How not to fall into the winner’s and loser’s curse?
- The Winner’s Curse
- The Loser’s Curse
- How to Beat the Curse
- Compare retail price with auction prices
- Set a bidding limit
- Inspect the items
- Take into consideration repairs before bidding
- Tips to Remember When Selling at an Auction
- Tips to Remember When Buying at an Auction
If you find yourself dabbling more and more into the world of car auctions in the Philippines, then it may be time for you to learn about the winner’s and loser’s curse. These are psychological mistakes that could be made amidst the adrenaline rush that comes with bidding at auctions. In order to prevent the curse from affecting you, there are certain things you can take note of.
Read on to learn how to not fall victim to the winner’s and loser’s curse.
The Winner’s Curse
In order not to fall into the winner’s curse, you must first be aware of what exactly it is. The winner’s curse is an occurrence that happens when a bidder overbids and wins, but suffers a huge loss in the process. This happens more often than not when the bidder is not aware of the market value of the vehicle they are bidding for. As the bidder simply resorts to estimating the value of the car, the person will tend to spend more than what is usually bid to that certain vehicle. The particular bidder will win, but will suffer a huge loss because of their lack of information.
Another curse you can fall into is the exact opposite of the winner’s curse.
The Loser’s Curse
The loser’s curse is when a bidder loses their desired vehicle to another bidder because of the low amount they offered. Falling victim to the loser’s curse could happen for a number of reasons. One could be that the bidder underestimated the item they were bidding for, and could have even underestimated the other bidders aiming for the vehicle. Another reason for underbidding could be that the bidder is afraid to take large risks. And lastly, you could bid below the optimal bid if, similar to the winner’s curse, you are unaware of the market value of the vehicle you are aiming for.
Scared to fall into one of the curses? Not to worry! Read on to learn the secrets to beating the curse.
How to Beat the Curse
Beating the winner’s and loser’s curse can be done by being a more intelligent bidder. This means being in control of your emotions and being organized and smart with your bids. Here are other ways you can beat the curse:
Compare retail price with auction prices
In order to find the most ideal bid, it is important to compare retail prices with auction prices. Search for the vehicle’s different prices online and in market reports. Finding the sweet spot between the two can ensure that you are not overspending nor underspending. It can also highly increase your chances of winning the auction.
Set a bidding limit
A trick you can do to not fall into the winner’s curse is setting a bidding limit. Even after doing thorough research, your competitiveness to acquire the vehicle may cause you to overbid in the end. Set a bidding limit early on in order to protect yourself and your bank from spending too much.
Inspect the items
Besides searching the market value of the vehicle, it is also important to inspect the vehicle itself. The market values you will see in your research will most likely be in terms of a brand new car. Vehicles in car auctions may be second hand cars in different conditions. Some can be well maintained, while some may need drastic repairs. This can help prevent you from bidding too much for an item that may not be up to par with what you want.
Take into consideration repairs before bidding
After finding a vehicle that fits into your standards, compute for any possible repairs you may need to do and compare it to your overall budget. If the cost to repair it is greater than the value of the vehicle, it would be for the best not to push through with the bid. This is also another way for you not to overbid for a vehicle you have your eyes on.
Tips to Remember When Selling at An Auction
In order to help reduce bidders falling into the winner’s and loser’s curse, a seller can keep these key things in mind.
Do not make your auction price too high or too low
Be aware of the market price of the vehicle you are trying to sell. Try not to make the auction price too high or too low. This way, you can help reduce the number of people trying to overbid or underbid.
Be honest with your vehicle
Be honest if your car needs any repairs or renovations. This type of honesty can help bidders make a smart bid that takes into consideration the repairs neededa hre. This can also help your image as a seller in the long run, with more people trusting the items you are auctioning out.
Tips to Remember When Buying at an Auction
Do not let yourself fall into the winner’s or loser’s curse. Remember these two tips.
Do your research well
Be aware of the vehicle you are interested in bidding on. Be practical with your decisions and you may just walk away with a brand new car. Make sure that you read up on the market value of each item you will be bidding on.
Do not overbid or underbid
Do not spend too much money on a bid and do not spend less than the optimal amount on a bid. There are auction databases available for you to look through in order to find the best amount for you. Set up a bidding limit to prevent yourself from going overboard. And do not underestimate a vehicle, you may not know who else is bidding for it.
The winner’s and loser’s curse can be broken by simply knowing all of the information needed. Before a car auction in the Philippines, do your homework to ensure that you do not get carried away by your emotions in the middle of a bidding session. Take note of as many details and specifications for your desired vehicle in order to fully understand its cost and value. Be a smart bidder and you will not fall victim to the winner’s and loser’s curse.