Foreclosure Auctions Psychology

Are you wondering why others win more foreclosure auctions than yourself? Do you want to know how to win more foreclosure auctions? Do you want to know when to make a higher bid?

Fortunately, all of these questions can be answered. For a much better understanding, you must understand that foreclosure auctions are mostly psychology. It’s a strategy game: you go out there, make a lot of bids, but you have a lot of “enemies”. These enemies always tend to bid more than you do and they win the auction, even before you can even think about raising your bid. Hard battle, isn’t it?

Yes, you guessed it. It’s a huge battle! It’s the battle of who is a better strategist, and also a smarter person. Maybe the winners aren’t always the rich people. They are the average people, who just know how and when to bid, and how much.

I want to tell you about what is known as “herd” behavior. The human herd. Whether you admit it or not, you’re in it, almost every day. We’re humans, so we like to be with other humans. We are social beings. Society, on the other hand, can accept or reject you. Nobody wants rejection, so we tend to do nearly anything just to be accepted. This is where herd behavior comes in.

How does this play in at auctions? You see a lot of people. You all want to buy that object, X. Now, at a given moment, all of your “enemies” start to bid more and more. So, as a reflex, or as a fighting back mechanism, you also tend to bid more. This is wrong, wrong, wrong! Why? Because by acting like that, you are giving others the strength they need to win the auction.

This is why you shouldn't go with the herd. Rather, stand alone. How does it work? People go to an auction and want to buy something. You don’t know each other’s budget. That’s the point! You don’t know theirs, and they don’t know yours! First of all, you wait. At the beginning, everyone is bidding. Time passes, and the number of bids keeps decreasing while the monetary amount is increasing. Let’s say there are two people, “fighting” to win. The current bid is $15,000. Suddenly, you jump in, and say $20,000. That’s the bomb! They’ll be so scared, they’ll think your budget is in the millions of dollars, when you might only have $20,500 and you really need that object X.

Tricky, isn’t it? There are other tricks too. If you organize yourself and win an auction, you can easily maximize your profit by selling object X, and earning even more money. How? I’ll give you an example. X is a house. You bought it for $70,000. It needs a little fixing here and there.

You buy some really cheap paint, hire some cheap workers, and start “repairing” the house. Your goal is to make the house look better, and people will think its value is at least $100,000. What else do you have to do? Paint the walls, clean and arrange the furniture, clean the rooms, and make everything look perfect. Mow the lawn, clean up the leaves and branches and plant some garden center blossoming flowers in the neglected flower beds outside. Stick some decorative lawn ornaments in strategic spots.

The point of all above mentioned, if you’re following me, is human psychology. You can easily use psychology to win foreclosure auctions. However, unethical methods may exist, and shouldn’t be used. This is mostly informative; you’ll simply learn the basics of foreclosure auction psychology.