“It’s easy to call an auction when there are lots of people bidding in the room,” says Daniel Coulson. “It’s a lot more difficult when people start saying no.”
The national residential manager and head of auctions at Bayleys Real Estate should know. He has called thousands of auctions and sold several billion dollars’ worth of real estate under the hammer.
“A good auctioneer is one who is able to connect with the crowd quite quickly and give it confidence in the property that’s for sale,” he says.
Recent reports in the media have called into question the effectiveness of real estate auctions, but Mr Coulson is an unabashed champion of the sales method.
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“They are the most effective method of sale for both vendors and buyers - outperforming other forms by a considerable margin.
“They are also an important barometer for the market and play a vital role in determining values.
“Auctions prove their worth when there is change and uncertainty in the market. For vendors, they are the best route to achieving the maximum possible, unconditional price for their properties.
“For buyers, they offer the most transparent method of purchasing a property. Buyers can see what amount other parties are offering and know they are not going to miss out if they have a strong desire to own something. They also have complete control over what they pay.
“With other methods of sale, buyers are essentially in the dark – they have no knowledge of other bidders’ intentions, which can be challenging in a changing market.”
He adds: “In a buoyant market, an auction helps push that price as a result of competition and achieve a premium result. In a market that’s a bit tougher, it concentrates minds and helps facilitate decisions to secure an unconditional sale”
“The fact that there is a deadline, a call to action, is a powerful trigger. It creates a sense of urgency. It puts things into a concentrated time frame and on an unconditional basis. Buyers know they have to act if they want to own the property – if they don’t, somebody else is going to own it.
“Both parties know negotiations won’t drag out for months. Once the hammer falls, the sold sticker goes up and everyone can move on with their lives. Without that deadline, everybody just procrastinates.”
From his position at the rostrum, Mr Coulson has noticed fundamental shifts not just in the market but also people's engagement with the process.
“I think reality TV shows such as The Block have also demystified the process and introduced auctions to a lot more people. Kiwis can see that it's not scary or complicated. And Trade Me has brought greater understanding of some of the terminology, such as ‘reserve price’ and ‘opening bid’.
He says that many auctioneers in New Zealand are also involved the negotiations that take place during the auction call.
“In situations where there is a gap between vendor expectations and what the market is telling them their property was worth, you try to get that closure, to get the right numbers together and then settle the transaction in the auction room. What you do in the negotiation is just as important as what you do at the rostrum.
“We are involved throughout the entire process. The work we do starts well before the auction day. We research and inspect the property, we compare it to similar properties that have recently sold. We assist the agent and vendor understand where the buyers are.
“As an auctioneer, you don’t just turn up on the day with a whole lot of contracts and start reading numbers and pretend that you know what you are talking about. When you get to auction day, and you are negotiating with somebody, you actually have a complete understanding of the intricacies of the campaign, and what the buyers may be comparing the property to as well as the challenges the property may pose.”
Outside of New Zealand, there have been moves to transfer the auction process online, and while there will be some segments of the market that will benefit from that, Mr Coulson says traditional live auctions will continue to offer the best value – especially for those selling high-worth real estate assets.
“The transparency you get in a physical auction is taken away in an online environment. You can’t see who you are bidding against, and you can’t engage with the rest of the room,” he says.
