Talk with anyone walking down the street and they can give you a definition of an auction. They may even expound their knowledge of auctions and issues surrounding such events.  Over time (and talking to a lot of people) I have come to understand that there are many misunderstandings or misconceptions of auctions.  In this edition. my intent is to discuss auction types.  Here we go:

·         Absolute: This type of auction has the least amount of restrictions and starts with the first bid and is SOLD at the last bid. It’s often referred to as the purest form of auction. Bidders prefer these auctions because of the possibility for a good deal; sellers also like this type because when professionally conducted they tend to bring a good price. Not all sellers are comfortable with the risk so they may choose an alternative type.

·         Minimum Bid: This usually has Minimum Bid that will acceptable to the seller. An auction may begin with this number or with whatever price a bidder states. The auctioneer continues the auction; if the bid does not reach the Minimum Bid the seller can elect to accept the last bid. If the bid reaches or bypasses the Minimum Bid, the auction will then be Sold to the last and final bidder.

·         Reserve: In this type of auction, there is a price that is determined to be the minimum at which the auctioneer can state the item Sold; this can be a disclosed or undisclosed price, either way the auctioneer knows what the seller is willing to accept (if a bid does not reach the agreed upon number, the seller can elect accept a price lower than the reserve).

·         Subject to Seller Confirmation: This differs from the Reserve auction as the desire of the seller is unknown until the auction’s end. Once the final bid is stated, the seller must inform the auctioneer of whether they accept or reject this price.

Most items sell at auctions, but not always. As mentioned above, there is an assortment of auction types with various restrictions. For instance, the seller may have put a reserve on the item or it may be a seller confirmation (seller must approve the final bid before Sold).

Often thought of as a last resort, auctions are now becoming some seller’s first choice as a method to sell. Many people prefer the accelerated marketing program that encompasses an auction. Sellers are tired of waiting for an unknown period of time, they would rather chose a day and time and know that it will be over. They also understand that it’s one of the best and truest ways to reach market value on the day of the sale. As early as 2003, the Wall Street Journal ran a story with the headline, “Auctions Are No Longer Only for the Desperate.”

Yes and No. Some auctions are the same as 50 or more years ago; people gather, the seller presents their item(s), the bid caller starts shouting out numbers and a buyer is the lucky winner. However, technological advancements have had a significant effect on auctions today. Because of the internet and the willingness of the auction industry to utilize new technology, you can bid on practically anything from the comfort of your home or anywhere your laptop has an internet connection. There are auctions that take place live and online simultaneously, a simulcast or webcast auction. There are even online-only auctions. Digital photography, video recording, world wide web, computers, have all played a significant role in creatively marketing and conducting today’s auctions.

Until the next installment,

Steve Hammarstrom