The Problem with Auctions

Why do some bidders stick with their bids even if they are starting to go beyond the rationality of the sale? Why are there so many people who jump into the hype of auctions without really knowing why they do it? And why are there so many bidders who tend to get themselves caught in bidding wars while knowing that they will have to pay more than they can afford?



Bidding frenzy is a common problem in joining auctions which also makes some people reluctant in buying from such. Why is this happening and why are there some people who just can't stop even when the rationality of auctioning is crossed?

Here are three reasons behind this:

One, it may be due to the combination of arousal, excitement, competition, an overwhelming desire to win and extreme reluctance to back out.

Bidding frenzy is comparable with addiction to gambling in terms of the adrenaline rush and the continued excitement running in the psyche of the people involved. The more intense the bidding war becomes, the more interested the bidders become.

The rush of emotions can't be discounted when trying to understand why people participate in bidding wars. At this point, it really no longer matters whether logic is working or not, what is more important is that the person is satisfied emotionally. Also, people loose their best judgment when their minds are clouded with emotions.

Two, it may not be purely on winning the item but on testing the personal threshold of the bidder and the competitor.

People who aren't so interested in the item but get caught in the bidding war no longer feel the need to get the merchandise but the need to make the other person pay dearly when the ending price is several times over than the original price.

Three, it may be due to the lack of experience with auctions.

Bidding wars are more commonly observed among people who are just beginning and are not backed by sufficient information on how exactly they work. It must be noted that some bidding wars are intentionally encouraged by the auction organizers themselves. This is working on the principle that the more interest the public has on the merchandise, the higher the value it receives and the more interested buyers bid on it. This does not only increase the hype over the item but also adds to its market value.


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Where to Find the Best Deal

If you are looking for your next car, real estate, clothes, jewelry, arts and antiques, household furniture, personal gadgets or anything you want to buy at bargain prices, you should be heading to any of the following places.

Police Auctions

Police confiscate items and impounds vehicles. But if the items are left unclaimed for a definite period of time or there is no possible way to trace the owners and return the items, they become auction goods. Police also seize properties and items associated to crimes people commit.


The police seized properties will then go to an auction. Police auctions are often held at local police agencies, federal law enforcement agencies, police departments, and county sheriff departments at specific time and date.
Government-Seized Auctions. Due to foreclosure and seizure laws, the government accumulates properties from private owners who were unable to pay their mortgages or loans. These will then become government property and will be put into auctions.

The Customs and Border Protection, US Department of Homeland Security, U.S. Postal Service, U.S. Marshals Service, U.S. Bankruptcy Court, Internal Revenue Service, and State Tax Department are some of the government agencies that hold government-seized property auctions.

Bank and Loan Companies. Bank and loan companies often repossess properties from owners who are unable to make loan payments. These repossessed properties range from real estate, vehicles to home furniture, become bank or loan company properties.

Since the cost of storage is high, bank and loan companies want to convert the repossessed properties into liquid assets right away. The best way to do it is through an auction. Bank and loan companies often announce auction schedules online, in office bulletins and in newspapers.

New and Used Car Dealers. In order to make a sale, new car dealers allow their costumers to trade-in their old cars for new ones. The old vehicle that was traded-in will then go to an auction. Used car dealers also employ the same system as other auction houses to generate sales.

While there are some used vehicles up for bidding, there are also very well-maintained vehicles you can buy at a price that is usually lower than their current market value.

Auction Companies. Auction companies sell a wide array of auction goods. Check newspaper ads, auction brochures, and the yellow pages. They often hold valuable information on when and where the next auction will be.



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Benefits of Auctions for Sellers

Many sellers, property owners and brokers often prefer to sell items through auctions due to the following reasons:

An item is considered sold once auctioned

Chances are the items will be bought once listed at an auction. The fact that it is being auctioned means that it has some good market value and this value could increase depending on the bidders. The buyers will always find good reasons to buy the item presented to them even if they may have no intention of doing so.


All buyers are willing to bid

There is no other way for potential buyers to get the item they want but to bid at an auction. Thus the seller has the assurance that his items and properties will be sold at the end of the day.

Quick disposal of items

Probably one of the fastest ways to sell things, auction gives the sellers the advantage of fast disposal of the merchandise. Once an item is presented to the crowd, someone will always be willing to get hold of it. This then will cut the expenses on maintenance, taxes, and even inventory costs.

Assurance of true market value

The market value is the price that is both competitive and acceptable to the buyers. If the price is bid, this means that the true market value of the item is being given therefore; there is no way for the auctioneer or the seller not to get the price that is fair for the item.

Accelerated sale

Unlike when a car is sold individually or a foreclosed home is negotiated between the owner of the property, the broker and the willing buyer, items being auctioned only need a moderator to announce the item and the buyers will bid on it. This makes the sale both efficient and fast. The process eliminates the negotiation or the waiting process.

Accurate information

Unlike with the conventional way of selling on the open market, auctions give the seller the assurance that his property will be sold at a certain time.


Buyers are qualified

Registration is a typical part of any auction. The potential buyer has to first register an account that would enable him to bid on the auction and would give the seller the assurance that the potential buyers have the capacity to pay.




