This snippet is from one of our previous episodes: Going Ape S#!t: How To Hack Your Brain To Make More Money

If you’ve ever walked into an open home with a checklist… only to fall in love with the property the moment you stepped through the door, you’re not alone.

In this bonus episode, Bryce chats with behavioural economist and psychologist Phil Slade about why property decisions are rarely purely logical. As it turns out, our brains are wired to respond emotionally — especially when time pressure, competition, and the fear of missing out come into play.

In this episode, you’ll learn:

  • Why property decisions are often driven by emotion rather than logic
  • How auction environments amplify time pressure and competition
  • The psychological trap known as loss aversion — and how it can lead to risky decisions
  • Practical ways to set guardrails so emotions don’t take over during bidding

Heading to Auction This Weekend?

Before you get caught in the bidding war trap, remember that preparation is your greatest advantage. Setting clear limits, slowing down the decision-making process, and even having someone bid on your behalf can help protect you from emotional decision-making in the heat of the moment.

And if you’d rather have an experienced professional in your corner, consider working with one of our Buyer’s Agents to guide you through the process.

__________________

If You Enjoyed TPC Gold | Why Auctions Are So Emotional (And What To Do About It), You Might Also Like:

Transcript

Bryce Holdaway
Someone’s turning up at an auction or they’re about to negotiate on a property… where are the common applications for your field to help someone who’s about to go this weekend to negotiate on a property?

Phil Slade
Yeah, so first thing obviously, I say to people is realize that buying a property is an emotional decision. You know, how many times you’ve walked into a house and you’ve got a list of things that you really want? They’re your must-haves; you’ve done a pros and cons list, and these are the must-haves and these are my trade-offs… and you walk into a house and go this is it. I don’t care. This is the one.

And that’s your ape talking right and all of a sudden the priority just goes out the window, and you pay whatever you want for that property because sometimes it makes sense. Particularly when you’re going to live in that property so it’s your primary residence (and) not just investing. This is going to be a primary residence and the thing that people have got to realize is that property is an identifier. It says something about you and who you are and your success in life and what your station is. And you’ve almost got to mitigate for those feelings to go: you care about that more than other people. The suburb that you’re in means more to you than anyone else.

So, starting to pick apart some of those emotions that sit there at the very outset… so that you don’t go into an auction so emotionally invested that you’ve got a limit of $1.2 million and bid to $2 million because you’re in the competition, you’re in that room, it’s manic, you have a bit of time pressure, you’re trying to navigate things, and you get yourself into trouble.

I think time pressure in an auction is what works for the auctioneer, works for the seller. And for much as possible even in an auction, you’re trying to decrease that time pressure somehow and expand it out. And the other thing is, don’t worry about loss. You know, the loss of a house can really hurt. You can almost grieve the loss of a house and you’re not even owning it yet. But you’ve emotionally invested over two months as you walked to the house, and you’ve connected with the house and you’ve seen your kids in the house and you’ve envisaged parties and what your life’s going to be like in this future state. And then to not get the option, you get this strange sense of loss.

Now, the interesting thing about loss and we’re averse to loss, we know this is loss aversion. When you’ve experienced a loss, the very next thing that you’re about to do often means that you’re a lot more risky in order to make up for the pain of that loss. So the very next option you’re likely to go to, you’re likely to actually make a worse decision.

Bryce Holdaway
Beware the rebound property.

Phil Slade
Right. This is classic loss aversion. So I think just being aware of those things is good. I think you can often set up the emotional regulation awareness; how do you slow down your environment a little bit better? One thing a lot of people do that know that they get caught up in the emotion of an auction (is) have a friend or a trusted other that can bid on their behalf, where prior to the auction, they set up simple rules. Don’t go over this amount. If the bidding’s too fast, slow it down.

All of those sorts of rules that you can think of beforehand because you’re using your rational brain, not your emotional reactive brain and get someone else to do that. And realize that you’re not an expert. You’re not doing this all the time. Yes, there are experts that do this week in and week out, but the expertise is very rarely on the buying or the selling side, right? On the buying or selling side, you are not an expert. So you will be emotional and you will be open to biases because you don’t have that expertise.

Bryce Holdaway
Yeah. Can I add to that, Phil? Because along that line of thought, there’s a couple of things where I can add my lived experience. Ben and I have got something called the Buyer’s Decision Quadrant, which helps people understand that they will need to compromise. Most people in this country need to compromise in one of the four areas of price, location, size of the land, or quality of the dwelling.

So knowing that in advance actually helps you game and prepare your environment for success. Also, this one is a little philosophical, but it’s the red lights, green lights philosophy where I’ve done so many transactions over a career and buying in my own portfolio that I know that life will throw us a red light or a green light. And if you continually keep coming up against red lights, it probably wasn’t meant to be. So the example for that is being so invested in an outcome on a piece of real estate the first time and they missed out, they’re devastated. But it’s only like two or three months later that we realise why they missed out. And it’s because the one that they actually bought was so much better, so much more appropriate. But at the time of missing out, they would not have even fathomed that that was possible. So for me, it’s like, don’t push the river. If you’ve tried whatever you can to make it work and you got a red light, it was for a reason. And the reason will reveal itself at some other stage.

And then the third one for me is, I’ve had people on the show that go: there’s no way I’m going to buy a property that looks like A, B and/or C and I take them to a property because the producers want me to take them there and it’s got A, B or C and I’m thinking: how am going to get them to even consider walking through the property, let alone buying it? They go through (and go): Oh this is amazing. This is the one. I’m like, really? Wow. Okay. So therefore my suggestion for gaming that is to realise the first time you go through a property, there’s an emotional response. But then what I find is when I take them back the second time, all of a sudden they go: Oh, actually there’s not a lot of storage in this property. And I’m not sure the kids are actually going to be able to play soccer out the back here. And so therefore they’re actually gaming on the second look. So there’s a couple of lived experiences through the property game that sort of reinforced some of the things you’re saying around setting yourself up to game your emotions.

Phil Slade
Yeah. Simple rules, right? Our brains love simple rules. And if you can learn some simple rules that help guardrail good decision-making and stick with them, then you’re ahead. You’re already ahead.