Different Auction Types
Everyone knows roughly how an auction works. People put items up for auction then others place bids until there is winner (whom ever is willing to pay the most). The sell can set reserves and minimum opening bids to make sure they get at least a certain amount.
But not everyone knows that there are different types of auctions like Multi-Parcel and Static Auctions. We know you might not know what we are talking about, but this is what we’re going to help teach you. Let’s get reading and bring you up to date on all different auction types.
Static Auction
A static auction is one that is conducted online similar to what you might find on eBay. It normally has a predefined duration of several days or more that count down to a definite end time. Bidders can place bids up until that end time at which point the bidder having the high bid is declared the high bidder and most likely winner depending upon any reserves needing to be met. There is a variation to a static auction in which the software will automatically extend the last bid if placed within a predefined few minutes or seconds of the ending time. If a bid is placed within this time an additional amount of time will be added so that others might bid again. Once no further bids are being placed the time will expire.. We use this in our software to prevent what is known as sniping. Sniping is the placing of bids within seconds of the ending time in such a way as to prevent other bidders from bidding because they don’t have the time necessary to respond to the last bid.
Live Onsite Auction
A live auction is a public outcry auction where bidders gather at a specific location like a room, banquet hall or onsite. In most cases the site is chosen close to those items being auctioned off. At a live auction, you will see a bid caller and a team of ringmen who are taking bids from bidders. The live auction method is extremely effective and some have argued that nothing replaces that sense of urgency it creates among bidders. When you need everything gone, it’s the most effective by far.
Online Auction
An online auction is one that is conducted on the internet where bids are placed using an auction platform via software. Bids can be placed from almost any computer or smart device that has internet access. Online auctions can expand the pool of buyers able to participate exponentially because they no longer need to be present to bid. Online auctions also increase the marketing effectiveness which again helps benefit the seller. There are many more benefits for both buyers and sellers having an auction offered online.
Simultaneous Live and Online Auction
A simultaneous live and online auction is one that has the benefit of bidders being able to bid live onsite or online from almost anywhere. In the very busy world we live in, this can be the most effective offering in that it allows more buyers to participate. The biggest benefit we see is for the seller in that we see higher prices. In some instances where we are selling specialized assets, it’s not uncommon for 60% or more of the winning bids to be placed online. What we see is more participation from professional buyers and resellers alike.
Sealed Bid
A sealed bid auction is when all the bids from bidders are made in such a way as not to be known to other bidders or the public. The bids can actually be mailed, faxed, emailed or by using an online application via the internet. Sealed bid auctions sometimes will have more than one round of bidding. In this multi-round process the seller can eliminate the lowest bidders from advancing to the next round or he can keep them. The additional round of bidding may put additional pressure on the bidders to make their best and final bid. Sealed bid auctions can be successful as it tends to pit the bidders against not only the other bidders but their own imagination as to what the others may be bidding. Sealed bid auctions can be very effective in identifying hidden value not necessarily reflected in the market research.
Multi-Parcel
The Multi-Parcel auction method is highly effective in obtaining maximum selling prices for acreage, raw land, farm land, anything sold in tracts or lots including city blocks as an example. It also allows buyers that frequently have different interests to bid on only the lots they are interested in or any combination of the same. Multi-Par auctions frequently will generate higher realized values than recent appraised values. If you consider the impact of breaking a large farm down into smaller tracks, what you see are more interested buyers like surrounding land owners and those that can only afford so much bidding and winning. The multi-par option can be conducted live, online or both simultaneously. Multi-Par requires our computer software to keep track of every bid and it can calculate what the future bid a bidder needs to place in order to win their desired lot or lots in real time. It is complex on the back end but it will maximize the value for the seller and it allows buyers to bid on those lots they value the most.
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