If you want to become a more successful negotiator not only in property but in many areas of your life, you’ll enjoy today’s podcast which is the second part of a two-part series on how to win at auctions.
Today I’m going to discuss the psychological tricks agents and auctioneers use to get the last dollar out of your pocket, in the hope that if you understand these techniques, you’ll be a better negotiator not only at auctions but in all real estate transactions.
After you’ve attended several auctions, you’ll realize that a lot of the theatre and pressure is intentionally manufactured to get results.
A good auctioneer can create an atmosphere of excitement and nervous competition as well as using some sneaky techniques I’m about to uncover for you that encourage businesses to pay a little bit more than they might have initially intended.
To be successful, you must be aware of the little tricks that agents will use on you, and even if you’re not planning to buy a property at auction you’ll find that most real estate agents, who are trained negotiators, will use many of the psychological principles I’m going to share with you in all property negotiations.
And as I show you how to spot these practices and how you can handle them, you’ll find the lessons you learn will be helpful in negotiations in all areas of your life.
In fact, my discussion with you today comes out of a chapter of my top-selling book Negotiate Influence Persuade.
Auction psychology tricks:
- Social proof – This shows potential buyers that many other people are also interested in the property. We feel validated when we can see that others want the same things that we want.
- Scarcity – We value things that are (or seem to be) scarce. Auctioneers will use tactics to emphasize or manufacture scarcity and create FOMO.
- Reciprocity – This is just giving your customers something before you ask for anything from them. We tend to want to return good deeds. Therefore, auctioneers might give away things like free coffee or treats, hoping your urger to reciprocate later will result in a sale.
- Anchoring – We tend to rely too heavily on an initial piece of information. We selectively filter by the first impression. So, the first number dropped can be hard to shake and you may anchor your judgment on it.
- Loss aversion – The pain of losing something is psychologically more powerful than the pleasure of gaining something. Auctioneers will play on this fear of losing out.
- Recency bias – you’re more likely to remember something that happened recently than something that happened a while Auctioneers will remind you of recent growth but not mention stagnation or loss a few years ago
Auction sins to avoid:
- Not bidding: The way to be the winner at the end is to actually bid.
- Deciding on a round number: You could miss out because you’re not prepared to bid an extra $500-1000.
- Stopping and starting bidding: Stopping to confer makes it seem like you might not have enough in your pocket to close the deal. It doesn’t project confidence.
- Asking if the property is on the market: You’re going to know when the property is on the market. You’ll see signs or they’ll actually tell you. But it shouldn’t matter – the seller came to sell the property. All you’re doing is negotiating on price.
- Making ridiculous offers: Starting too low may in some cases allow bidders in who might otherwise stay out and can build momentum, which you want to avoid.
- Pretending you’re not interested: Agents want to help genuine buyers purchase, so be a stand up buyer.
Get a range of my ebooks here: www.PodcastBonus.com.au
Some of our favourite quotes from the show:
“Again, I’m suggesting you should be aware of these techniques, so they don’t catch you off guard so that you bid at auction with your head and not your heart.” – Michael Yardney
“Of course, in a rising market as we’re experiencing in most parts of Australia, a property price achieved two or three months ago is going to be irrelevant.” – Michael Yardney
“Start with a strong confident bid that could knock out several other contenders early on.” – Michael Yardney
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