In front of 400 real estate agents a woman stood up and addressed the speaker. “Auctions don’t work in my area” she said.
It was 2006 and Leanne Mugavin was attending a real estate conference in Melbourne. The speaker was Mark McLeod. He looked at her with a smile.
“Really?” he said.
“I’ll make you a bet. You find a property to auction. Call me every morning and do exactly as I tell you and I bet you’ll sell it under the hammer on auction day.”
After seven years of selling real estate in Warrnanbool, country Victoria, Leanne was an experienced agent who had achieved a reasonable level of success. She had even conducted some auctions before, although with little conviction and less than spectacular results.
But Leanne accepted the challenge in good humour, aware all eyes were now on her. She did as Mark had asked, calling him every day and following his instructions carefully.
“It was amazing - everything happened just as he predicted. The buyers said exactly what he said they would, as did the vendor” Leanne said.
Although nervous on auction day, Leanne felt more in control than she had expected. Out of a pool of six bidders the auction ended with an incredible result - the property sold under the hammer for $652K, $102K above the reserve of $550k.
“I was excited when I called Mark, but before I could say a word he had already guessed the price we’d gotten and was within 10K of the actual. The whole experience was quite surreal and showed me unequivocally that I had been wrong about auctions not working in my area - it was HOW we had done them that hadn’t been working.”
“Previously our method of marketing an auction property was basically to put up signs, place ads, hold opens, not talk about price and hope for the best. In fact, I would always try hard to sell the property before auction day. If we actually had to go to auction, it was hit-and-miss as to whether anyone would show up; if we sold anything under the hammer, it was pure luck. Even though I had been “trained” in auctions, the whole process I’d learned was stressful and I had no control over the outcome” Leanne said.
With the benefit of hindsight, she says it’s now obvious a solid process makes all the difference. Since her very public experiment, she has taken many properties to auction with 92% selling under the hammer on auction day.
“Mark’s process gave me the control I was lacking and a real understanding of an effective auction method. I can see now if you do just one thing wrong it can pull down the whole process. And we weren’t just doing one thing wrong - we were doing a whole lot of things wrong. ”
“I think a lot of agents fear auctions because they don’t understand them. I get that, because I was one of those agents. You hear horror stories and they’re mostly true; if you don’t know what you’re doing you can potentially cost the vendor a lot of money. You have to work hard to do an auction well, and it takes courage as it’s a very public process. But the outcome is worth it - the experience with Mark changed my whole perspective.”
Leanne says a challenging market is a good time for auctions because marketing a property without a price becomes even more compelling.
“We are finding vendors today, as always, have an unrealistic price in mind when they first list their property. The auction method gives us the time to provide evidence to them of what an achievable price is, so they are better able to make a good decision when the actual day comes.”
“Most vendors in the current market are selling because they have to, not because they want to. There are always buyers around at the right price but the price they’ll pay generally will drop if the property is sitting on the market for too long. When an auction campaign is done well it will produce a quicker outcome and a higher price.”
A year ago Leanne was made a partner in Ray White Warrnambool. While she still lists and sells some property, much of her attention is now directed at running and developing the business. Going forward she plans to focus the team even more on auctions as a critical part of the future.
“We are having a better year than last and our market share is growing. We refuse to blame the market or to use the market as an excuse for not selling property. There are always buyers and there are always sellers; our job is to bring them together. A challenging market gives us a great opportunity to shine. If we have good processes in place our opposition will be left wondering.”
“Auctions are a key part of our success; they grow your marketing and profile and give you a competitive advantage if you do them effectively. In our marketplace, they’re a real differentiator - luckily for us, other agents are still saying auctions don’t work here!”
