Going, going …
You’re at an auction for a home – then you get the leading bid. Research out of the University of Copenhagen suggests that getting the leading bid can change individuals’ perceptions of the item up for auction, build attachment and mean they are “willing to pay more when outbid”. The idea is similar to the endowment effect explained in the eZonomics video The mistake of not giving up. Researcher Jens-Martin Bramsen, of the university’s Institute of Food and Resource Economics, called it the “pseudo endowment effect” in his study of online furniture auctions.
Remember, house prices can go down
No matter if buying at auction or making an offer, it pays to do plenty of research before buying a house. Be aware of the financial risks, including the risk that house prices can go down. If bidding at an auction, understand the rules involved. Does a winning bid require a deposit to be paid immediately? What documents are needed? Blog kerbside appeal outlines some auction tactics. It says working out a fair price requires research of the housing market as well as the particular property.