Looking back, it\u2019s easy to understand why. As with any substantial bet, bidding on a foreclosure is risky. You stand to win (or lose) a significant sum of money.<\/p>\n
And it\u2019s not just that, buying foreclosures at auction is<\/em> competitive. If you\u2019ve done your due diligence and chosen a property with plenty of profit potential, there\u2019s a good chance that other attendees will be bidding against you. This is a tricky combination, one that often causes people to behave in ways they wouldn\u2019t expect.<\/p>\n Related:<\/em><\/strong> Don\u2019t Skip This Step When Buying Foreclosures at Auction<\/a><\/em><\/p>\n Stress and competition have a way of hijacking your rational brain and allowing emotions to take control. In poker, this is referred to as tilt.<\/p>\n When you\u2019re sitting at home analyzing properties and planning your buys, it\u2019s easy to think you\u2019ll be cool and collected when the time comes to bid. But the auction atmosphere is not calm and comfortable like your home environment. The competition, the stakes, the excitement\u2014they combine in ways that can make you do things you\u2019d never do otherwise.<\/p>\n When poker players get tilted, emotions take control and negatively affect their play. This is exactly what can happen to you at auction. You might, for instance, start bidding more than you should despite the fact that the numbers no longer make sense. I\u2019ve seen people get so caught up in the emotion of auction that they end up bidding more than double<\/em> the amount they felt was safe.<\/p>\n That\u2019s why, at auction, the aim is to avoid tilt at all costs. In my opinion, there are really only two ways to do this.<\/p>\n The first is to attend plenty of auctions and to buy your fair share of foreclosures. After all, experience will help you keep your head in the heat of the moment.<\/p>\n Related:<\/em><\/strong> Buying Foreclosures at Auction: 4 Risk-Free Ways to Learn the Ropes<\/a><\/em><\/p>\n If you\u2019re just starting out, however, this isn\u2019t helpful.\u00a0That\u2019s why I advise new bidders to apply the second approach: employ a series of simple rules and strategies to stay calm and in control once bidding starts.<\/p>\n Here are nine that have helped me avoid tilt in my time as a professional foreclosure flipper.<\/p>\n It\u2019s exhilarating to bid in real time against someone else, but beating other bidders should not be your objective. Your goal is to buy a house, not beat a person. There\u2019s nothing wrong with a little friendly competition; it can even be a fun part of the camaraderie.<\/p>\n It\u2019s not helpful, however, when it changes your goal.<\/p>\n Remember:<\/strong> Your goal is to buy property at a good price, not to win at all costs.<\/p><\/blockquote>\n Prior to auction, you should prepare a bid sheet with notes and information on the properties that fit your plans and budget. For each property, you should have a maximum bid.<\/p>\n Related:<\/em><\/strong> 5 Steps for Building Your First Foreclosure List<\/a><\/em><\/p>\n Never<\/em> exceed that bid, especially if you\u2019re new to auctions.<\/p>\n Know that you will absolutely<\/em> be tempted to. It\u2019s almost impossible not to get excited about some properties, and that\u2019s totally fine. But you can\u2019t let that excitement lure you into overbidding; it\u2019s a surefire way to lose money.<\/p>\n Remember:<\/strong> Prepare your max bids in advance, and don’t exceed them.<\/p><\/blockquote>\n I\u2019ve learned through painful experience that showing up to auction unprepared leads to bad decisions.<\/p>\n That\u2019s why I recommend completing the last of your bid sheet work the day prior to auction at the latest<\/em>. Also, pick up your checks the day before so that you\u2019re able to arrive at auction early. These early prep efforts will help you keep your cool when the time comes to bid.<\/p>\n By controlling as many things as you can, you\u2019ll stand a better chance of keeping a leash on the things you can\u2019t.<\/p>\n Remember:<\/strong> By preparing and arriving early, you\u2019ll have much better chances of staying calm.<\/p><\/blockquote>\n Auctions can be chaotic, noisy, and full of distractions. When you\u2019re at auction, it\u2019s imperative that you focus on the trustee and listen carefully so that you\u2019re able to hear the loan and property description clearly.<\/p>\n Related:<\/em><\/strong> Buying Foreclosures at Auction: How to Avoid Overpaying<\/a><\/em><\/p>\n If not, you might make a costly mistake.<\/p>\n For example, there are a lot of Smiths in the world, and there can easily be two of them facing foreclosure at the same time. If you\u2019re not paying attention, you could bid on the wrong property. I’ve seen it happen.<\/p>\n Remember:<\/strong> Focus and listen carefully. Simple mistakes can be costly!<\/p><\/blockquote>\n I\u2019m always surprised by the ways in which a property I haven\u2019t analyzed or have already discarded suddenly seems like a great buy in the heat of the moment. Still, regardless of how tempted I may be to bid, I don\u2019t.<\/p>\n Unless the properties announced at auction are on your list with a bid price that you\u2019ve established in advance, they\u2019re not for you.