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The two great Melbourne weekend obsessions of attending AFL games and real estate auctions have a few things in common. Both start out with high-spirited chanting, secret strategies and occasional subterfuge, which can progress to a desperate frenzy of play before ending in either glorious triumph or bitter defeat. Most football fans and auction losers do eventually get over their losses and head out to do it all again the next weekend. However, it is the auction winners that can continue to feel the pain for years if they pay too much.

Auctions are the ultimate game of bluff for all players: vendors, auctioneers and buyers each have their own bag of tricks which starts with how the home is styled and marketed and ends with bidding tactics during the auction. Buyers unfamiliar with or intimidated by the auction process can end up forking out more than was necessary to secure the property. Before raising that hand in pursuit of your dream home, it can help to understand the psychology of selling and have your own game plan for auction day. What you wear, who you take, where you stand and how you bid can all have an impact to varying extents on your opponents and the price you pay, according to industry insiders and psychologists.

“Dress does have an impact,” says University of Melbourne consumer psychologist Dr Brent Coker. “I would tend to think that going dressed smartly in a suit would be more beneficial than turning up like a poker player with your dark sunglasses and cap, which I’ve seen quite a lot of actually.” While auctions can be won by wealthy people in casual or even scruffy attire, your auction opponents are trying to size up how deep your pockets are and dressing for business creates a perception of wealth. “It’s a similar principle to what we call the price-quality heuristic in psychology,” says Dr Coker, which is where consumers tend to perceive products as having higher quality based solely on having a bigger price tag. In auctions, other punters are more likely to become deflated and bail out earlier if they think you have more resources.

Bringing the family along to the auction is probably not the best idea either as other bidders could perceive you as financially stretched with school fees. Your nearest and dearest are also more likely to unravel your plans to stick to a limit. When the offspring gaze up at you with pleading eyes, desperately wanting that backyard for their bunnies, it makes it harder to deny them and stick to your budget.

“If you are there with the family, you might say ‘OK, that is what we are prepared to pay’ and then suddenly your wife or your husband or your kids say ‘Come on dad, one more bid’ and suddenly you find you are going beyond your limit,” says Mike McCarthy, CEO and director of Barry Plant.

“There’s all sorts of tactics you can undertake but in my view when you enter the bidding you need to be strong and bold, you need to know what your limit is,” McCarthy says. Hesitation is a sign of weakness and the biggest mistake that inexperienced buyers make at auction. “Once you get to the point where you are hesitating and you are umming and aahing about your next bid, you are really sending a message to the other buyers there and potentially other people who haven’t entered the bidding at that point that you are near the end,” he says.

Melbourne’s weekend bidding wars are not exactly Game of Thrones but everyone still wants to seize the castle. Be bold and stand up the front near the auctioneer where other bidders can see you rather than hiding down the back of the crowd. Your bids should be delivered loudly and confidently immediately after your opponents’ bids, which robs them of a potential sense of victory that comes with holding the highest bid for any length of time. However queasy you might feel as you bid your way into a monstrous mortgage, it’s important not to show it.

Auctioneer Andrew McCann, the Jellis Craig Bennison Mackinnon managing director making his auction debut on The Block this year, puts it like this: “I think the best bidding strategy is to bid until your maximum and do it looking like you’ve got a lot more to spend than you really do.”

One seasoned all-rounder of the auction scene is David Morrell, a self-described poacher turned gamekeeper who started out as a licensed real estate agent at age 21 before switching sides to become a buyers’ advocate 17 years ago. He has been attending two or three auctions every weekend for the past 36 years and has turned the act of bidding into a form of performance art.

Morrell’s auction theatrics range from loud, aggressive bidding to humorous antics. With auctioneers that employ the two-steps-forward, two-steps-back dance, he imitates their steps and gets a laugh from the crowd. When auctioneers with a “slow hammer” launch into a spiel about the property’s highlights after the “going once”, “going twice” calls after bids have ended, he interrupts by yelling out “SOLD!”. “I think that is grubby, unfair and misleading and can cost another $100,000,” he says.

You have to control the situation and control what the auctioneer does is Morrell’s advice to buyers. “Don’t be afraid to take the momentum out of the auction – if they are taking $50,000 increments, you can take control and drop it to $10,000.” Another trick is to make a higher bid that isn’t a round number (for example, throw in a $14,000 bid when it’s rising by $10,000 increments) which can result in the auctioneer dropping the increments in order to round up for easier maths. “Auctioneers aren’t neurosurgeons,” he says.

Morrell also has no qualms about talking to other bidders mid-auction. “Humour helps,” he says. “I will go over to the other bidder and say, ‘Will you please go home? Someone is going to pay more than they need to here’.”

An auction is all about presence and bidders should never be timid. “Take control, slow it down, open with a loud aggressive bid, ask if it’s on the market, interrupt the auctioneer – you own it,” says Morrell. If you can’t, get someone else who can says the man proud to be described by some of his clients as their “personal Rottweiler”.

While a few psychological approaches might increase your chances of winning an auction, it ultimately comes down to who wants it most and can afford to win. “If someone’s got more money and they’ve got more desire to own the property then they are going to get to buy it,” says McCann. “That’s the way the auction system works and that’s why it has worked for such a long period of time.”


Posted by Lorna Edwards – The Age on 3rd November, 2014