What is an auction? An auction is a buying and selling system that offers them bidding. 

Once an item is placed for a bid, the auctioneer would start with a relatively lower price to attract more bidders. 

The bidders would compete against one another by placing a bid higher than the other,

Once the highest bid has been made, and no other bidder is willing to offer a higher bid, the deal is sealed, and the bidder who offered the largest sum of money will be the winner of the night. 

Why Do People Enjoy Auctions? 

The adrenaline rush, the excitement, the audience, and simply the thrill of bidding make people enjoy auctions even though they might lose more than gain in a bid once in a while. 

Emotions play a major role when you are at an auction. You need to learn to control your emotions at a bid before they prove to be a disadvantage. 

• Persuasion — Persuasion plays an influential role when it comes to bidding. When you are at an auction, winning the bid is in your best interest. However, circumstances may occur such that the bid exceeds your budget.   Although the bid is above your budget, you may place a higher bid due to persuasion caused by your partner, your peers, or even yourself. This happens either because you don’t want to lose the product or because of your pressure.

• Competition — Some of us take competitions a little more seriously than others. Some bidders consider an auction a competition. The thrill of winning the bid overpowers their logical thinking and results in making a bid that is not worth the price.

• Social facilitation — No matter how much we deny it, we all love a little bit of attention along with the audience. When you’re at an auction, you will be surrounded by other bidders around you. Winning a bid, of course, brings you some recognition.

• Fear and humiliation. — This applies explicitly when you’re one of the last bidders to make a bid. When the whole crowd is anticipated, waiting for the final winner, you do not feel like giving up and facing the humiliation; instead, you place higher bids that would later put you in trouble. 

Pros And Cons Of Buying A Property Through An Auction

Pros Of Bidding 

• There is always the possibility of buying a property at a discount price at an Auction. 

• Auctioning might avert potential competitors because of the competitive nature of bidding. 

• One of the quickest ways to purchase a property is through an Auction. 

• An Auction provides a wide range of choices for you to choose from. 

• Ease of Purchase. Once you have sealed the deal and the hammer has been hit, the property belongs to you within 28 days.

Cons Of Bidding 

• Due to the potential competition of other bidders, you may end up paying a larger sum than necessary. 

• Although the fast process can be an advantage, you need to get your finances in order. If you win the bid, you will have to deposit 10% on the day. 

• If you don’t settle the total amount within 28 days, you might lose your property. 

• More often than not, you tend to overpay at an auction, and the quoted prices tend to be unrealistic and more than the actual market price. 

• Bidding at an auction can be nerve-wracking and significantly cause stress when you cannot acquire the property you want. 

Tips To Help You Win At An Auction

• Educate yourself. The more you do your research, the more you know about the actual value of a property. This will help you to place your bid wisely.

• Do not hurry. When placing your bids, you are advised to go at a slow pace and have breaks between your bids. 

• Control your emotions. Do not let your emotions get the better of you, and make decisions in haste, leaving you regretting later. 

• It is suggested that you go to other auctions and spectate the process before actually making a move. 

• Stick to your budget. You can easily be distracted when at an auction, as your primary motive is to bag the property. 

• Confidence is Key. Be confident and optimistic when placing a bid. 

The financial world is vast, and you must understand a lot of things. The bidding system is one such topic that simultaneously teaches you many other things. However, Afiya Financial Services mainly focuses on home loans. So if you need a hand, talk to us.