8 ms·

I bid 701k on my house, whose asking price of 645k seemed on the low side. After winning the bid, I asked what the next-highest bid was. Turned out to be 699k.

by tromp 5y ago

I bid 701k on my house, whose asking price of 645k seemed on the low side. After winning the bid, I asked what the next-highest bid was. Turned out to be 699k. I'm so happy they took this unrounding advice in the other direction :-)

TonyTrapp 5y ago
This also often worked on ebay for me, e.g. if you are willing to spend 60 $currency on an auction, make your highest bid 61.52 or something like that. The extra 1.5 dollars/euros/whatever doesn't really hurt but if there's many people who'd want to win the action for a similar price as you, it can be the distinguishing factor.
- toss1 5y ago
  Yup. Same here for eBay and industrial equipment auctions - figure out my approximate maximum, consider the nearby round number, then add something almost trivial like the "1.52" in your example. While it obviously doesn't help if the bidding runs up to another level, I've found it helps a surprising number of times. And if you actually want to win the bidding, definitely do not skimp to below or at the round figure - that marginal extra will provide way more value than the cost (i.e., not losing & spending more time & funds getting the item elsewhere). Now, I wonder how long it will take for auction systems to start suggesting this type of bid and ruining the strategy so we need to find another strategy...
  - TonyTrapp 5y ago
    > Now, I wonder how long it will take for auction systems to start suggesting this type of bid and ruining the strategy so we need to find another strategy... To be honest, the immediate issue that is already there in this very moment is that more and more people no longer sell their stuff as regular auctions on ebay, but as completely overpriced fixed-priced offers. This is the main distinguishing factor for me between using ebay ten years ago and now. If everyone starts doing that, the best bidding strategies become useless.
- planede 5y ago
  ebay is basically a second price auction, although not sealed-bid. I try to follow the strategy to bid my true value near the end of the auction, this is my only bid. I bid at the end to minimize the effect my bid has on other bidders. Then I just let the auto bidder to take over.
- frou_dh 5y ago
  It can sometimes be surprisingly difficult to sit down in isolation and decide what the ACTUAL maximum you're willing to pay for an eBay item is. That's part of the whole "auction" gimmick I guess: there can be an element of wanting to beat any competitors.
joedissmeyer 5y ago
I had an extremely similar situation when we purchased our home last year. The home had an estimated valuation of 320k but because of the ridiculousness of the US housing market bids were going for upwards of more than 20k higher than the asking prices. We put in our bid for 341,100 - and we got it. I found out later that the next highest bid was exactly 340,100. That extra 1k in our offer made the difference for us.
op00to 5y ago
For a 2k difference, I hope the sellers evaluated both offers for contingencies that would complicate the transaction. It would suck to have to carry a house for an extra month or two and lose the $2k difference because Offer 701k can’t get their financing together! :)
- arunprakash01 5y ago
  [flagged]
- Ensorceled 5y ago
  Kind of weird to be accusing the commenter of being unable to get their financing together.
  - lcnPylGDnU4H9OF 5y ago
    I think they're suggesting the seller should understand the risks of their undertaking. If they didn't do their due diligence it could end up being the case that the offer they take was the "worse" offer because the person making it couldn't back it.
    - Ensorceled 5y ago
      Right, but they are replying to the BUYER. The seller probably doesn't even know what HN is. It's just a weird thing to say to the BUYER, "ah, but did the SELLER look into your finances before they took your bid"
      - op00to 5y ago
        A lot of what’s said on HN, in good faith, would sound totally weird in person.
    - LanceH 5y ago
      That there are other considerations for a seller aren't really relevant when the post is about bidding just higher than a round number to win it. Just as explaining how you won the bid at 2k lower by having a cash offer and writing a nice letter and being accommodating with their move out times is irrelevant to the round number argument. The story of bidding 701k is clearly in the realm of "all else being equal", nudging the price up a relatively insignificant amount can have a significant effect.
deleted 5y ago
