Auction insights with Director of Marshall White Port Phillip, Kaine Lanyon
We are well and truly heading towards the spring auction market for 2024.
So, who better to provide some insider insights than a third-generation auctioneer, Director of Marshall White Port Phillip, Kaine Lanyon.
How are you seeing the market shaping up for Spring this year?
It probably feels, especially being only a week or two after the main winter break here in Melbourne, that things are moving slightly slower than what we would ideally like. There are definitely listings coming up, but they’re not in abundance, so it could make for an interesting end to the year. I don’t think there’s going to be a massive amount on offer, and the quality may not be as high as we’re all hoping for.
You’re a third-generation auctioneer, so it’s clearly in your blood. We’re both Victorian country boys – I’m from Wimmera, and you grew up in the Western District. But what’s the story behind it all? What drew you into real estate?
I grew up in a small country town called Hamilton in Western Victoria. My father and grandfather were stock and station agents, so two or three times a week, they were at the cattle yards, selling sheep and cattle. The auction scene was a huge part of their lives and their weekly routines. Growing up, during school holidays and returning from boarding school, I spent many early mornings penning up cattle and standing beside my dad as he auctioned them off to supermarket buyers. It’s very much in my blood.
Admittedly, when I was at school, I wasn’t sure what I wanted to do. I ended up studying property at RMIT for a while. The turning point came quite suddenly – sadly, my father passed away when I was in my first year of uni. The moment my father left us, I felt a strong pull towards becoming an auctioneer; it was almost like a lightbulb moment. I pretty much quit university and jumped into residential real estate within six months. And here we are, about 25 years later.
It’s quite a shift from stock and station auctioneering, dealing with cattle and the like, compared to what you experience at a residential auction on a Saturday.
It is, and if I’m being honest, I almost prefer the country style, the country banter. I mean, I internally refer to those stock auctioneers as the real auctioneers, as opposed to us city slickers who generally think we’re auctioneers. But I think the real boys are out of town.
When you’ve got a busy Saturday lined up with auctions, do you spend a lot of time preparing on either Friday afternoon or Saturday morning in terms of what you’re going to say?
I do, but it’s not necessarily about what I’m going to say. Most of the preparation I do, especially if I’m not the listing agent, involves a lot of phone calls with the listing agent to find out who the buyers are. I want to know their background, their profile, why they want to buy, and what they’ve bid on recently. I just want a clear idea in my head about the one, two, or three potential buyers and their scenarios. I also do a fair bit of work on recent, relevant sales or comparable sales for the particular auction I’ll be calling. I’m probably not going to use that information directly, but I feel better having it in my head, knowing exactly where I think this property sits in the pecking order. And that’s probably more for if I get into a conversation with a buyer at some point, whether that’s before or after the auction, then I’ve got it ready to roll off.
How important do you think it is for an auctioneer to be involved in the campaign from start to finish? I don’t necessarily mean standing at every single open for inspection, but perhaps attending some of the opens and also being in regular contact with those running the campaign.
I think it’s a big deal, but to be fair, that’s all I know. Obviously, in places like New South Wales and Sydney, and maybe Queensland, they have a lot of what you might call ‘guns for hire’ auctioneers. These auctioneers show up, do the job, get in the car, and move on. They wouldn’t know anything about the property beforehand, and yet they seem to do it very well. That’s not really the Melbourne model. So, I might be slightly biased, but I think it’s far better when you have some sort of intimate knowledge of the property. If you’ve been through the home five or ten times, stood with the listing agent, spoken to a bunch of the buyers, and you know the vendor – to varying degrees, of course – I think you’ve a better overall scenario when you have been there, touched it, felt it, talked to everyone, and you have a good idea of how it’s going.
What are some of the key features of a good auctioneer, both in terms of research and on Saturday, when you’re standing out front? What do you think are the really good aspects, and what do you encourage in your young auctioneers coming through?
Not in any particular order, but I think presence is crucial. Strength, in terms of realising that it’s the auctioneer’s show. It’s not about making it about the auctioneer, but it’s important to ensure that the crowd doesn’t take over. You have to remember who’s running the show. It’s a process, an open negotiation, and someone has to run it, convene it, and be in charge. So, humor, empathy, being quick-witted, strength, and control are the first points that come to mind.
I talk to a lot of our clients before the auction about not having a set plan or idea. We have different auctioneers, properties, vendors, and competitors, so we regularly discuss the various scenarios that could play out on the day and how we would react. From an auctioneer’s perspective, how important do you think it is to be able to read an auction, to know which direction to take?
I think that’s a massive part of our role. What I might think or plan on a Thursday or Friday for the upcoming auction can often change dramatically by Saturday. It’s often very different when you get out of the car, walk through the property, and have a few discussions. The buyer landscape can change in the last 12 to 24 hours, as it normally does. It’s very much about responding to the here and now, rather than sticking to some pre-scripted idea of what you think it should look like a couple of days out.
If you had to switch from being an auctioneer to a buyer, what are some effective tactics when they’re bidding at your auction?
When considering a property we estimate to be worth around $2 million, it’s fascinating to observe buyer behavior at auctions. Sometimes, despite having several interested parties, none choose to bid, possibly due to last-minute uncertainties. Even if the auction needs to be passed in on a vendor bid, it doesn’t reduce the property’s value. Yet, some buyers mistakenly believe they can secure the property for significantly less immediately after a no-bid auction.
