Auction processes can appear complicated,
but generally fall into one of two Types & Formats:
Absolute or Reserved,
Live or On-Line.
Auction Types & Formats
Bidding Venues & Strategies For Real Estate
and Personal Property Auctions
There are several methodologies, one of which will best assist in the sale of your property.
Regardless, you , the seller, control the timing and the terms of the sale.
The auction strategy (or strategies) and venue employed is based upon many factors:
- The value range of the property
- The condition of the property or merchandise
- The number of properties in the portfolio or size of the collection
- Location, accessibility and security
- Current market conditions
- The buyer profile or 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 and expenses to the seller.
Venues
Live Bidding: Live bid auctions are just that; live. 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.
This had been our prefered venue for Real Estate sale for decades. .
On-Line: Bounds Auction Company has invested great time and capital mastering the offering of real estate auctions on-line.
We currently offer the majority of our auctions as ON LINE ONLY.
Real Time, On-Line Only:
All bidding is accepted - in real time - live - via the internet only. This is our primary means of offering both Real Property & high value personal property.
This is not a timed event. Bidding opens at a low minimum opening bid and continues for a specified period of time, example, 1 week, in a prebid status. At a predesignated "closing"time, the bidding becomes "live". and continues to a natural conclusion with a short time limit to recieve a counter bid. A " Soft close", just like a live bid auction.
As long as bids are made within a preset paramiter, 3 minutes for example, bidding continues. At this time, if reserve or seller's acceptance has been met and announced, bidders knowing that their next bid can win, a "real auction" will have been achieved. We know bidders hate to lose. In nearly every case, we have seen bidding extend well past this point. That is the goal.
#2 On-Line/Live Hybrid: On-line bidding in concert with live bidding.
This is very effective for high value property and unique items. As described, bids are taken both live and from pre qualified bidders via an internet connection, no differently than a phone bid would be. Many of our Real Estate offering have employed this technique. Many auction companies still use this method, some actually employing multiple on line bidding sites at a time.
We have found that this technique can put off as many bidders as it just isn't as transparent as live only or on line only. Bidder trust is everything.
What has changed ?
This generation of buyers are more comfortable annoynous on line than they are eye to eye on the live floor. Its that simple.
Live and Real Time On line Only share the commonality that only the truely interested and committed will be there at the close.
Real Time On line has the distinct advantages of getting them comfortable enough to partisapate in the 1st place and reaching them whereever they may be . Next door, in another State, at work, at home, on their phone ... anywhere.
Auction Types, Formats & Strategies
The UCC ( Universal Commercial Code ) states that all auctions are to be considered with reserve unless stated in the terms as " Absolute".
An auction with reserve; the seller “reserves “ the right to sell by setting a minimum
or withholding final approval.
An absolute auction without any reserve. Whatever the high bid, the property is sold.
While Bounds Auction Company rarely recommends absolute terms for real estate, there are circumstances when it is appropriate. Most all personal property is offered absolute.
Absolute usually out performs any other auction terms. Nothing can stimulate attendance, interest and bidding like the knowledge that the next bid can win.
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.
- "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 at any juncture. Experience shows us tha this is the most effect approach.
- 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, very attractive.
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.
Other Bidding Strategies
High Bidder’s Choice: In this style of bidding, similar properties or merchandise are grouped and bidders may bid for the right to select 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. This methodolgy is also popular with personal property of a like kind.
People will pay more to have their "choice," and will often buy them all at that price.
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.
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.