Winning an auction involves thinking strategically, and you also have to have the upper hand over your competition. Many real experts and mortgage brokers suggest that understanding the psychology of an auction will see you place a winning bid time-and-time again.
What is the Psychology of an Auction?
The psychology of an auction is how the main players involved in an auction think and act before and during the auction. Simply put, an auction is the ultimate game of bluff, where all who are involved the buyer, the seller and the auctioneer have their 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. 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.
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.
Strategy for Winning an Auction
There are several ways that you can avoid paying too much at an auction and falling into the spontaneous buying trap. The following points are key for winning an auction.
1.Set your budge: 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 during the heat of the moment its often best to go by yourself. This line of attack will allow you to stick to your guns and not to be persuaded by others to go above your buying limit.
Leaving your family at home also makes it harder for other bidders to work out who you are and what type of payments you already have to make. For instance, a family with many children is costly. So if you turn up with your four children to an auction, then others bidder 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 methodology makes other bidders feel intimidated. Wearing a hat and dark glasses, say psychologists, also makes you harder to work out, which can give you an advantage at an auction.
4. Remember your poker face: Winning an auction involves beingdevoid of emotion.Avoid smiling or get 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 curve ball with a $5,000 bid. This approach upsets the flow of the auction, and some bidders even question the value of the property.
7. Be outspoken: When you make a bid say it with conviction. Dont be meek and mild, be loud and proud. Ask the auctioneer if the property is on the market and interrupt them during a 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 dont change from auction-to-auction. So if you step in and throw them off guard, you may just find that you catch them out.
Written by eChoice
Since 1998, eChoice has helped more than 50,000 Australians secure a home loan through its network of over 25 lenders and hundreds of loans. Best of all our service is cost and obligation free!