Different Types of Auctions
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 seller 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 the different auction types.
Static Auction
A static auction 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 the end time; the highest bidder wins, provided any reserves need to be met. In some auctions, the software will auto-extend the last bid if placed within a predefined final moment. 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 placing a bid within seconds of the ending time to prevent other bidders from responding 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, a banquet hall, or on-site. 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 the 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 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 of having an auction offered online.
Simultaneous Live and Online Auction
A simultaneous live and online auction 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 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 they tend to pit the bidders against not only the other bidders but their 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 for maximizing prices on land, acreage, and anything sold in tracts or lots. It lets buyers bid on specific lots or any combination they’re interested in. Multi-Par auctions frequently will generate higher realized values than recent appraised values. If you consider breaking a large farm into smaller tracts, you will see more interested buyers. The multi-par option can be conducted live, online, or both simultaneously. Multi-Par uses software to keep track of every bid, and it can calculate what the future bid a bidder needs to place to win their desired lot or lots in real time. Though complex, it will maximize the value for the seller and allow buyers to bid on lots they value the most.
