These three simple rules will help you in any auction – whether they be online or live ones with an auctioneer and a hammer. You need to understand a little bit about the psychology of auctions to prepare your winning strategy.
The over-riding principal of any auction is to negotiate between the seller and the market for the highest sales price (best terms) possible. For the seller. The non-altruistic buyer is not interested in paying the highest price, their best interest is the lowest price.
If it were just one buyer and one seller, the vinegar strokes of the negotiation come down to changes in price – how much the incremental price change is. You can see how much you’re changing the price by with each round of negotiation, and try to figure out the other party’s position before making your next bid. Auctions throw multiple buyers into the mix, so you’re trying to figure out the positions of multiple parties. If it’s a live auction, a good auctioneer will know how to play two buyers against one another. Phrases like “Don’t lose it to that guy for $50” spring to mind.
So auctions favor the seller by having multiple buyers, so that’s the first way to win. Be the seller.
The second way to win relies on a simple and often overlooked exercise, define “winning”. This can be as simple as having a firm price that you’re prepared to pay, or a value of the item to you. Or it could be “not losing the auction to Joe Bloggs”. To implement the strategy of not paying more than the item is worth to you, you have to stick to that price. Or you may end up winning the auction, but losing on your principals or value definition. Note: it’s often said that you can’t get a good deal on anything that you really want, so that’s why many people will pay more than they want to at auction than they plan to. They really want something.
The third way is to snipe. If you use eBay to lose auctions frequently, you’ll notice that new bidders often come in at the last minute and win your favorite items. Which is annoying. In live auctions, the same thing happens. Two parties will bid up until the bid increment becomes small, and then a third party will come in and scupper the first two parties’ and break their spirit. It happened yesterday when I was at a live auction for the Batmobile. People use tools like AuctionSniper to do this for a nickel on an eBay auction.
I went to an auction yesterday and won one auction by simply not paying more than I was willing to spend on a London Black Cab. I sniped at the end of the bidding which happened to be a little above my best price (if I had won at that price, I would have lost), and then the winning bidder upped my bid. I had won by virtue of finding out that the taxi was worth more to someone else than me.