PodcastsThe Property Couch469 | How Auctions Really Work: The Hybrids, Negotiations & Courageously Uncomfortable Reserve Prices - Chat with Justin Nickerson

469 | How Auctions Really Work: The Hybrids, Negotiations & Courageously Uncomfortable Reserve Prices - Chat with Justin Nickerson
The Property CouchWed Nov 22 2023
Career Transition to Real Estate:
- Justin transitioned from working for the AFL to real estate due to his aspirations of financial success, wearing nice clothes, and driving a nice car. Real estate offered an opportunity for these desires.
- He gained valuable experience by being an agent for three years, which provided him with foundational knowledge of buying and selling property and insights into how agents think. This understanding is crucial in his role as an auctioneer.
Lessons Learned from Property Investments:
- Justin learned about delayed gratification through experiences with property investments, realizing the importance of control over one's living space and recognizing that decisions need careful consideration to avoid emotional influences.
- Despite initial setbacks in property investment, such as purchasing at a bad time near the GFC and dealing with uncooperative sellers, these experiences served as valuable lessons on making well-informed decisions and managing emotions during negotiations.
Role Models and Mentorship:
- Having a mentor like Jason Andrew played a significant role in guiding Justin toward pursuing auctioneering as a career path. Visible role models are essential in inspiring individuals to pursue specific professions or paths.
- The influence of visible role models, such as Jason Andrew, can serve as beacons for aspiring professionals by providing examples of potential career trajectories and successes.
Auctioneer's Motivation and Skill Set:
- Expresses a personal fulfillment in facilitating prolonged negotiations between buyers and sellers, showcasing a passion for negotiation as a core component of their role.
- Highlights the appeal of negotiation over public speaking, emphasizing that while auctions involve calls, the most fulfilling aspect is negotiating deals behind the scenes.
Logistics of Managing Multiple Auctions:
- Describes managing 15 auctions in a day by strategically scheduling them hourly or within close proximity to each other, allowing for efficient travel time and maximizing value on Saturdays.
- Discusses the impact of frenzied activity on expediting auctions during peak market periods, contrasting it with the current need for more time due to increased negotiation requirements.
Setting Reserve Prices and Trust Dynamics:
- Advises sellers to courageously set reserve prices at levels they are uncomfortable with but willing to sell at, ensuring that momentum-based auctions can carry properties beyond aspirational reserves when necessary.
- Shares an example where trust between agents and auctioneers was pivotal in successfully navigating reserve price setting and achieving optimal sale outcomes.
Bidding Strategies and Buyer Advice:
- Emphasizes the significance of having a well-defined strategy when bidding at auctions, warning against passive approaches such as waiting without a clear plan.
- Offers valuable advice to potential buyers about common mistakes and successful strategies for securing properties at auctions, urging them not to leave property acquisition to chance.
Auction Bidding Strategies:
- Placing the first bid increases the buyer's chance of success by limiting competition and intimidating other bidders, potentially causing them to back off.
- Having three figures in mind for an auction: dream figure (over the moon if bought at that price), fair number (likely selling price based on research), and absolute maximum.
Buyer's Auction Strategy:
- Bidding quickly gives the impression of determination and puts stress on other bidders, potentially weakening their position or making them back off.
- Observing triggers from other bidders' behavior can provide strategic advantages during auctions, allowing buyers to gain insights into their competitors' mindset and financial limits.
Memorable Auction Experiences:
- Recently sold a property for $24.8 million under the hammer, which was personally rewarding due to breaking a record.
- Conducted a no-reserve auction for a severely damaged property with 161 registered bidders, creating a unique and chaotic atmosphere that attracted significant attention from both local media and potential buyers.
Post-Auction Negotiation Dynamics:
- In Queensland, passing an auction allows equal rights for all parties to negotiate, unlike New South Wales and Victoria where the highest bidder has first negotiation rights.
- Emphasizing the importance of satisfying the seller in negotiations as they hold the desired asset, requiring buyers to understand their role in satisfying sellers' terms while also trying to save money within their predetermined budget.
Auction Strategies for Buyers:
- Making an offer can put the buyer in a favorable position for communication and help the seller understand the market.
- By engaging with the seller, buyers can influence their understanding of market dynamics and potentially secure better deals.
Impact of Increased Property Supply on Prices:
- The increase in property supply has led to lower preliminary clearance rates in some markets.
- This increased supply may present buying opportunities during the Christmas period as vendors' expectations are likely to be lowered.
Effect of Government Policies on Housing Market:
- The Queensland government's decision to boost the first homeowners grant to $30,000 for new properties aims to support first-time buyers but may also impact market prices.
- The timing of such policies, especially nearing an election year, suggests political motivations behind them.