You may be wondering how many different types of auctions are there?
The list is long and there are so many potential variances. The auction type will often vary depending on what is being auctioned. These auction types are applied across different lots being sold. They will be used for real estate, goods, art, animals, vehicles, businesses, coins, storage units, foreclosures, etc.
Some types have similarities and variations which may be set by the auctioneer. Regardless of the auction type, it is stated upfront so that participants and the seller have clear expectations as to how the auction will be governed.
Types of Auctions
Here are some of the most common types of auctions you will find.
Absolute Auction
This is your traditional live auction were the highest bid wins no matter the final price. Bids are accepted in ascending order. Here the price starts at zero and goes up. Sometimes an auction house will set bid increments. This style of auction favors the seller because bidding can get very competitive and raise the price past the value of the lot. Absolute auctions thrive on emotions and besting other bidders in a fight to see who is willing to pay the most for the given property. These tend to get the most bidding action.
For the seller the risk of an absolute auction is selling for below the properties value. However the reward is also potentially greater for selling well over the estimated value.
Minimum Bid Auction (English Auction)
This is also referred to as an English auction. It is another traditional live auction type similar to the absolute, except here the seller sets a minimum price. No sale can be made unless a bid is received for the minimum asking price.
At the start of a minimum bid auction, the auctioneer announces “the bidding will begin at [minimum amount of dollars]” for the specific property. Some may also set a bid increment. These auctions can get competitive as well with emotions and rivalries, but are less alluring to buyers. The minimum bid requirement helps filter out all bidders who aren’t serious or who are hoping to get price below value.
This auction type provides less risk for the seller, since they can ensure they get their minimum asking price. One of the key strategies is to set the minimum price low enough to get competitive bidding started. If the minimum bid is set to high, buyers will not be encouraged to start bidding.
Reserve Auction
This types of auctions usually are the least interesting to buyers. In these live auction events the seller can accept, reject or counter the “winning” bid, should they decide to. They need to determine if they will reverse before the auction event concludes.
This is one of the least risky auctions for a seller because they can protect themselves from underselling their properties. Reverse auctions are not very exciting to potential buyers, because even if they have the highest bid, the seller may reject it anyway. These types of auctions become very anti-climactic when sellers decide not to sell.
Sealed Bid or Blind Auction
In these auctions, buyers submit their best offer in a sealed envelope. The bidders have no idea how much anyone else has wagered. The auctioneer opens the envelopes in private and does not share the results with the participants. the results are only shared privately with the seller. At this point the seller must decide to either: accept the highest bid, reject all bids, or call for “best and final from only the two highest bidders.
This type of auction is most commonly used for properties that aren’t considered very attractive. A property that doesn’t have much curb appeal tends to get low bids which reduces the perception of the properties value. If low bids were made public the seller may struggle to sell of the property in the future, because it was stigmatized with low bids
The sealed bid auction is typically associated with land and real estate auctions.
Combo Auction
This is also known as a Two Step Auction. It is a combination of a sealed auction and an Absolute, Minimum, or a reverse auction. First sealed bids are gathered. The seller reviews the bids and if no offer is accepted, they invite the top fiver bidders into live bidding. So know five bidders participate in an absolute, minimum or reverse style auction.
The combo auction is typically associated with land and real estate auctions.
Other Types of Auctions
Swedish Auction
These are just like English auctions (minimum Bid Auctions) except with less regulations. Here bidders are not tied to the offers and the seller can accept or decline any offer they want from any participant.
Dutch Auction (Descending Price Auction)
Here the auction starts with the highest price and then bids get placed until all items are sold. These styles of auctions are often used for bulk or wholesale items, so several things can be sold at one time. This style of auction is sometimes done for salvage autos.
Vickery Auction (Second-Price Sealed Bid Auction)
These are just like sealed bid or blind auctions with one change. The highest bidder, doesn’t have to pay their bid amount, they need to pay the amount of second highest bid.
Candle Auction
These auctions are built to prevent last minute bidding or sniping. A candle is lit when the auction starts and the bidding ends when the candle burns out. This means the actual time of the auction is ambiguous.
Japanese Auction
Here there is no bidding at all. The cost of the lot goes up continuously as as per the auctioneer’s timer. Buyers can come and go from the auction hall if they are not interested in bidding any longer. The last standing buyer is the winning bidder and pays the final price.
Chinese Auction
This type of auction is a combination of a raffle and an auction. Participants, buy raffle tickets and place them in a container for items that want to bid on. At the end of the event there is a drawing of the tickets like a raffle. Participants can enter as many tickets as they won’t to increase their probability of winning. These types of auctions are popular for churches and charity events, as they rely on people buying chances to win items.
Types of Auctions Near Me
If you are looking for Auctions Near Me, you can reference our homepage. For more general information about auctions, how they work and history, you can visit the Auctions Wiki page. Depending on what is being offered by the seller will often determine the type of auction that is appropriate. For sellers choosing the auction type is an important part of determining how much risk you are willing to take as well as the potential reward.