in the industry as long as I have you tend to live and breathe real estate so it’s sometimes easy to forget that buyers and sellers may be completely new to auctions, are scared of the thought and don’t know the jargon. The point of this auction series is to write things out in plain and simple terms – and to state the taken for granted knowledge I’ve gained from experience.

If you disagree with anything I write please make a comment or email, I am open to other view points and definitely open to discussion. Some of the topics to be covered will be:

• Auction Vs Private Treaty? – How do you choose whether to put a price on your property or go to auction?
• Do you know what a vendor bid is?
• How much is an auctioneer?
• Onsite VS In-room auctions?
• Does an auction campaign cost more than private treaty?
• Bidders guide for auction day
• The difference between a vendor bid and the reserve
• When is the reserve set?
• Can an auctioneer knock back my bid?
• Auctioneer VS Agent? Their role on auction day
• Unconditional, 66W and cool off exchanges

My qualifications:

I am a Licensed Real Estate Agent and I have been selling real estate for 14 years. I am also a fully licensed, non practising Auctioneer!

Last weekend there were 9 auctions scheduled for Saturday 3rd July from Cronulla to Lilli Pilli, Sutherland Shire. On Friday afternoon all these auctions were going ahead except for 1 which was sold prior at 5/3-5 Coast Ave, Cronulla.

On Sat the Beach & Bay team attended each auction and the stats at the end of the day were 5 properties passed in at Caringbah (4 of these auctioned in 1 line), 1 property in Caringbah withdrawn from auction Sat morning and now for sale, 1 property in Lilli Pilli passed in and 1 property in Cronulla sold at auction. If we take the 4 properties auctioned in 1 line as 1 auction, the final auction clearance rate is 33% for our area.

Interesting then that Domain’s Home Price Guide website shows an auction clearance rate sydneywide of 64% for Saturday 3rd July? When I checked through the results the only 2 properties they had tracked in their statistics for suburbs in our area were the 2 properties in Cronulla that sold! So basically they were missing 7 auction results or 4 if we assume the 4 properties auctioned in 1 line were 1 property!

It begs the question how many auctions are being missed in other suburbs? It is a huge job to cover the whole of Sydney accurately and we know this from the experience of tracking the auctions just for our area. Auctions get pulled minutes before going to auction, auctions get passed in with a vendor bid and are published as passed in when they must be published as a vendor bid (false and misleading behaviour), auctions get postponed and sometimes wrong auction dates are advertised. Some are just simple mistakes some are misleading.

We will continue to track the auctions for Cronulla, Burraneer, Woolooware, Caringbah, Caringbah South, Dolans Bay and Lilli Pilli and whether you are an agent, vendor, buyer, interested neighbour you can make up your own mind as to how your suburb is doing!

As you may be aware Beach & Bay Realty are participating in Dry July. The funds raised directly benefit the lives of adults living with cancer right across Australia.

How on earth is the Beach & Bay Team going to get through a booze free month? That is a very good question! This daily journal will give you all a little insight into our Dry July journey.

If you would like to make a donation go to www.dryjuly.com. You can find the Beach & Bay team at www.dryjuly.com/groups/boozefreebeachbayrealty

Wish us luck. We are going to need it!

Thursday 1 July - I started early as I have my school reunion on 31st July which I need to drink at! So I had to get through end of financial year with no alcohol. It was tough let me tell you!

Friday 2 July – 2 staff now on leave and Rachael and I are into day 2 officially of no drinking. Help! Friday night was camomile tea (I was cold alright! and no red wine to warm me up), felt strange drinking camomile tea with Thai take away.  Mel C said she was suffering as she had a terrible day and the kids were out of control and all she wanted was a calming drink!

Saturday 3 July – Rachael had a 21st to go to last night and she didn’t end up going, hopefully this is not a sign of things to come. Wonder how the others are coping, Anne has her daughters birthday dinner tonight and is designated driver. Have to check how much we have raised to remind me that this is for a good cause.

Sunday 4 July – Walked past the Opera Bar today on the perfect winter’s afternoon, didn’t stop. Rachael went to a party on Sat night where the alcohol was free, now that would have been tough. Mel A. stayed home the whole weekend.

