The Psychology of an Auction [Guide]

20 October 2020

Sweaty palms, lump in the throat, heart beating out of your chest. This is exactly where you don’t want to be.

Out of the vendor’s arsenal of sales methods, the auction is by far one of the most popular. With its huge potential benefits to the vendor there are also its matching pitfalls.

Auctions can squeeze out the best result for the vendor but also bring the vendor’s price expectations crashing down.

Auctions rely on generating as much competition as possible in a public forum. Auctioneers use charisma to leverage the emotional attachment made by prospective buyers to the property and impose a fear of loss where the only remedy is the flick of the paddle.

Prospective buyers tend to enter an auction having counted their chickens before they have hatched, meaning they believe that the property is theirs to lose to the other bidders.

This hubris blocks your reasoning and logic and twists the perception of the $5000 incremental bids to resemble something less significant.

Without proper understanding, what could have been a dream home becomes an unaffordable nightmare.

On the flipside, if no one bids it publicly announces that the property is not worth what the vendor is asking and forces the vendor to reconsider what price the market would accept.

It can be a dangerous game to play, telling yourself that you will remain stoic in the face of one of the most significant purchases in your life.

Understanding the emotional forces that will pull you from one side to the other and just how easy the auctioneer can grease your wrist is a word of warning when walking into an auction.

Alexander Gibson

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