Mastering the Bidding Game Without Overspending
How do you avoid over bidding at the auction?
The auction's live. You're watching a property you researched. Bidding's climbing. Your max was $8,000. It's at $7,800.
Someone bids $8,200.
Do you chase it?
This is where most investors lose money. Not because they bid on bad properties, but because they can't walk away from good ones at bad prices.
The Pre-Auction Discipline System
Step 1: Calculate Your Max Before the Auction Starts
Never decide your max bid during the auction. Ever.
Use this formula:
Max Bid = (Property Value x 0.40) – Expected Costs
$80,000 property:
$80,000 x 0.40 = $32,000
Minus $2,000 costs = $30,000 max
Anything over $30k? You walk. No exceptions.
Step 2: Write It Down
Seriously. Grab a notepad and write:
“Property 123 Main St – MAX BID: $8,500 – WALK AT: $8,501”
That physical reminder keeps you honest when adrenaline kicks in.
Step 3: Set a “Comfort Zone” Below Your Max
Your max is $8,500. But set your “stop and think” point at $7,500.
If bidding hits $7,500, pause. Ask yourself: “Is this still a great deal or am I just emotionally attached?”
Usually? You're emotionally attached.
Real life: Tom used to chase every property he researched. “I put in the work, so I deserve to win it.” He overpaid on 7 out of 12 liens his first year. Now he sets hard limits and walks away at least 40% of the time. His returns doubled.
The Auction Psychology Traps
Trap 1: Sunk Cost (“I already researched this!”)
Your research time doesn't entitle you to overpay. Walk away.
Trap 2: Scarcity (“This is the only good one!”)
There's always another auction. Another county. Another opportunity.
Trap 3: Competition (“I can't let them win!”)
You're not competing with other bidders. You're competing with your own profit margins.
The Walk-Away Rule
If you attend 10 auctions and win 10 liens, you're overbidding.
Top investors win 30-50% of what they target. They walk away constantly because they know something better is coming.
Your Pre-Auction Checklist
Before every auction:
- Calculate max bid using the formula.
- Write it down physically.
- Set your “pause point” 10-15% below max.
- Commit to walking away if it exceeds max.
The goal isn't to win auctions. It's to win profitable liens at prices that make sense.
Discipline is uncomfortable. Watching someone else win the property you researched stings. But six months later, when their overleveraged lien is stuck and your capital is working at 14% elsewhere? You'll be glad you walked.
đź’Ş Discipline is the difference between winning and winning smart.
