The Block auctions

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Spotlight on auctions

 

The Block auctions provide insight into how all auctions work. Property renovating and design are a form of personal expression. Many people watch The Block because they can pick up ideas for their own homes as well as make their properties more sellable. Viewers become very involved in each property’s progress and many will attend the final auction.

 

On auction day a large crowd will suggest there is a lot of interest and competition. The Block auctions also have the added celebrity – making the properties even more exclusive. The Block properties are indeed rare and have luminary cachet so the competition will be for the property as well as the status.

 

At a regular auction, the same variables exist minus the publicity. Purchasers at regular auctions will behave exactly the same – competitive or cautious. However, the market and the other bidders will influence the price, not Channel 9 which has promoted the properties.

 

The Block clearly demonstrates what is happening when a property is in demand. Behind the scenes there are people watching the property if it is rare there will be a big crowd and the marketing will help the sellers.

 

The Block auctions clearly demonstrate that the buyers will do what they want on the day. That often means they can pay far more than what the market is indicating. Agents are often blamed for giving a suggestion of price that is not a reflection of what the house will actually sell for but in reality, buyers always decide.

 

Media creating a frenzy

 

The media constantly provides stories of real estate agents that hype up prices. However, The Block’s auction results demonstrate the market, not the agents dictate the results. Clearly, Channel 9 hypes up The Block properties as a whole show is dedicated to that sole purpose.

 

There have been many hugely successful sales on The Block but ultimately no matter what is said prior to the sale the market will decide. Agents try and give an indication for purchasers but if a property is rare the price will reflect that. Equally, if a market is hostile – high interest rates – the market will reflect that too.

 

 

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Psychology at an auction

 

Individuals at auctions can become very competitive and drive a price much higher than ANYONE can predict. The behaviour of people at auctions is quite interesting. Buyers are in an emotional state and that causes them to deviate from their predetermined bidding strategy. People have a budget going into an auction but when bidding exceeds their budget they are often committed and exceed the amount they originally set out to pay.

 

People behave differently when they are being watched or competing with others undertaking the same task. Scientists believe it is caused by competitive instincts between individuals and bidders have an insatiable need to beat their rival bidders.

 

During auctions, scarcity is embedded into the process. Often, humans overvalue things they think will run out. Auction items are scarce because they are unique and infrequent in time. Bidders feel they only have one opportunity to win the property.

 

Humans take the lead from their peers. When many people say something or do something, others replicate that action. Auctions place you in competition with other people who all consider the item valuable and therefore, reinforce buying behaviour.

 

The Block is a window into how all auctions work. Competition, rarity and ego impact the result and no external party has control once the auction begins.