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We have learnt a number of bidding strategies in class and many a times the best strategy in most bidding scenarios is to know the value that you assign to the item being auctioned. It should be true when you are buying a house too. But, do you bid for a house even when there is no auction?

When purchasing a house, your real estate agent may show you a house and will tell you the list price. Typically, you will give a counter-offer which will be less than list price. You will hope that the  owner will either accept or negotiate some amount in between your amount and the list price. In this case you may be assuming that the owner understands prisoner’s dilemma and will act in the best interest of both parties (you and him) and that you will respond accordingly. But in our assumption we tend to forget that there is another player in the game who needs to maximize his returns as well – the realtor. There may be instances where he will drag you into a bidding game without you being aware of the situation. And then, you may get carried away.

One common strategy that realtors employ is that of finding another prospective buyer and them pitching you against them. Psychologically you will be expected to get desperate to win and get the house because you have by now developed an affiliation for it (To understand this concept better, do read my highly recommended Influence: Science and Practice). It is very important that you truly estimate what your ZOPA (Zone Of Possible Agreement) is and what your final limit is.

A good article that talks about such realtor strategies and how to defend yourself against being dragged into bidding, read this article by a real estate agent herself, Alison Rogers.

Don’t exactly remember where I got the reference for this book but I would like to thank the person/site that mentioned it to me.

Influence: Science and Practice, by Robert B. Cialdiniis a book that opens your eyes. To the world surrounding us and to the compliance tactics smart and cunning people have used to exploit us of our money and joy. No matter who we are, what we want to become, or what we already do, we are constant preys to such people. Think about the TV advertising you just saw, your car salesman, or even the innocent looking boy who came to sell you magazine subscriptions. They are all employing some common tactics that “forces” you to take decisions favorable to them.

Most common uses of these practices are during the course of a negotiation. An intelligent negotiator can employ these mind games to gain an upper hand. You will be astounded when you realize the simplicity of the idea and the enormity of the results it produce. Maybe even you can learn a trick or two to weave into your next negotiation. I also believe that this book will aid you in your relationships – be it as a father, employer, or a friend. The goal should be to reach a conclusion that is favorable to all, not just oneself. Per this book, most of it is psychological!!!

Dr. Cialdini offers great insights into a number of such tactics used. He explains, clearly and lucidly, the fundamentals behind our reactions and backs it up with rich examples and references to research publications. Popular blogger Guy Kawasaki has an interview of Dr. Cialdini on his website. Do check it out.

I would most definitely recommend this book to just about everyone. I am going to buy this book (borrowed from the library this time) and keep in my meaningful-self-help-books shelf.