Climbing Mt. Ego with realtors

Auction professionals and realtors both bring ego to the table. Move past that by tactfully showing auction is the best method of sale.

By James Myers, contributor

Can realtors and brokers have a symbiotic relationship with Auctioneers, or vice versa?

It is not a question some Auctioneers will consider, nor would a realtor. However, given the changing landscape in today’s real estate market, it is a partnership that has to be taken seriously now more than ever.
Jason Winter, CAI, AARE, AMM, CES, has a unique position on the matter as he graduated from World Wide College of Auctioneering in 1993 and completed his pre-licensing real estate sales education in 1996.

“Relations with realtors have been good and not so good,” said Winter, who has been the owner/Auctioneer of West Central Auction Company in Harrisonville, Missouri, since 1993 and a real estate broker since 2006. “Realtors have a different mindset … first and foremost, realtors are realtors and Auctioneers are Auctioneers.”

The divide is quite apparent with some real estate professionals whom Winter said will only use auction professionals as their last resort. However, other realtors will jump on a chance to work with Auctioneers to push a sale with which they need assistance.
“We all have kind of an ego,” Winter said of Auctioneers, realtors and brokers. “We’re salespeople, and we’re excited about our sale. When we book a contract, it gives you a kind of euphoria.”

Winter said that ego is the biggest challenge Auctioneers and realtors face in working together.

“We might think the broker is a bad guy because they don’t want to give us any business,” Winter said. “They’ve got the same feeling in their gut and their heart that we do when they list that house. Why would they want to give that up, right?”

Auctioneers, Winter said, have to be careful not to step on that passion as they approach realtors about collaborating. However, the only way to “cross that bridge” is by educating realtors and brokers, establish a relationship with them, and convey, tactfully, information about the auction process, because in some cases, it’s the best method.

Winter said during the Great Recession he read in a real estate association publication something to the effect that “the auction way is going to be the way to go” for selling real estate. However, despite the fact that he would like to see more realtors working with Auctioneers, not every property is going to be a good match for the auction method.

“Not every seller can sell at auction,” he said.

Working with Realtors: Finding allies

Realtors can be a big asset for Auctioneers, Winter said, because they have “file cabinets” full of properties, and information about past and current buyers and sellers. The task is to establish a relationship with these realtors and let them know Auctioneers aren’t “monsters [or] huge evil people” who are going to take their business away.

“A zero-percent commission is how much money?” Winter asked rhetorically about situations where a realtor could still make a commission by turning over a listing to an Auctioneer. “We have similar goals out there. If we list an auction property, what’s our goal? Sell it/close it … we have to come alongside our fellow realtors and work with them and hope they work with us.”

One of the barriers to the auction process is that realtors and brokers work around an MLS listing price. The topic of reserve prices came up during Winter’s presentation with one participant asking if a reserve should ever be revealed.

Winter said revealing the reserve can be a problem. A buyer, he said, might think the reserve is too high and not show up, missing out on a chance to make the purchase should the seller agree to let it go for less than the reserve. Conversely, the buyer might think the reserve is too low and believe there is something wrong with the property.

“The challenge for the auction industry is that it’s price basedd,” he said of MLS listings, which is the norm for real estate agents. He also said that a potential buyer who asks “what will you take for that piece of real estate,” should be met with an answer of, “all I can get.”

“Don’t say any price,” Winter recommended when questioned about reserves.

This article was an excerpt from a presentation given at the 2017 NAA International Auctioneers Conference and Show. Want even more tips regarding this topic? NAA members can access the full audio of this presentation and many others in the NAA Knowledge Center.