Winning an auction involves thinking strategically and gaining the upper hand over your competition. Many real estate experts and mortgage brokers suggest that understanding the psychology of an auction will see you place a winning bid.
What is the Psychology of an Auction?
How the main players of an auction think and act before and during the auction makes up the psychology of the event. Simply put, an auction is the ultimate game of bluff, where all who are involved – the buyer, the seller, and the auctioneer – have a strategic line of attack. Therefore, as a buyer, you need to remember that while the real estate agent seems friendly enough, they are working for the vendor and that both are seeking to get the highest possible price for the property from you or another bidder. So, you need to view these players more as foes, rather than friends. This approach will enable you to get the upper hand when it comes to crunch time.
Another misconception of an auction is that a high opening bid means that the property will sell at a high price. According to research, this is not necessarily the case. In fact, there have been several studies conducted on lower starting bids and their attraction, and in all, participants said they’d be more inclined to bid at an auction with a lower starting price.
Body language is another crucial factor to consider when bidding. Therefore, when you attended an auction, stand in a prominent position, and watch your competition. Watching how they stand, and their facial expressions will tell you just how far they are willing to go. In fact, watch everyone at the auction like a hawk, even the auctioneer.
Understanding the psychology of selling will allow you to avoid feeling intimidated or overwhelmed at an auction. Develop your game plan well before you attend an auction and ask as many questions as possible at inspections. This information is a guide only and is an estimate only based on the past 12 months of aggregated online mortgage enquiries from eChoice and partner programs. Submitting your enquiry An eChoice home loan expert will be in touch soon.
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This information is a guide only and is an estimate only based on the past 12 months of aggregated online mortgage enquiries from eChoice and partner programs.
Submitting your enquiry
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Strategy for Winning an Auction
There are several ways that you could avoid paying too much at an auction and falling into the spontaneous buying trap. The following 7 points could prove key to landing that top bid and winning an auction:
1. Set your budget
Always get home loan pre-approval before going to an auction. Know how much you can afford and do not go over this limit. Otherwise, it will be costly.
2. Go it alone
Your partner, parents, and children, may all love to be present at the auction, but if you’re by yourself you’ll handle the heat of the moment with more precision. This line of attack will allow you to stick to your guns and to avoid the persuasion of others, which may push you over your limit.
Also, leaving your family at home makes it harder for other bidders to work out who you are and what type of financial commitments you already have. For instance, a family with many children is costly. So, if you turn up with your four children to an auction, then other bidders will know that you have school fees and other expenses to pay. Therefore, you will have limited funds. But, if you turn up solo, they have no idea about your other commitments.
3. Dress for success
Do not wear your trackie-daks and thongs to an auction. Instead, wear a suit and look like you can afford to buy whatever you like. This method makes other bidders feel intimidated. Wearing a hat and dark glasses, say psychologists, also makes you harder to work out, which could give you an advantage at winning an auction.
4. Remember your poker face
Winning an auction involves being devoid of emotion. Avoid smiling or getting excited. Keep a straight face and only bid when you feel comfortable.
5. Think only with your head
Leave your heart in your car if you have fallen in love with the property. This way you can make strong and strategic decisions without stretching your budget to its limit.
6. Control the situation
If the auctioneer is asking for bids of $50,000, then throw them a curveball with a $13,000 bid. This approach upsets the flow of the auction, and some bidders even question the value of the property. Avoiding round numbers means the auctioneer pausing for a moment to add up the total, and this can disrupt the auction flow even further.
7. Be outspoken
When you make a bid say it with conviction. Don’t be meek and mild, be loud and proud. Ask the auctioneer if the property is on the market and interrupt them during their spiel. This approach often rattles others, especially an auctioneer who has a specific line-of-attack at an auction. For instance, most auctioneers do a dance when selling a property. They follow a series of steps and these steps usually don’t change from auction-to-auction. So, if you step in and throw them off-guard, you may just find that you catch them out. This approach could then let you get the upper hand, with you able to buy at a better price.
Plus, taking a confident stance and placing assertive bids shows others that you are serious. If there is a larger auction crowd and several bidders, then make your opening bid higher. This tactic could scare off those who were looking for a bargain and will eliminate some of your competition. On the other hand, if there’s just you and one other bidder, then keep your cards close to your chest.
Are you looking to purchase a property and wanting to get a home loan pre-approval? Then contact eChoice to discuss your options. Our brokers have access to 100’s of products, so we’ll help find you a competitive mortgage.
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