Monday 5 July – Mood – grumpy

Tuesday 6 July-  (Post by Rachael). I’m turning 21 in 6 weeks and while not a seasoned wino I have drunk almost every weekend (usually 2 times) since I was 18. (And If I’m honest, sneaky drinks underage). Binge drinking is huge in my age group – it was not uncommon for me to drink more than 10 drinks playing drinking games – and my group of friends often have “pre drinks” where we drink at least 6 standard drinks (and then go out for many more). Over the last year I have cut my drinking down to no more than 5 (95% of the time) but it’s still a big part of my social life.

When I told my friends I was participating in Dry July not one person congratulated me or thought it was a good idea. “But why?” or “Don’t be boring”. Even after my first weekend booze free I’ve began to notice how people react when someone is sober. Firstly, I don’t drive – so I didn’t have the legitimate excuse of driving home. Because of this, on Saturday night I was continually hassled – offered to be bought drinks by no less than 5 people and told I was a “bad friend” if I didn’t have a drink. It appeared that people were really offended by my choice not to drink, and my age group didn’t really appreciate that it was for a good cause. I woke up fresh on Sunday at 8am so walked the dogs, went for a run, cleaned the house and went and got coffee (by myself, everyone else was too hungover) – all before midday.

Today is my sisters birthday – she’s pregnant so at least I won’t feel bad not celebrating with a wine!!

Wednesday 7 July (Post by Rachael) -A little disappointed that we are no longer beating Neil Perry from Rockpool in donations. James Packer sponsored the celeb chef $10,000 ! Hey James, what about us? Going to dinner tonight with a friend. He said he would bring the wine. My heart sunk a little and I texted back that he can’t. Kylie went to a friends house last night where both women were drinking red. She promptly left and went home and had tea.  She’s off to the Dendy tonight at Newtown to see a movie and get dinner. Sparkling mineral water is her new best friend.

Thursday 8 July (Post by Kylie) – Last night I went to a pub and drank mineral water, my friend asked if the barman could dress my mineral water up a bit, maybe a piece of lemon and a nice straw. Then the barman asked if I wanted my friend’s wine in a frosted glass in a straw so it looked like he was drinking lemonade or sth. Oh dear, next we headed to the Dendy Newtown where my 2 friends proceeded to sit next to me sipping red wine and even went out midway through the movie to get a top up. Normally I like the fact that you can sip a wine during a movie but not when I am on Dry July. Day 8 finished!

Friday 9 July (Post by Rachael) – I’m training for Sutho 2 Surf (July), City 2 Surf (Aug)  & a 1/2 Marathon (Sep) so Dry July comes at a good time! I’m eating the healthiest I ever have and not drinking and guess what….I’ve just gotten sick! See – red wine IS good for you! I’m wondering what to do tonight now that the idea of Fusion sober is unbearable. Might go to the movies but seeing it’s school holidays my only real options are Toy Story & Shrek. (Party on!) Saturday night I have another 21st with unlimited free alcohol. GREAT!

Anne has just realised she is going to the snow for 3 days in July.  Could someone be so kind and buy her a golden ticket so she can enjoy some red at least one of the nights? Anne also went to bed at half time during State of Origin on Wednesday. Just wasn’t the same without being able to drink!

Saturday 10 July (Post by Rachael) Went to a 21st and realised that everyone’s stories weren’t as funny as they usually would be. Ended up mulling around the food table and eating to compensate lack of drinking. Felt a bit blurgh, non social and while I still had a dance I was itching to get home by 11:30pm. (Outside party, freezing cold and no wine to warm me up!)

Anne was ‘designated dryver’ and went to a restaurant with friends. The group had pre drinks, wine during dinner, then more drinks after! Anne had soda, water and tea but found it pretty hard.

Sunday 11 July (Post by Rachael) Still feeling a bit sick and rundown I stayed home today. Also didn’t go to Northies which is a Sunday regular. Instead I ordered pizza and watched movies. Woke up on Monday morning with a massive food hangover! (Post by Kylie) On Sunday I went to a restaurant in a vineyard and spent almost 4 hrs there, watching everyone around me drink wines that complemented the food, I sat on one very large mineral water and made many trips to the bathroom. I had dessert instead of wine and I am feeling the kilos piling on. It was quite excruciating but when I think of people with cancer going through chemo I think I should get a grip. Of course I drove everyone home too.