[deleted]
JackFr 5y ago
“What’s my cover?” Often bond dealers will put out “bid lists” to customers or other banks of relatively illiquid bonds and ask for competitive bids for a handful of bonds. Invariably the buyer with the winning bid on a bond would ask “What’s my cover?”, that is “How much more did I pay than the next best bid.” Importantly, there is no legal obligation to tell the them or especially to tell them the truth, and invariably the response would be “a tick” (1/32). The only time I’ve heard someone say someone tell the truth with bad news for the customer was “No cover - you were the only bid.”
- Handytinge 5y ago
  This of course varies country to country. I'm unsure what country you or the GP are in, in mine the price is reported publicly in most states.
pc86 5y ago
701 is just as non-round as 699
- rovr138 5y ago
  hence, > I'm so happy they took this unrounding advice in the other direction :-) they went up, the others went down.
  - pc86 5y ago
    Ah, I read it as going against the advice!
- gpvos 5y ago
  True, but bidding is also the opposite from offering for sale, so it makes sense to go up instead of down like you see with the prices in shops.
  - Uehreka 5y ago
    Does it? The point of 699 is to get the highest price possible while hiding the most-significant digit. The opposite of that would be signalling a high most-significant digit while giving as little as possible, which would be 700. 701 just kind of looks like an esoteric joke.
tomxor 5y ago
That sounds like a closed bid, where any psychological tactics against other biders are ineffective... maybe if someone incorrectly attempts to apply open biding strategies it makes sense to think of number that would barely outbid those people (as you did). But to be honest I'm not sure what they were attempting to signal with 699, that's a sales strategy to make the price appear lower, surely you want it to appear the opposite. I guess some people copy strategies without understanding them.
- JumpCrisscross 5y ago
  > sounds like a closed bid, where any psychological tactics against other biders are ineffective Other bidders aren't making the decision to sell. The seller is. $701k might deter a seller countering a $700k bid with $735k (5% more).
  - gowld 5y ago
    Other bidders are making the decision whether to increase their bid.
    - bialpio 5y ago
      I don't remember this was how putting an offer for a house worked. The seller is collecting a bunch of offers and picks the one they like the most. The offers can include escalation clause, but it's still more of a closed auction than the open auction.
      - toast0 5y ago
        The seller doesn't have to accept one of the offers, they can ask bidders to rebid or just let it sit on the market longer. If they got a lot of offers clustered around $700k, they might take the best (which might not be the largest, if there's a difference in contingencies), or they might try to get everyone to rebid, or maybe just the lower bidders to try to go back and forth. Of course, asking for a rebid usually means not accepting the firm bid, and there's a risk of putting off the potential buyers.
noitsnot 5y ago
Or you could use an escalation clause. Go above the highest bid by a certain dollar amount and cap the limit.
astura 5y ago
The reason someone would accept a slightly lower bid for a house is the funding source is easier/more likely to go though. Nothing to do with the roundness of the bid. That's assuming the $699k bid isn't entirely fictitious, which it probably is. Both agents have an incentive to make the buyer feel good about the transaction and not like they overpaid when they did.
t_mann 5y ago
haha, I wonder who's analyzed that game formally. feels a bit like the 2/3 game with flipped signs (https://en.wikipedia.org/wiki/Guess_2/3_of_the_average https://en.wikipedia.org/wiki/Guess_2/3_of_the_average). for real numbers, the unique Nash equilibrium is 0, for finite precision numbers (which we're effectively dealing with in reality), the set of Nash equilibria is a bit more interesting. but of course, Nash equilibria don't always line up well with human behaviour. for the 2/3 game there's empirical work showing that the best strategy against inexperienced players is betting somewhere around 20 iirc. would be interesting if there are papers that would give a similar rule of thumb how much of a "premium" you should offer over the nearest sensible round number
danielmarkbruce 5y ago
Why didn't you bid 702?
layer8 5y ago
Right, on Ebay I’ve always bid slightly above a round number for that reason.
DaltonCoffee 5y ago
All those episodes of Price is Right finally paid off.

