Auction companies offer items for sale ranging from personal property to real estate. Whether the auction takes place at a physical location or on the internet, these companies connect buyers and sellers locally, nationally, and even internationally. But how does a seller choose the right auction company? Here are ten key characteristics a seller should look for in an auction firm.
- Auctioneer Empathy
Empathy is critically important in the auction business. Whether selling the assets of a commercial client, the real estate of a business, or the entire contents of an estate, a reputable auctioneer never forgets that an auction is far more than selling things. Focusing on why a seller is considering an auction can help the auctioneer plan the best course of action for the client and, in doing so, enhance the auction’s results.
Sellers often consult an auctioneer because they find themselves in the heartbreaking position of having to sell off assets that were essential to their daily lives not that long before. Some have failing businesses and liquidation is the only avenue left to them. Others are family members who have recently lost a loved one and are faced with selling treasured items or even the family home in an estate auction. Yet others are faced with forced liquidation in a bankruptcy auction. These are some of the most stressful circumstances a person will ever encounter.
An auctioneer should be able to step into a client’s shoes and view the situation from that person’s perspective. Every seller should be treated with dignity and respect and an auctioneer who understands the issues facing the seller can tailor an auction to meet his or her special needs and concerns. Whether suggesting a particular day on which to hold the auction or offering ways that the seller can save on expenses, the auctioneer who puts the client’s needs ahead of those of the auction company clearly has the client’s best interests at heart.
- Auctioneer Market Knowledge
The auctioneer who maintains and understands how to use market knowledge stands the best chance of being available to serve both buyers and sellers over the long run. Without sellers to offer property for sale and buyers to bid on that property, an auction company cannot keep its doors open.
An auctioneer must be able to advise prospective clients on what they can reasonably expect to receive at auction for the items they want to sell. Honesty is essential and the auctioneer has to be careful to ensure that the client maintains realistic expectations. An auctioneer can provide the best information possible to a client by:
- Staying abreast of local, state, national, and even global markets and market trends;
- Developing a deep understanding of the factors that motivate buyers and sellers;
- Staying abreast of productive avenues for advertising various types of property;
- Building and regularly updating a current list of prospective buyers for particular types of property;
- Incorporating strategies that have worked for other auctioneers;
- Avoiding strategies that have caused problems for clients of other auctioneers;
- Staying abreast of best auction practices;
- Being innovative—being on the leading edge of auctioneering; and
- Understanding what he or she does best and publishing that information to maximize the number of buyers and sellers the auction company can bring together.
How does the auctioneer do this?
Auctioneers should continuously train and enhance their knowledge, particularly in their specialty areas. They might even add new licenses and certifications as they grow their specialties. Some real estate auctioneers may become real estate brokers, for example. Others might become personal property appraisers.
Auctioneers should network with others in the industry on a regular basis, sharing experiences and information. They should read trade journals and blogs and take advantage of the various National Auctioneers Association (NAA) materials available. The NAA provides a monthly magazine, e-news, webinars, an annual conference, an annual show, and a full educational platform that not only teaches but certifies auctioneers in the range of disciplines covered by the auction industry.
Facebook has an auctioneering group that provides an outstanding platform for sharing knowledge. This group offers auctioneers a forum for identifying unusual items, sharing ideas and procedures, comparing notes on auctioneering equipment, and discussing other aspects of the auction industry.
A devoted auctioneer is always learning and adding to the auction company’s market knowledge. This knowledge is essential in evaluating the personal property or real estate a client wants to offer for sale. The well informed auctioneer can prepare the client for the auction, advertise in the best places, attract the most potential buyers for those particular items, and run an ethical and professional sale.
- Auctioneer and Seller Personal Compatibility
Sellers must rely on an auctioneer to do what is best for the overall outcome of an auction. By establishing a comfortable environment and good relationship with the seller, an auctioneer sets the stage for a full exchange of information that can lead to a successful sale. Clients must feel comfortable disclosing personal and financial information and should expect the auctioneer to provide sound advice.
