Published at: 6/21/2016 3:29:23 PM
Master the mind games to enjoy success at auction sales.
Auctions are highly emotive, pressure-cooker environments – and with good reason. The stakes are high with plenty of money on the line. Bidders may already have cash invested in the deal through pre-purchase inspections and legal fees; and there can be a real sense of completion between bidders, who all want to be ‘the winner’ of the auction contest.
Buckling under pressure could see you bidding beyond your budget. So the trick is to understand the psychology of auctions and develop your own strategy to maintain a cool head.
Draw a line in the sand
The golden rule at auction sales is not to bid beyond your purchase budget – it’s something you could regret for some time. Having a conditional loan approval in place is a great way to know exactly how high you can afford to bid, and that makes conditional approval a vital tool in guiding your bidding decisions in the pressure cooker environment of an auction. Talk to your ME Mobile Bank Manager to organise conditional loan approval before you attend the auction.
Do your research
It can be difficult to know exactly what a property will sell for at auction so don’t assume the selling agent’s estimate is bang on. Check out what similar properties have sold for in the area to get a reasonable idea of fair market value. That way you won’t be shocked or disappointed when bidding goes beyond the figure quoted to you.
Good research can also help you employ the shock tactic of making a strong bid early on – like, say, offering $300,000 when the bidding is at $275,000. This strategy can help you eliminate a large number of bidders at any early stage.
Be aware of the FOMO factor – the ‘fear of missing out’. Sure, the property may seem perfect for you, but if you miss out on this one, it’s a sure bet that another home will come onto the market that sees you fall in love all over again. This is especially worth bearing in mind as bidding climbs higher and all eyes in the crowd may be on you. Don’t be afraid to back down.
Your body language is important at auction. Use a firm clear voice when you make bids – and bear in mind, you can dictate the size of your bid. If the auctioneer says he will take bids in increments of $1,000, calling a bid for $5,000 can show you are a serious buyer. Alternatively, bid in small increments to slow bidding down.
Consider professional help
If you have concerns about bidding beyond your budget, or if you’re just not confident about buying at auction, consider using a buyer’s agent to bid on your behalf.