by tromp 5y ago

TonyTrapp 5y ago

This also often worked on ebay for me, e.g. if you are willing to spend 60 $currency on an auction, make your highest bid 61.52 or something like that. The extra 1.5 dollars/euros/whatever doesn't really hurt but if there's many people who'd want to win the action for a similar price as you, it can be the distinguishing factor.

toss1 5y ago
Yup. Same here for eBay and industrial equipment auctions - figure out my approximate maximum, consider the nearby round number, then add something almost trivial like the "1.52" in your example. While it obviously doesn't help if the bidding runs up to another level, I've found it helps a surprising number of times. And if you actually want to win the bidding, definitely do not skimp to below or at the round figure - that marginal extra will provide way more value than the cost (i.e., not losing & spending more time & funds getting the item elsewhere). Now, I wonder how long it will take for auction systems to start suggesting this type of bid and ruining the strategy so we need to find another strategy...
- TonyTrapp 5y ago
  > Now, I wonder how long it will take for auction systems to start suggesting this type of bid and ruining the strategy so we need to find another strategy... To be honest, the immediate issue that is already there in this very moment is that more and more people no longer sell their stuff as regular auctions on ebay, but as completely overpriced fixed-priced offers. This is the main distinguishing factor for me between using ebay ten years ago and now. If everyone starts doing that, the best bidding strategies become useless.
planede 5y ago
ebay is basically a second price auction, although not sealed-bid. I try to follow the strategy to bid my true value near the end of the auction, this is my only bid. I bid at the end to minimize the effect my bid has on other bidders. Then I just let the auto bidder to take over.
frou_dh 5y ago
It can sometimes be surprisingly difficult to sit down in isolation and decide what the ACTUAL maximum you're willing to pay for an eBay item is. That's part of the whole "auction" gimmick I guess: there can be an element of wanting to beat any competitors.

joedissmeyer 5y ago

I had an extremely similar situation when we purchased our home last year. The home had an estimated valuation of 320k but because of the ridiculousness of the US housing market bids were going for upwards of more than 20k higher than the asking prices. We put in our bid for 341,100 - and we got it. I found out later that the next highest bid was exactly 340,100. That extra 1k in our offer made the difference for us.

op00to 5y ago

For a 2k difference, I hope the sellers evaluated both offers for contingencies that would complicate the transaction. It would suck to have to carry a house for an extra month or two and lose the $2k difference because Offer 701k can’t get their financing together! :)

arunprakash01 5y ago
[flagged]
Ensorceled 5y ago
Kind of weird to be accusing the commenter of being unable to get their financing together.
- lcnPylGDnU4H9OF 5y ago
  I think they're suggesting the seller should understand the risks of their undertaking. If they didn't do their due diligence it could end up being the case that the offer they take was the "worse" offer because the person making it couldn't back it.
  - Ensorceled 5y ago
    Right, but they are replying to the BUYER. The seller probably doesn't even know what HN is. It's just a weird thing to say to the BUYER, "ah, but did the SELLER look into your finances before they took your bid"
    - op00to 5y ago
      A lot of what’s said on HN, in good faith, would sound totally weird in person.
  - LanceH 5y ago
    That there are other considerations for a seller aren't really relevant when the post is about bidding just higher than a round number to win it. Just as explaining how you won the bid at 2k lower by having a cash offer and writing a nice letter and being accommodating with their move out times is irrelevant to the round number argument. The story of bidding 701k is clearly in the realm of "all else being equal", nudging the price up a relatively insignificant amount can have a significant effect.

deleted 5y ago

[deleted]

JackFr 5y ago

“What’s my cover?” Often bond dealers will put out “bid lists” to customers or other banks of relatively illiquid bonds and ask for competitive bids for a handful of bonds. Invariably the buyer with the winning bid on a bond would ask “What’s my cover?”, that is “How much more did I pay than the next best bid.” Importantly, there is no legal obligation to tell the them or especially to tell them the truth, and invariably the response would be “a tick” (1/32). The only time I’ve heard someone say someone tell the truth with bad news for the customer was “No cover - you were the only bid.”

