Auction Formats

Not all auctions are the same, or even for the same purpose.  It is important to understand the reason for the auction, the format of the auction and the terms and conditions under which the auction will be conducted.

            Absolute Auction – the property will sell to the highest bidders without a minimum or reserve.  Generally this type of auction attracts the largest number of bidders and results in the spirited competitive bidding that produces maximum selling prices.  An absolute auction may not be the right choice for all sellers and properties, particularly where there are significant outstanding mortgages or if the property has very limited appeal or where other conditions might affect the marketability of the property.  The seller must be prepared to accept the market’s evaluation on auction day.  Maximum prices through maximum attendance and most risk for the seller.

            Reserve Auction – the property will sell to the highest bidder above a preset minimum price determined by the Seller.  This reserve amount may be published or kept private.  In order to be effective, the published reserve price must still represent a “bargain” for the buyer.  The number of bidders in attendance will be in direct proportion to the perceived “bargain”.  Predetermined risk for the seller but generally lower attendance and lower prices.

            Hybrid Auction – Applicable to multi-property auctions where a portion of the properties to be sold “Absolute” and remaining properties to be sold subject to a “reserve” or confirmation by the seller.  In this type of auction, the marketing will highlight the “absolute” properties in an attempt to get the maximum number of bidders competing for the properties available on an “absolute” basis. 

If there is only one seller, selling many similar properties, usually the “absolute” properties will be auctioned first; and if the price action and number of participating bidders is acceptable to the seller, additional properties will be offered, one at a time, on an “absolute” basis until the price drops below an acceptable level.  Controlled risk for the seller but generally higher attendance and higher prices.

If there are multiple sellers or if the properties are dissimilar, then the "absolute" properties may be mixed in throughout the auction.