Use auctions to push VPA

Use auctions to push VPA

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Negotiating vendor-paid advertising (VPA) has become easy for one regional agent who has found auctions can work in any area.

Principal of Raine&Horne Charmhaven Andrew Sorenson pioneered the auction process in his market.

“In this area, no one would try going down that path,” he told the 3,300 delegtes at the 18th annual AREC.

“The way I initially sold it to my vendors was that we aim to have it sold prior to auction, so in essence we were running a sale-by-set-date.”

But pushing for auctions did more than just cut his days on market significantly.

“It gave me a platform from which it was easier to justify marketing expenses. VPA was unheard of in our market, but because I could say we can sell this property within four weeks, we found most vendors were willing to invest in marketing,” said Mr Sorenson.

Numbers at open for inspections doubled after they switched from private treaty to auction, which helped the team grow its database.

Based on the central coast of NSW, Mr Sorenson’s office isn’t located in what is typically considered an auction-friendly market, with half of agents in a recent Real Estate Business straw poll claiming auctions can’t work everywhere.

“We still aim to sell prior to auction and around 80 per cent of our listings do,” he said.

With hundreds of properties going through the auction campaign, fewer than 10 auctions were actually called last year.

Despite a low average sale price, Mr Sorenson has managed to top the Raine&Horne group two years in a row, place in the REB Top 100 Agents ranking and have his office place in the Top 50 Sales Offices ranking.

But he offered a cautionary word of advice to young prospective principals.

“Start where you want to end up,” he said.

“You don’t want to uproot your business because it will take years to build it up again. It’s a crucial thing to keep in mind when you start out because I’m in such a small market with a low median price, but I can’t move somewhere else now.”

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