Handytinge 5y ago
This of course varies country to country. I'm unsure what country you or the GP are in, in mine the price is reported publicly in most states.

pc86 5y ago

701 is just as non-round as 699

rovr138 5y ago
hence, > I'm so happy they took this unrounding advice in the other direction :-) they went up, the others went down.
- pc86 5y ago
  Ah, I read it as going against the advice!
gpvos 5y ago
True, but bidding is also the opposite from offering for sale, so it makes sense to go up instead of down like you see with the prices in shops.
- Uehreka 5y ago
  Does it? The point of 699 is to get the highest price possible while hiding the most-significant digit. The opposite of that would be signalling a high most-significant digit while giving as little as possible, which would be 700. 701 just kind of looks like an esoteric joke.

tomxor 5y ago

That sounds like a closed bid, where any psychological tactics against other biders are ineffective... maybe if someone incorrectly attempts to apply open biding strategies it makes sense to think of number that would barely outbid those people (as you did). But to be honest I'm not sure what they were attempting to signal with 699, that's a sales strategy to make the price appear lower, surely you want it to appear the opposite. I guess some people copy strategies without understanding them.

JumpCrisscross 5y ago
> sounds like a closed bid, where any psychological tactics against other biders are ineffective Other bidders aren't making the decision to sell. The seller is. $701k might deter a seller countering a $700k bid with $735k (5% more).
- gowld 5y ago
  Other bidders are making the decision whether to increase their bid.
  - bialpio 5y ago
    I don't remember this was how putting an offer for a house worked. The seller is collecting a bunch of offers and picks the one they like the most. The offers can include escalation clause, but it's still more of a closed auction than the open auction.
    - toast0 5y ago
      The seller doesn't have to accept one of the offers, they can ask bidders to rebid or just let it sit on the market longer. If they got a lot of offers clustered around $700k, they might take the best (which might not be the largest, if there's a difference in contingencies), or they might try to get everyone to rebid, or maybe just the lower bidders to try to go back and forth. Of course, asking for a rebid usually means not accepting the firm bid, and there's a risk of putting off the potential buyers.

noitsnot 5y ago

Or you could use an escalation clause. Go above the highest bid by a certain dollar amount and cap the limit.

astura 5y ago

The reason someone would accept a slightly lower bid for a house is the funding source is easier/more likely to go though. Nothing to do with the roundness of the bid. That's assuming the $699k bid isn't entirely fictitious, which it probably is. Both agents have an incentive to make the buyer feel good about the transaction and not like they overpaid when they did.

t_mann 5y ago

haha, I wonder who's analyzed that game formally. feels a bit like the 2/3 game with flipped signs (https://en.wikipedia.org/wiki/Guess_2/3_of_the_average https://en.wikipedia.org/wiki/Guess_2/3_of_the_average). for real numbers, the unique Nash equilibrium is 0, for finite precision numbers (which we're effectively dealing with in reality), the set of Nash equilibria is a bit more interesting. but of course, Nash equilibria don't always line up well with human behaviour. for the 2/3 game there's empirical work showing that the best strategy against inexperienced players is betting somewhere around 20 iirc. would be interesting if there are papers that would give a similar rule of thumb how much of a "premium" you should offer over the nearest sensible round number

danielmarkbruce 5y ago

Why didn't you bid 702?

layer8 5y ago

Right, on Ebay I’ve always bid slightly above a round number for that reason.

DaltonCoffee 5y ago

All those episodes of Price is Right finally paid off.