Some experts advocate using a formula to calculate how much time to spend with each client in the business setting. A good auctioneer, however, understands that auctions are about people and one-on-one interactions lead to the best sale outcome. Some clients might require very little personal interaction while others need more. The experienced auctioneer provides the right amount of personal service to each client, earning client trust one auction at a time.
- The Auctioneer’s Education and Specialties
Auctioneers often hold college degrees, diverse licensing, and multiple certifications that demonstrate their specific interests and commitment to developing expertise. A real estate auctioneer, for example, may also hold a real estate broker’s license. But all auctioneers should engage in continuous training on many aspects of the auction business.
Part of a client’s due diligence is determining whether an auctioneer is sufficiently educated about the property being sold. An auctioneer who is knowledgeable about—or even specializes in—that type of property will be able to answer the seller’s specific questions intelligently and accurately and will be able to describe, promote, and sell the property at the best possible price. Other things being equal, well-educated bidders will bid higher if the auctioneer is also well educated and knowledgeable.
Auctioneers who expand their knowledge through rigorous training and testing develop the essential knowledge base that best serves clients who need their help. The NAA offers a broad education for auctioneers covering not only how to sell real estate and personal property but other issues as well such as applicable laws, accounting, personnel, and how to work with people in a decent and trustworthy manner.
Your auctioneer should participate in NAA training and certification, demonstrating a commitment to continuous training and specialized knowledge. A seller should never hesitate to ask an auctioneer about the training he or she pursues on an annual basis. How that auctioneer responds could speak volumes.
- The Auctioneer’s Reputation
A good reputation relies on one’s ability to develop and maintain client trust. Forbes describes reputation as “your actions [plus] what others say about you.” Here are the ten points that Forbes believes contribute to a good reputation:
- Do what you say you’ll do;
- Go out of your way to help others reach their goals;
- Make other people look good;
- Go a step beyond what is expected;
- Look the part;
- Consider your body language;
- Be consistent;
- Act with integrity;
- Get engaged with your community; and
- Be likeable.
Forbes, 10 Simple Ways to Improve Your Reputation, January 28, 2014.
These characteristics are just as relevant in the auction industry as in any other sector of the economy. Business reputation is essential to anyone’s ability to perform in the business world.
A reputable auctioneer satisfies both buyers and sellers. Sellers, with their due diligence, can find an auctioneer who is known for honesty and fair dealing. Bidders similarly can research auction companies online and patronize those that offer clear and equitable terms, clear conditions of sale, and auctioneers who are known to keep their word.
- Auctioneer Experience
Top auctioneers know how to run a business. They understand what buyers and sellers need, stay up to date on market trends and factors that can affect economies worldwide, and train continuously. But ultimately, auctioneers learn by doing.
An auctioneer can spend years reviewing trends and learning from others. But it is the day-to-day experience–conducting real estate auctions, personal property auctions, using specific software packages, answering questions, doing research, taking bids, and dropping that gavel–that reinforces the training and information from other sources to create a well-rounded auctioneer who knows what is best for each client.
An auctioneer who has operated an auction company for a decade or more has streamlined the auction process. That auctioneer has seen shifts in trends and can probably detect the beginning of a trend change faster than the one who hasn’t been in the business very long. This is so important for sellers.
An auctioneer’s experience can make the difference between a good sale and a great sale. The experienced auctioneer knows how to save money for a seller while protecting buyers from unfair practices. Whether suggesting the best day for holding a real estate auction or recognizing and heading off a potential problem, experience makes a difference.
- Auctioneer and Auction Company References
A seller looking for a reputable auction company wants to find one that has satisfied similarly situated clients. Some companies offer client references or testimonials. Sellers should also look for client comments and reviews online.
Whether someone has shared a comment on a Facebook page, has taken the time to write a lengthy review, has provided a glowing letter of recommendation for the auction company’s use, or has been listed by the auction firm as a reference, reviewing these is part of the due diligence any prospective client should do before engaging an auction company. This client feedback should confirm that a particular auctioneer can deliver a successful auction time and time again.
