Bidding game theory

lcwill

So here's the situation -
- desirable location with limited supplies of high end property.
- numerous bidders in a bidding war for a particular property until one wins, going way over asking price
- when the next comparable property comes up will it sell for more or less than the previous property and why?

Any ideas?

IronSteve

It depends...

lcwill

That's what I guessed too....but I thought maybe there was some game theory explanation that could help

LirW

It's in the end always about how much the highest bidder is willing to pay (and they do have a variety of reasons why they go up until amount X).

Lumen

To "win" you have to pay more than anyone else thinks it's worth.

NinjaTruncs

If the number of players stays the same, minus the one who bought the first house the price of the second house should be lower. But there are other factors new better (more cash) players could join or the current players could get more cash if the time frame is long enough. But the high score set by the first winning player will influence the new house.

Alkers

Lumen wrote:

To "win" you have to pay more than anyone else thinks it's worth.

Or can afford

Peregrinus

lcwill wrote: »

So here's the situation -
- desirable location with limited supplies of high end property.
- numerous bidders in a bidding war for a particular property until one wins, going way over asking price
- when the next comparable property comes up will it sell for more or less than the previous property and why?

Any ideas?

Assuming the asking price was a reasonably well-informed approximation to the market price, the fact that bidding drove the price well above that tells you that there were at least two bidders who really wanted the property and were prepared to pay above-market for it.

One of those bidders is now out of the market (since he has bought a property, and we have no reason to assume he wants another).

The result is that the next property is likely to sell for close to market value. It won't be bid up unless there are at least two bidders willing to pay above-market for it.

If, on the other hand, there were numerous bidders involved in bidding the price well above asking price, that suggests that the asking price was below the market value. If that's the case, assuming the market conditions haven't changed, another similar property should sell for a similar price.

Victor

NinjaTruncs wrote: »

If the number of players stays the same, minus the one who bought the first house the price of the second house should be lower.

If there were only two properties in the market ans there are many buyers, the price would likely go up.

Lumen

Lumen wrote: »

To "win" you have to pay more than anyone else thinks it's worth.

Simona1986 wrote: »

Or can afford

Nope. There is always someone in the market with enough money but they're not interested in the property because they don't think it's worth it.

Yourself isit

Lumen wrote: »

To "win" you have to pay more than anyone else thinks it's worth.

The buyer always loses in an auction.

spaceHopper

quadrifoglio verde wrote: »

Buy a banger. Ideally one that has been sitting under a pine tree of some sort so it will be all green. Can be picked up for 200 Euro. Abandon it outside the house that you're intending to buy on the day of its open viewing. Smash off the wing mirrors for added effect.

That should take some people's bids :pac:

That's actually not a bad idea, but how about go to scrap yard get a good bit of broken glass and place it in several spots on the street it will give the impression of trouble in the are.

All of you have ignored two important people the EA and seller. Before you even bidd, find out about the EA and why is the seller selling, is it a probate sale with a looming tax bill or 5 or six sibling each getting a share. Are the sellers moving. I thin pussying futting arond with 1k increments below the asking is only drawing in more bidders. Before you bid have a price in mind, have all your paper work done and loan from the bank... If you being bid against ask the EA who are the other bidders, do they have loan approval... then leave it for couple of hours. Don't go 1 k more either walk or comeback with a strong bid.

Also there is no point placing a bid you know the seller won't or can't accept