If I were advising buyers, I’d suggest observing the competition initially but not delaying too long to engage. It’s important to demonstrate your intent decisively. Quick, assertive bidding can intimidate other bidders and is crucial in signaling serious interest. This approach not only shows you’re ready to compete but can also sway the auction’s momentum in your favour.
What’s your view on vendor bids? Some agents refuse to place a vendor bid if there’s an opening bid, and are happy to proceed even if it’s slightly below expectations. Do you have set plans for these practices?
The vendor bid is an aspect of our auction process that I find particularly fascinating, primarily because it, along with the reserve price, is often misunderstood. When we start an auction, we have to assume that nothing might happen – that no bids might come from the crowd. Of course, receiving bids is the goal, but we consider it almost a bonus.
For instance, if we’re auctioning a property we believe is valued around $2 million, the starting point for the vendor bid is crucial. Some agencies might start a vendor bid as high as $1.95 million, which is nearly at the property’s expected value. This high starting point can deter initial bidding because buyers generally don’t want to start at their maximum limit.
Our approach differs. We might start the bidding at $1.75 million to encourage participation. This price makes the property look like great value, enticing buyers to engage. If no one starts the bidding, I will place a vendor bid at that level, indicating that the vendor is comfortable keeping the property at that price. From there, buyers who see value might be willing to bid up to $1.9 million or more, knowing they are still getting value.
There are numerous instances where auctions don’t start because the initial vendor bid is set too high, and the property sits on the market for weeks. Eventually, it might sell for less than the vendor bid, illustrating a misuse of the strategy. Properly setting the vendor bid can not only initiate bidding but can also prevent the property from being undersold later. This strategic approach ensures that even if the auction doesn’t achieve a sale on the day, it doesn’t devalue the property or undermine the eventual sale price.
What’s your philosophy around halftime breaks? Some auctioneers adhere to the golden rule of always taking a halftime break, regardless of how the auction is progressing.
You need to be nimble and able to pivot on the spot quickly. Over the years, I’ve learned a lot about different approaches. A few years back, I spent several Saturdays in Sydney, shadowing various auctioneers. These professionals, or ‘guns for hire,’ had tightly scheduled auctions – starting at nine o’clock with the next at 9:45, on 45-minute intervals. They didn’t have time for halftime breaks, which worked well because their market is accustomed to this efficiency.
However, the situation in Melbourne metro is generally the opposite. It’s not necessarily right or wrong, but the average attendee at tomorrow’s auction likely expects a halftime break. This expectation has been cultivated over the past 20 to 30 years, often passed along by friends who might be former agents, seasoned investors, or simply enthusiasts of the auction process.
I believe that the average person tells their friend there’s going to be a halftime break where the agent and the auctioneer will have a little chat with the vendor inside. Sometimes they even suggest that you probably don’t need to bid until halftime. Now, I’m not saying that’s the right approach, but I think it’s what most people attending an auction in Melbourne have in mind. So, given that it’s a big day for your selling client, if that’s what most attendees are probably thinking, then it’s important not to change up the process. It’s too significant an occasion to get creative with the process when you believe the buyers are expecting a certain approach.
Over your extended career, who are some of the most entertaining, high-quality auctioneers that you’ve encountered?
In terms of some of the best auctioneers I’ve seen, not in any particular order, Philip Kingston from Caulfield stands out. He’s an exceptionally talented wordsmith, truly gifted in the art of auctioneering. While he might not fit the traditional mold of a stock and station auctioneer in terms of banter and patter, his ability to captivate the crowd and conduct an open negotiation is as good as anyone’s in Australia.
Then there’s Anthony Woodley, known for his dynamic voice and engaging banter, particularly prominent on the north side. Another notable mention goes to Tom Roberts from Nelson Alexander, who is also highly skilled in the field. These auctioneers showcase a range of styles and strengths that make them stand out in the industry.
Justin Long is also technically a very good auctioneer. Daniel Wheeler is another great, really underrated auctioneer; I think he’s exceptional. Then there is Damian O’Sullivan, who I’ve never seen perform a bad auction in over 20 years.
Then there are the entertaining figures like Tony Pride, who’s now retired but was known for his lively and humorous style. Tony was a little barrel of a man, and when he got going, it looked like his head might blow off his shoulders. He was politically very incorrect, often saying whatever was on his mind, which, despite being potentially offensive, always carried a message within the humor. I’m pretty broad-minded, so I’d find myself laughing in the crowd, even though he might have just offended half the audience. But he got the job done, and I think he was a very effective auctioneer.
Do you have any humorous experiences of your own you can leave us with?
One particularly memorable auction I conducted happened a few years ago on Pickle Street in South Melbourne. It was a rainy day with only six or seven people in the crowd, and we had one or two interested parties. As the auction was about to start, a guy I went to school with, who’s also a real estate agent but from a completely different part of town, drove by. He shouted and waved as he passed, then parked and joined the auction, leaning against a tree in the rain. He’s quite the talker and began telling the crowd how proud he was of me, recounting our school days and cricket games together, almost taking over the auction with his anecdotes.
The property was eventually passed in on a vendor bid. Interestingly, this school friend turned out to be representing one of the potential buyers. I had to rush off to another auction that day, and later I learned that after an hour of negotiations following the event I had left, they had successfully purchased the property. It seemed he was just there to say hello, but he knew exactly what he was doing.