Sellers should also contact several of the auctioneer’s references. They should ask questions designed to determine whether the auctioneer is the right person to handle the property being sold. A former client who says he or she would hire the auctioneer again, without reservations, makes a powerful endorsement.
- The Auctioneer and Auction Company Should be Properly Certified and Licensed
In the United States, twenty one state governments regulate auctioneers, issuing auction firm and auctioneer licenses to those who meet established requirements.
These criteria ensure that the auctioneer’s personal and professional history demonstrates integrity, honesty, and professionalism.
In addition to licensing, an auctioneer can become certified in specific areas of auctioneering. The NAA offers training and certification in many specialties. The NAA guidelines include a Code of Ethics and suggested business practices that give the auctioneer a clear roadmap for successfully running the business professionally, fairly, and ethically. NAA certifications attest to the auctioneer’s knowledge, skills, and ethical standards.
By undergoing NAA training and certification, an auctioneer demonstrates a commitment to ensuring a client’s reliance is not misplaced. An auctioneer who specializes in estates might train to become a Certified Estate Specialist (CES) or even a Master Personal Property Appraiser (MPPA). One who focuses on real estate auctions can obtain the NAA’s Accredited Auctioneer Real Estate (AARE) certification. An auctioneer who offers online auctions should obtain training in technology-based auctions and might even obtain the NAA’s Auction Marketing Management (AMM) certification.
A seller should ensure that an auction company has the appropriate licensing within a particular state and inquire into any additional certifications the auctioneer has. These qualifications, as a whole, demonstrate the specific knowledge of the auctioneer(s) and the auction company’s cultural commitment to continuously expanding industry knowledge.
- The Auctioneer and Auction Company Should be Bonded and Insured
When an auction company says it is ‘bonded and insured,’ what kind of bond does it mean? Auction Companies may hold Surety Bonds and/or Fidelity Bonds.
A potential seller should specifically inquire as to whether the auction company holds a Surety Bond or insurance. An auction company can obtain insurance to cover losses or may elect to obtain a Surety Bond to protect clients. For a Surety Bond, the state holds the bond secure. If the business fails to meet its contractual obligations or experiences employee theft or damage, the bond money would cover the client’s loss. Insurance, which represents the other part of a client’s protection, would cover lawsuit expenses and/or claims for things like theft or injury on the auction site premises.
In contrast, a Fidelity Bond protects the auction company from certain losses such as embezzlement. This type of bond does not protect the auction company’s clients.
- Auctioneer’s Memberships in Professional Associations
Professionals generally associate with others in their industries. Associations provide networking, education, certification, and other benefits for their members. Auctioneers are professionals and potential clients should ask them about their memberships.
The NAA represents thousands of auctioneers worldwide and an auction professional should belong to this organization. By hiring a member auctioneer, a seller leverages the powerful alliances and knowledge interchange that improve the likelihood of a more successful auction. An auctioneer should also belong to the Facebook auctioneering group which provides a forum for day-to-day sharing of information. Many states also have professional auctioneer organizations. International organizations such as the International Society of Appraisers can also enhance an auctioneer’s skills and knowledge.
Sellers should inquire into all memberships. An auctioneer who is also a real estate broker will belong to the National Association of Realtors, the state association of realtors, and even a local realtors association. An auctioneer who serves bankruptcy clients will belong to the American Bankruptcy Institute.
By performing this due diligence, the seller can develop a full picture of each auction company and compare them fairly before deciding which one to hire.
The more thorough the research, the more confidence the seller will have in the ultimate decision.
Tom Jordan, Auctioneer, CAI, AARE, AMM, CES, MPPA, has been an auctioneer for almost twenty years. He is licensed as an auctioneer in North Carolina, Virginia, and South Carolina and as a real estate broker in North Carolina and South Carolina. He is the owner of Carolina Auction and Realty, a Raleigh, NC company offering online real estate, commercial equipment, estate, business liquidation, and benefit auctions. He holds a Bachelor of Science in Business Administration and is a graduate of the Certified Auctioneers Institute at Indiana University. He serves as the Vice Chair and Trustee of the NAA Education Institute and as Chairman of the Conference and Show Education Committee.