I remember something I was taught by one of the best auction trainers I’ve meet.
If bidders are allowed to choose an opening bid, they will typically start about 75% of the property’s market value.
Over time, I understood why letting bidders start the auction where they feel comfortable makes a big difference to the auction result.
The first person to bid is usually confident about having a go. They make the opening bid not to impress the seller, they make it to see who else bids. They want to start low so they can flush competing bidders out.
In the early stages of an auction, a good salesperson isn’t trying to get the bidding to increase as much as they are trying to get as many people as possible to bid. The more people that bid, the more competition and its competition that drives value.
Conversely, some Auctioneers try to start the auction high. The reasoning is if they force an auction to start high, it will finish higher. In practice, if buyers are forced to start high, bidders hold back. The crowd goes quiet or worse they whisper, caution creeps in and the bidding struggles to flow.
The best strategy is to let bidders compete against each other. They want to know other people want this property. They want to win. The auctioneer should facilitate that process rather than dominate it. As an agent, bidding flow is what we want. Let buyers start at a figure that encourages others to jump in, not pull back.
Author – Stephen Jackson
