Auctions can be fun, exciting and unpredictable. Once in a while there’s something up for auction that is rare or odd enough that several people want it, and are willing to pay extravagant amounts of money to “win” it. Of course, that’s not usually the case, but it does happen, especially with rare pieces of art, cool cars no one else has or one-of-a-kind properties where there’s a “dream home” or something special few others have, like waterfalls in the yard.
Now how can you win at auctions without overpaying? That’s something most people who attend auctions will ask themselves. Just as the auctioneer says “Going once, going twice,” there could be that one person who holds up their hand and makes a last-minute bid. And it feels like a scene from a movie. People gasp in the crowd. All eyes are on that one person making that bid. And maybe you’re the other person bidding and you thought you’d win. Now someone’s competing, and they seem to have come from out of nowhere to mess up your plans. What do you do? Bid higher? Walk away? It’s an emotional moment for sure.
Ideally, you don’t want to get into a position at an auction where you feel trapped or forced to do something, especially if that something will put you in debt. You want to be in control and win without overpaying, right? How is this possible? Is it possible?
Knowledge is Power
First, do your research. Information is power! You must know what the thing you want to win is truly worth. Determine its true value. You can do this by looking online at comparable sales, as well as asking around to see what others would be willing to pay for it at top-dollar. You should do enough research to have in mind a buying range whereas you know when you’d be getting a deal versus when you should walk away and let someone else spend big money for the item/thing/property in question. Here’s an example: You know a piece of property is up for auction in a certain area where similar parcels have sold recently for $400,000 on average. Therefore, you’d be getting a deal to “win” a property there at $350,000, but you’d be overpaying if it went for $500,000. So you can make an informed decision at the auction and not overpay.
Next, when you attend an auction it’s important to be confident. Know what your “walk away” price will be before the auction even starts. That way you’re not overpaying for something simply because you got caught up in the frenzy of the bidding war and put your brain on pause. Furthermore, it can help to study your competition at an auction, making note of their body language in particular. This way, you can have a better idea how high they might bid. Who has registered to bid? Who are “the players” in this game? What’s their history? What do they really want to win? Study these people to see if they look nervous or pressured. Are they dressed to intimidate? Maybe they look rich but it’s a facade.
Implement a Plan of Attack
Thirdly, come into an auction with a bidding strategy prepared beforehand and then stick to that strategy. Be proactive rather than reactive. This way you control the auction a bit by controlling bidding increments, helping set the pace for the flow of the auction and getting rid of other buyers early on, knocking out competition as best you can. Do what you can to make others be forced to think, to be distracted and/or to be uncertain– their indecisiveness will likely lead to them withdrawing because they know they’re not in control.
Be a Poker Player
Finally, just like in a game of cards, keep your cards close to your chest. Don’t share too much information with others, especially the competition. The less they know about you and your intentions, the better!
When you want to win an auction but not overpay, it’s smart to wait a bit to place your first bid so you can size up the competition, and then make your first bid a strong one that reflects the market value. Bid with rounded figures. Counter bid quickly and confidently. You can win an auction, including online ones, without overpaying– it is possible.