Monday 12 July – Easy, too tired after watching the soccer to do anything else but go to bed so now worries today!

Tuesday 13 July - Almost half way, cutting back on the sugar addiction/replacement food this week

Wednesday 14 July – Anne W. came in to see us, she spent Sat night as designated driver, friends went bar hopping, restaurant then back to bar hopping, friends wanted to buy her a golden ticket, no support from friends just bad influences.

Thursday 15 July - Half way! Half way! Half way! Giving ourselves a pat on the back, feeling very clear headed and focused. Kylie is looking down the barrel of a Nun’s Pool dinner tomorrow night though with some bad influence friends!

Friday 16 July – Cupcakes & coffee at Bass & Flinders Cafe in Cronulla Mall to celebrate the half way mark of Dry July.

Saturday 17 July – (Post by Kylie) I was quite thankful a b’day dinner was cancelled at Nun’s Pool last night, don’t know how I could have got through dinner there without a nice Italian red wine…

Sunday 18 July – (Post by Kylie) Toy Story 3 at Cronulla Cinemas. 3rd weekend finished.

Monday 19 July – (Post by Rachael) Went to a ‘Christmas in July Party’ Saturday. Lots of punch & beers were drunk by everyone else. Sipped water and ate loads of rocky road. On the home stretch now!

Tuesday 20 July - Looking forward to saying we have been sober for 3 weeks tomorrow, wondering why July had to be such a loooong month with so many weekends

Wednesday 21 July - 3 weeks! 21 days!

Thursday 22 July – (Post by Kylie) Thinking I might have the sugar fix under control now?!!! Maybe the exercise regime will kick in soon but maybe not as it has been a very cold winter without my red wine.

Friday 23 July – (Post by Rachael) Going to a pub in Surry Hills tonight for dinner with a friend from Sweden who I haven’t seen for over a year! Tonight is going to be tough. Then we plan to go clubbing (tougher). I am beginning to think that after Dry July there will be a tsunami in August…..

Saturday 24 July (Post by Kylie) Definitely a tsunami Rachael, 1 week to go and it can’t come soon enough, I am stressed, grumpy and driving everyone nuts! At least this is the last full weekend left of Dry July.

Sunday 25 July (Post by Kylie) I rise and shine early Sunday morning, no hangover to speak of, this is becoming easier and harder at the same time, I am keeping very busy so I don’t think about Dry July! Later Sunday afternoon the text messages start, 3 Dry Julyers are feeling rather guilty it seems, there might be some back dating of Golden tickets, oh dear.

Monday 26 July – (Post by Kylie) I am trying to stand tall, while everyone else is falling down, down, down beside me. Not a drop for me though, I am 2 days ahead too as I started early so today I am celebrating 26 days official and 28 days unofficial (a short month!). Why did July have to be such a long month.

Tuesday 27 July - (Post by Rachael) Friday night re-cap. My friend arrived in Aus from Sweden last week. My friend from Sweden likes a  beer or 2. The conversation was stalled because English isn’t his first language. Wine made it easier! We went out for dinner and I had 3 glasses and got roped into having a shot of Jagermeister (filth!!) when we went out dancing. I woke up with a slight hangover, full of remorse! Didn’t tell Kylie for 2 days and didn’t write back to her text saying “Only 7 days left”….oh dear I thought, I’ve broken the pact!

Sunday night – Murray from work bought me a Golden Ticket to drink on Sunday night too (terrible Rachael!)  I helped organise a team of runners for the Sutherland to Surf for Australian Youth Against Cancer (a charity we blog about often). We raised $4000 and I wanted to celebrate! Another 3 glasses of wine…..

Wednesday 28 July – (Posted by Kylie) Over dinner tonight heard about my family drinking a bottle of 1985 red earlier in the week. Wanted to cry.

Thursday 29 July - (Posted by Kylie) – Out to dinner last night for my mum’s birthday, busted a Dry Julyer at the same restaurant enjoying a glass of wine and hit her husband (bad influence that he is) up for a backdated Golden Ticket. 2 sleeps for me left and I am done! Just in time for my school reunion!

Friday 30 July -

Saturday 31 July