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Going to an Auction in 5 Easy Steps

by: Harry S


The process of buying at an auction can be confusing to first timers. If you get started on the wrong foot, the whole experience can be discouraging. So in order to make sure that you do it correctly on your first try, here are the steps you should follow
1. Go to an auction preview

If you want to increase your chances of success, this is the most important step you should focus on. Auction previews are an opportunity to know the different auction goods on sale and the only time to inspect personally the items you are interested in bidding on. Turn it on, plug it in, try it out and examine all the features of the item when possible.

Auction previews are held days before the actual auction day. It is your chance to take notes, bring a camera, and screen the items through your personal quality check list. At the day of the auction, go through the items one last time and inspect that they are still in the same condition.

2. Do your Research

Once you have seen the items on sale, go home and do your research. Go online and check the market value of the items. Consider the repair costs if necessary.

3. Set your budget

Once you have done your research on the items you are interested in bidding on, determine the highest amount you are willing to pay for each item. Take note, knowing the amount of your highest bid should be based on the current market value of each item, the possible repair costs, and the additional charges the auction company will impose on the sale.

4. Prepare Your money

Winning at an auction is legally binding so you cannot simply pull yourself out after you win an item. Prepare your money that you have set to cover your bids and the extra fee.

5. Bid

When the auction opens and the auctioneer calls for the bids be ready. A second of hesitation may cost you to lose the item you are eyeing. Stay within your set budget. The auction process is fast-paced; things can get ugly, and emotions can run high. Do not let your emotions rule your decision-making. Bidding on impulse may win you an item but make sure that it won't overrule the budget you have set and the research you have done.


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Guideline to Auctions for Bidder

by: Harry S

This is a compilation of helpful tricks that could improve your bidding power.

How not to overbid.

Overbidding is a common problem among people participating at auctions. In sealed and silent bidding, it is easy to overbid since nobody else knows exactly how high or low the bids are. To ensure that someone wins the bids, he should give it his highest estimated value. On the other hand, the behavior of the crowd and the excitement encouraged by the auctioneer over the properties or items are enough to make people bid excessively. The easiest way to counter this is to do your research.


How to establish your price limit.

Realistic price limits could be made through critically listening to people's advice, from searching the same items online and through researching some information regarding the property or the item being auctioned. With enough information, you could come up with an estimated value of the merchandise. You don't have to be an auction guru to know how much an item is worth though.

It all boils down to research. Knowing something about the item could help you decide on how much you should be willing to bid on it. Doing your homework, getting hold of the actual auction catalogue or inspecting the items during their viewing period could help a lot not only on deciding which item to get but also the price limit you give to each item.

Maximize your time

Some auctions will give you sufficient time to inspect the item, some provide the catalogues. Whichever method is being used in the auction you are interested in, you should try to maximize your time by coming in the auction site early. By doing so you might get a chance to talk to the auction organizers and inquire about the items. This also gives you the advantage of getting a comfortable seat.

Attend some auctions beforehand

People who are serious about auctions try to find as much information about them as they can. One good way is to witness live auctions personally. There is so much going on, the hype, the excitement and the wars that normally happen. All these could give you reliable information once you decide to participate yourself. Initially, you should not place any bid- no matter how small the amount. Your intention is to get the feel of the auction process, nothing else.

Observe the crowd.
Bidders have different personalities- each of which work for their buying styles. Work out the differences and similarities among bidders and develop a style of your own. Take note of the style of the more successful ones.




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Auction Guide for First Time Bidders

by: Harry S

When you are going to an auction for the first time, there are specific things that you should know :

1. Obtain an auction brochure or catalogue. Do this at least a day before the auction date. This ensures that the goods for sale are what you need.

2. From the auction catalogue, identify what you want. If it's a car, do your research on its current market value online. Once you know its value on the market, you can set your budget.

3. At the day of the sale, phone in the auction house and confirm if the auction is going as scheduled as certain auctions can be subjected to last minute cancellations or rescheduling. Phoning in to confirm if the property or an item you are interested in is still on sale is something you should do before going to the auction house as well.

4. Once you arrive at the auction house, register to obtain a bidding number. You will be asked for your name, address, and contact number and will be asked to pay a deposit or pay a certain amount for the registration fee.

5. Come early. This allows you to inspect the auction goods properly before the bidding starts. An auction brochure may be helpful in providing information of the goods for sale; but physically inspecting the items before the sale allows you to determine if the goods are really worth any amount of your money. Do an ocular inspection, days before the scheduled auction if it is a piece of property.

6. Each item is designated with a lot number for easy reference. Take note of these numbers when you are inspecting the goods. The same number will be called during the actual auction.

7. Before the auction starts, the auctioneer will explain the rules. Listen attentively and keep your ears open for additional information on the goods up for bid.

8. Once the auctioneer calls for the starting bid, the bidding process begins. Each item may be sold within seconds. Once the lot number you are interested in is called, be alert and stay focus. Do not bid an amount you cannot afford. Stay within your set budget. Most first time bidders get carried away and bid higher than what they have originally planned.

9. If you have won an item, you will be asked to pay in partial or in full and to give your personal details the day of the auction.

Once it is all settled, you will be asked to sign an auction memorandum. The deal is done!

Good luck.....happy bidders !

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