John D Schultz

The days of the local auctioneer conducting an auction because he/she is the only option in the area is increasingly becoming a thing of the past. Replacing this mentality on the part of sellers is the ability to create competition between, local, regional, and sometimes national companies. In short, our world is becoming flat. Therefore, it is important that a company’s professional image is forefront at all times. You see, in a flat world, the local, regional, and national companies are suddenly on similar footing.

Often, one of the first contacts with a client is an effective, well-written auction proposal. It may be easy to discount the need for an effective, well-written auction proposal. However, it is often what enables companies to stand out among their competition, and get the business. An effective auction proposal does not need to be a difficult process. In fact, a basic template can be used to create an efficient method to write an auction proposal. Many of the items within each proposal remain the same from proposal to proposal. As a result writing an auction proposal is simply a matter of updating key areas to reflect the needs of our clients. In the next few paragraphs, I will outline the components necessary to write an award-winning auction proposal.

Necessary Components
There are several necessary components to an effective auction proposal. The proposal should attempt to answer any questions a potential auction client would have for you. The necessary components include a cover page; an introduction letter; a synopsis of the marketing campaign; a buyer due diligence overview; an area reviewing the advantages to selling at auction; a discussion on buyer and market stimulation; a basic budget covering marketing, commissions/buyer’s premiums, and any other special rebate packages offered to the sellers; and finally a brief synopsis about your auction team.

Cover Page
The cover page should quickly identify that the document is an auction proposal, who the proposal is being submitted to, and who is submitting the auction proposal. Often, a short table of contents on the cover page or immediately following the cover page assists the client in understanding where to go for specific information.

Introduction Letter
This short one-page, signed letter introduces you to your client. It is your opportunity to thank your client for the opportunity to present the auction proposal. It is also your opportunity to create a standard theme that you will carry through the proposal. For example, a recent proposal contained the following few sentences, “As you review the proposal, it is important to remember the market always speaks. Normally when the market speaks, it is indicating the property is over-priced or under-exposed. That said, the auction is a new marketing campaign and will create new exposure for the property and establish the market price for the property.” You will want to end the introduction letter with a short sentence that proactively states you look forward to working with the client on this project, and that you are ideal for the project because of xyz reasons.

Marketing Campaign
Just as you might imagine, this is your general overview of the marketing campaign for the auction. Within this area, it is important to include your marketing period for the auction. You also should include a brief synopsis of print, direct mail, press releases, and online marketing for the event. This is not an in-depth look at the marketing; rather this is the high points. You do not want to give away the ship prior to securing the business.

Buyer Due Diligence
This is the area where you lay out specific information on how you will handle potential buyers. Items included in this section include preview dates of the assets/property, information that will be included in bidder information packets, and any special terms that will apply to buyers. While these items are generally standard items in the course of auctions, it is important to include this information for your auction seller, as this may be his/her first auction experience.

Advantages to Selling at Auction
This section of the proposal contains a brief synopsis on the advantages to selling at auction. Most clients have options available for the disposal of their assets other than auction. As a result, it is important to explain the advantages to selling at auction. Areas to touch on in this area include selling the assets within a set period, the buyer’s control over the sales process, exposure created by auctions, establishing fair market value, sales without contingencies, elimination of carrying costs, and reaching the broadest universe of qualified bidders. Many more advantages can be included in this section; however, you want to concentrate of specific tangible advantages. Remember to give a brief explanation of each advantage.

Buyer and Market Stimulation
In situations where a client may be discussing the option of using a reserve on the sale of the assets, it is important to discuss buyer and market stimulation. This section lays out hesitancies a buyer may have when an asset is not sold absolute. Also, a brief paragraph on the different options available to the seller in the sale of the asset is included (i.e. absolute, seller confirmation, published minimum, et cetera). Again, this section is not necessary in all proposals. However, it is an effective manner to convey your beliefs on the best method to sell the assets.

Budget
This section details the specific costs of conducting the auction. This is the first place any specific hard numbers are discussed with the clients with regard to the marketing budget, the sales fee or buyer’s premium, and any special rebate or seller/buyer incentive programs. At times, it is advantages to several options to a client – for example, two different marketing budgets, or two different sales fee/buyer’s premium options.

Who we are
This section is your brag section. You should include a short synopsis of who your company is, and any special recognition you and your key employees have received. In addition, this is where I like to include a short list of past clients that may be recognizable to the current client.

The above components are a sampling of the key components of an effective, well-written auction proposal. You likely will need to tweak, change, and improve on these components to make this template work in your business. However, by implementing the use of auction proposals into the normal routine of your business, you will present a professional auction image from the beginning, and set yourself apart from your competitors.