Auction processes can appear complicated, but generally fall into one of two types:
Absolute or Reserved.
Auction Types & Formats
An absolute auction is just that; whatever the high bid, the property is sold.
An auction with reserve; the seller “reserves “ the right to sell by setting a minimum
or withholding final approval.
While Bounds Auction Company rarely recommends absolute terms for real estate, there are circumstances when it is appropriate. Absolute will out perform any other auction terms. Nothing can stimulate attendance, interest and bidding like the knowledge that the next bid can win. Performed properly, there is little risk.
Reserve auctions come in a variety of formats.
Confidential Reserve: A minimum value is established between the Auctioneer and the Seller. Once bidding exceeds this reserve, the Auctioneer can execute the sale on behalf of the Seller. If reserve is not achieved, the Seller is under no obligation to sell and the auctioneer may not declare the property sold without consent of the seller.
Published Minimum Opening Bid: Similar to the confidential reserve format with the exception that the reserve is published as part of the marketing program. Bidding openings at that reserve and the Auctioneer can execute the sale on behalf of the seller at the highest bid in excess of the opening bid. This published reserve must be a valid reserve at which the property can sell and not simply a mandated opening bid. For this format to be effective, the published reserve must be very attractive.
"Subject To Seller’s Confirmation ": The premise of a by confirmation auction is that there is no minimum opening bid or contractual reserve empowering the auctioneer to sell. The seller retains the right to refuse or accept the final bid.
Success of any by approval or reserve offering depends upon achieving seller's acceptance quickly. Bidders must know they can buy for truly competitive bidding to take place. The goal of either reserve format is to meet the expectation of the seller, then by releasing the property to the bidding, to exceed that seller's expectation.
Bidding Venues & Strategies For Real Estate Auctions
There are several methodologies, one of which will best assist in the sale of your property.
The auction strategy (or strategies) we employ will be based upon the value range of the property, the condition of the property, the number of properties in the portfolio, the nature of the property to be offered, the location , current market conditions, the buyer profile, the target market and most importantly, your goals.
Which ever auction strategy we propose for your property, auction is the very best method of maximizing exposure and price, while minimizing carrying costs of no longer needed assets.
Venues
Live Bidding: Live bid auctions are just that. During a live bid auction you would expect to bid on real property just like you would bid on an antique, a work of art or a tool. A live bid auction is typically a public event where bidders and spectators are able to enjoy the show together. Live auctions may take place at the premises or another site better suited to handle expected turnout .
On-Line: Bounds Auction Company has invested much time and capital mastering the offering of real estate & personal property auctions on-line. We currently offer 3 different on-line platforms:
#1. Real Time, On-Line Only: All bidding is accepted via the internet only. This is our primary means of offering personal property. This is not a timed event. Bidding continues to a natural resolution.
#2. On-line/Hybrid: On-line bidding in concert with live bidding. This is very effective for high value property and unique items.
#3. Live Web Casting: As more consumers have access to high speed Internet connections, this format will have a place in higher value sales. This format excells at REO and investor liquidation offerings. Bounds Auction Co. is prepared and offers state of the art on-line bidding capabilities. This can take the form of a live outcry auction conducted in two or more bidding locations, thus allowing bidders in different cities or different countries to bid for the same property.
Bidding Strategies
Live Outcry Auctions: Used where the buyers prefer to bid in person and will buy the property exactly under the terms of the offering. This strategy is selected when price is the sole consideration as to who buys the property. This is our most common choice.
Two Bid: A ‘two bid’ auction includes a written pre-auction bid followed by a live auction. The live auction is then a restricted event including only those bidders that submitted an acceptable pre-auction bid. This system is used most often when selling unique or exceptional residential real estate or real estate along with other significant assets, like a turn key business package. Another variation is requiring bidders to offer an opening bid to register.
Sealed Bid/Tender Bid: A sealed bid auction is used when dealing with transactions where specific terms for the sale may not all be pre-determined. In this instance, the buyer has some room to negotiate the terms of the purchase of the property, and the seller is provided an opportunity to potentially receive a higher price, due to the terms of the deal being somewhat negotiable and in some instances, even conditional.
A Rolling Sealed Bid Offering is a combination of the Two Bid & Sealed Bid formats.
High Bidder’s Choice: In this style of bidding, similar properties are grouped and bidders may bid for the right to select the property of their choice from the grouping. The highest bidder’s choice is then removed and a subsequent round of bidding begins for the remaining properties, again at high bidder's choice.. This style of bidding is most commonly used on the sale of condominiums, townhomes or building lots.
Multi-Par Bidding: Multi-Par Bidding is most commonly used on the sale of large undeveloped land where multiple parcels of land are offered. This method allows bidders to place bids for various configurations of parcels based on the bidder's desire to assemble the parcels.