by Daniel J. Hyman
Register your client: Do you want to get paid? If so, then the most important step is to register your client. Make sure you specifically follow the rules the auction company requires in order to earn your fee. We are more lenient, but other companies will find any excuse not to pay you.
Referring product: The ability to refer sellers to auctions companies. I would advise you to pick one firm and develop a relationship with them rather than seeing who will give your client the best deal or pay you the highest referral. The key is working with someone who can structure, market and effectuate an auction properly.
Study before you shop: Many brokers show up at the open houses not knowing the material so they are not prepared to ask questions, or worse, ask too many that are fairly elementary. Your buyer does not have much confidence in the process, let alone an agent that is not prepared.
Prepare your client for the auction: Be realistic as to what you’re planning to bid. Starting bids that are so ridiculously low that you can not believe are just that: ridiculous. If your client feels that they are not willing to bid beyond the starting bid, it’s doubtful that you will be successful. If you are, it’s an unusual property or an inept auction firm. If your prospect has a high bid set in stone, you need to encourage them to think a little higher. Sometimes, one more bid can make you the winner. Furthermore, show up on time with the correct funds.
Be an active participant: Auctions usually equate with bargains, so what your prospect saw at a sale will always be in their frame of reference. If a property sells at a bargain price and the buyer is unprepared to bid or gets stage fright, and then the buyer expects that all other sellers will agree on the same price and terms, there will be disappointment. Real life does not work like that. Sellers use auctions for specific reasons and are obligated to the terms thereof. It may never happen again.
Daniel J. Hyman is a 30-year veteran in the commercial real estate industry, and the founder of MILLENNIUM PROPERTIES R/E, INC. He can be reached at 312.338.3000.