When going first matters at auctions

Chatter around winners and losers at the recent auction sales of The Block properties in both New Zealand and Australia centred on the order of the auctions: in order to make the most profit above reserve price, teams and their agents jostled over what order they appeared on the auction slate.

But does that matter so much for regular homes going to auction in New Zealand?

“No,” says Mark Sumich, one the chief judge for auction competitions both here and in Australia.

“It only matters if you are auctioning five properties that are all the same price or quality. And that doesn’t happen.”

Sumich says that the only time vendors and their agents “squabble” about who goes first is if they are worried that bidders for lots that appear late in the days programme might not know when to turn up for the property they’re interested in. But, he says, that’s a matter of whether your property comes up at say, third or fourth in the auction instead of eighth, or tenth or last.

Barfoot & Thompson auctioneer Marian Tolich concurs, saying that for properties like The Block, often bought by investors who are more open to more than one property, it might become an issue.

“But generally when [a buyer] goes along to the rooms, you’ve decided on the one house. The lots are not similar, so you not going to be choosing either or”.

However, she says, there is an art to running the order of the sale, with auctioneers preferring to start the lots with the most popular properties that are likely to see heavy bidding.

“It gets a bit of energy set up, so the day starts with a bang. It gives the room confidence in the market.”

She points to this week’s auctions, where a property on Kiwitia St, Sandringham, had a whopping 28 registered bidders.

“That meant 27 people missed out,” she says. “But they didn’t stick around to bid on something else. This had everything right, it was renovated, a young person’s dream. They’re not going to buy a do-up, they’re buying this one, already done up.”

Tolich also said that her company prefers to run auctions together, in their rooms, rather than on-site at a property. That way, she says, bidders have access to a second auctioneer or sales people who can help them with negotiating the bidding process.

“It’s a business environment, people have come for the auction. On site, you’re at the mercy of the weather obscuring that amazing view, or the neighbours.

“I don’t know that it matters for the result. Emotionally, you’ve got as much invested [in the auction] if you come to the rooms. It’s all about the excitement of the bidding and a good price created.”

Like Tolich, Harcourts Blue Fern auctioneer Aaron Davis, winner of this year’s Real Estate Institute of New Zealand national championships, likes to set the tone of day’s bidding with a strong opening game.

“Usually the first auction is deemed to be the best auction. You need momentum, bidders in a crowd set up the suctions that follow. You don’t want to start with passed in, passed in.

“But you never penalised successful properties with less successful ones, there’s not a hard and fast rule.”

Experienced auctioneers say that sometimes the order is determined by ordinary things such as vendors or bidders having other time commitments, planes to catch or such. Always, this is discussed by agents, vendors and auctioneer to get the timing right.

“It’s an art, not a science.”

Similarly, Davis says, top agents lets their clients decide whether to have ‘a home game or an away game’, that is, auction in rooms or at the property itself. He does explain that bad weather is out of anyone’s control, but to think of the strengths (and weaknesses) of holding bidding on site.

Bayleys national head of auctions Conor Patton, says that that decision is made at the start of the campaign so that marketing and advertising make this clear to buyers from the outset. His company prefers the professionalism of using their own rooms, with support staff and facilities to hand. Giving support to nervous or new bidders creates more comfort, he sees, than folks feeling uncomfortable standing on the vendors’ lawn or living room.

“We believe in Auckland we’ve got the finest auction rooms in the country, so why not capitalise on that atmosphere?”

But as far as order within an auction, Patton reckons there is no rhyme or reason for the best place to be. He reiterates that most bidders are there for a particular property, so will stick around for that and not randomly start bidding for another.