<\/p>\n Remember:<\/strong> Stick to the properties listed on your bid sheet.<\/p><\/blockquote>\n Many bidders bring other people with them to auction. This is usually due to the fact that it\u2019s easy to miss a bid at a busy auction with multiple trustees calling out properties.<\/p>\n Related:<\/em><\/strong> The 5 Biggest Risks of Buying Foreclosures at Auction<\/a><\/em><\/p>\n When you\u2019re new, however, there\u2019s an even better reason to bring someone along: to have them act as your second brain. Give them your properties and your bids. Arrange in advance for them to let you know if you\u2019re starting to tilt.<\/p>\n Remember:<\/strong> Bring a friend or partner to auction. It\u2019s more fun and can help prevent tilt.<\/p><\/blockquote>\n Recently, we bought a home at auction for thousands of dollars over the maximum bid we\u2019d established the day before. The reason? Our bidders didn\u2019t want to go home empty-handed.<\/p>\n It\u2019s an easy mistake to make. Auction day requires a lot of preparation, and it\u2019s painful to think you might go home with nothing.<\/p>\n But trust me, it\u2019s better to go home empty-handed than to go home with an overpriced property. You can\u2019t make money by losing money. Even if you don\u2019t buy anything, you\u2019ll be going home with valuable experience that will help you at the next auction.<\/p>\n Remember:<\/strong> Going home empty-handed is better than making a bad buy.<\/p><\/blockquote>\n There have been times when I\u2019ve been swept up in bidding just because I assumed other bidders knew more than me. When you\u2019re learning the ropes, it\u2019s an easy trap to fall into.<\/p>\n Don\u2019t.<\/p>\n In the heat of the moment, trust the work. If you\u2019ve followed the process outlined in Bidding to Buy<\/em><\/a>, then you\u2019ve done the work. When doubt surfaces, look at your bid sheet and follow your own instructions. Think of the bid sheet as a message sent through time to help you now as you stand anxiously on the courthouse steps.<\/p>\n What other bidders do is irrelevant. Trust in yourself and the process.<\/p>\n Remember:<\/strong> Ignore your feelings about other bidders. Trust yourself and the process.<\/p><\/blockquote>\n Auctions have more in common with poker than just tilt.<\/p>\n Buyers are often strategic with their style of bidding. Some will bid a big amount, going all in to scare off competition. Others bid small amounts to appear uninterested.<\/p>\n In reality, bidding styles don\u2019t tell you much. They\u2019re tactics designed to play on your emotions. You can\u2019t tell if the all-in bidder is desperate, bluffing, or just new to auctions. Likewise, you can\u2019t tell if the person placing low bids is reluctant, broke, or playing a specific strategy.<\/p>\n Related:<\/em><\/strong> How to Successfully Market to Homes in Pre-Foreclosure<\/a><\/em><\/p>\n Your best approach as a new bidder is to focus on the numbers and to rely on your bid sheet. All that matters is whether the current bidding is above or below your max bid.<\/p>\n As you gain experience, you\u2019ll become familiar with some of the other players and their bidding styles. You can later experiment with your own bidding style or follow the style of others. For now, though, just play the numbers. Keep an eye on your own wallet without worrying about anyone else\u2019s.<\/p>\n Remember:<\/strong> Ignore the posturing of other bidders and focus on the numbers.<\/p><\/blockquote>\n Believe me, I know how strange it feels to stand in a crowd knowing that millions of dollars are about to change hands. Most people never see anything like it, and it can be overwhelming for first-timers.<\/p>\n But that\u2019s part of the excitement of auction. It really is an experience like no other.<\/p>\n Embracing that excitement and truly enjoying the experience will help you keep a cool head. The alternative\u2014freaking out\u2014isn\u2019t going to do you any good.<\/p>\n As a new bidder, do your best to stay calm and have some fun. If you ever feel you\u2019re in danger of tilting, do nothing but watch. There will always be other auctions and other opportunities to buy foreclosures.<\/p>\n Be sure to check out the new foreclosure book I co-authored with David Osborn, Bidding to Buy<\/em>. It\u2019s available now on the BiggerPockets Bookstore<\/a>.<\/p>\nDon\u2019t Get Tilted at Auction<\/h2>\n
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<\/p>\n1. Have the Right Goal<\/h3>\n
2. Know Your Foreclosure Bids in Advance<\/h3>\n
3. Arrive Early and Prepared<\/h3>\n
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<\/p>\n4. Listen Carefully<\/h3>\n
5. Don\u2019t Bid on Unknown or Discarded Foreclosures<\/h3>\n
6. Bring a Voice of Reason<\/h3>\n
7. Accept Going Home Empty-Handed<\/h3>\n
![\"cpa-vs-self-prepare\"](\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2017\/01\/cpa-vs-self-prepare.jpg\" "\\"\\"")
<\/p>\n8. Trust Yourself and the Process<\/h3>\n
9. Don\u2019t Worry About Bidding Style<\/h3>\n
Final Thoughts for First-Timers Buying at Auction<\/h2>\n
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<\/a><\/p>\n