Panic is a natural human emotion. It’s designed to motivate us to take drastic action in the face of imminent danger. You might think of a distant ancestor of yours being confronted by a ravenous lion.
In the modern world of work and commerce, however, panic can be a disastrous response. Keeping a cool head is vital, especially if you regularly find yourself working in high-pressure situations.
There are few environments more high-pressure than a car auction. The deals are swift and final, and the stakes are high. It’s important to avoid falling into psychological traps, like ‘auction fever’, and to be aware of biases and fallacies, like the infamous ‘fear of missing out’.
Establish the Non-Negotiable Hard Ceiling
To begin with, you’ll need to have a clear grasp of your finances. That means calculating a maximum acceptable bid. Ideally, this should be informed by the wholesale value of the vehicle, as well as the costs necessary to restore it, transport it, and earn a profit.
If the bidding hits this level, then the vehicle is loss-making. Make sure that you, or the person buying on your behalf, know what the ceiling is, and that they stick to it.
Employ Calculated Late-Stage Bidding
If you bid too early and too aggressively, then you might demonstrate that you are strongly interested in the item. This can be a good thing – but it can also backfire. Competitors might get the impression that the item is worth bidding for, and bid more aggressively, too.
By leaving your bidding until the last two increments, you can keep yourself emotionally detached from the process, and take the opportunity to observe other buyers and their behaviour.
Adhere to the “Two-Bidder” Rule
The price of an item can be inflated by a number of factors, independent of its actual value to the people bidding. The competitive auction process might persuade buyers to bid beyond their means.
You can think of your remaining competition as a key metric. If there are two or more competitors pushing up the price of the vehicle to beyond what you would have wanted to pay for it, then it’s almost always time to back away.
Decouple Emotion from Inventory Quotas
It’s natural to be afraid of leaving the auction without having bought anything. After all, this would naturally mean that the trip was wasted. You’ve invested time and energy into the process, after all. This goes especially if your finances are affecting your state of mind.
This is a form of what’s known as a ‘sunk cost’ fallacy. Just because you’ve invested time and energy doesn’t mean that you should be wasteful. The costs you’ve incurred as a result of simply being there are non-recoverable.
You should treat every transaction as independent, and be mindful of the continuous nature of car auctions. There will always be another deal around the corner. Compromising the rules you’ve set yourself in pursuit of a quick ‘win’ can, in the long term, be disastrous.
Be mindful of this, and ensure that your team is mindful of it, too!
