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We’re going to show you exactly why real estate agents choose to sell property by way of auction and the tactics you need to be aware of to avoid the BIG mistakes, step by step, so keep watching.
00:00 Auction Bidding Strategy [6 Auction tips for buyers in 2024]
00:59 1. Time pressure
02:25 Bonus secret real estate agents use in Auctions
02:37 2. Unconditional offers only
03:56 3. Sunk cost theory
04:51 4. Be careful of Greed
06:51 5. How the auction sales process works for the agent
09:13 6. buyer beware
1 Time pressure
Make no mistake, auctions are created to achieve record prices. They’re for the benefit of the seller, not for you, the buyer. --
Their tool of choice is that of time, whilst intangible it’s deployed to create a perception that if you don’t act now, you’ll miss out…. Time being the gatekeeper to all good decisions, and given enough of it, will never make the wrong step but without it could be likened to deciding with a toss of a coin.
2 Unconditional offers only
Note that all auction offers aren't subject to anything, not building and pest, finance or due diligence. You buy it without the ability to do any of this.
Therefore to bid with confidence will need to invest upfront, even without knowing if you will be the successful bidder.
think about it this way, if you’re selling a property which has a few “bits and bumps”, which method of sale would you choose.
3 Sunk cost theory
It’s because the property is unconditional, and that to bid diligently you will need to pay to play and therefore creating a sunk cost. Sunk cost theory essentially stipulates that by having skin in the game, that is, money or even time, that it created a greater tendency to continue, even if the path proves destructive.
4 Greed
at one stage in my mortgage broker career, I would work from a real estate agents office one or two days a week. Because of this I’d regularly be appart of the team training sessions, and for this particular office they were preliminary focused on auctions, in these meetings a frase which they commonly used was “feed the greed”. The trainer would say this over and over again, saying that you’ve got to feed the greed.
Essentially the agents are referred to you, the buyer, and your disposition. If it’s done well they’ll have you believe that you’ll pick up the property for nothing. Think of this as mental Judo, the agents looking to use your own energy against yourself. They do this by having you think that the property will be sold no matter what, and whatever your budget, you’re in with a big chance.
Like the great Jim Rohn once said, “you need to STAND GUARD at the door of our own mind.”. So that you’re not feeding the greed, here are the questions you’ll want to ask;
- is what I’m being told by the agent too good to be true
- if i were the seller, how much would i want for this property
- how do i know what i’m being told is true? What’s more likely the situation.
5 How the auction sales process works for the agent
okay so now we’ve covered the four reasons agents choose to sell at auction. Let’s understand the three phases of the auction process.
The first phase is called, Pre Auction and it’s in this phase the agents are looking to accomplish two things.
First, is to present all offers on the property. The goal here for the real estate agent to educate the seller on what the market is willing to pay for the property. Often buyers can have their hopes raised and dashed in this process. It’s because at this stage the real estate agent is looking for all offers, no matter how low, because the agent’s looking to condition the seller to understand their properties worth less than their expectations. It’s very common for sellers to have unrealistic expectations on what their home is worth.
6 - buyer beware
if you’re looking to go to auction it’s really important to know that they’re not designed in any way shape or form for your benefit. They’re run for the sole purpose of getting the highest and most competitive offer, and does this by way of competition and scarcity.
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