Auction sales can be divided into two types: “Absolute” and “Reserve.” Both have merit.
In an Absolute Auction, property is sold to the high bidder regardless of price. Once the auctioneer opens bidding, all high bids are accepted. Market studies show that Absolute Auctions produce the most registered, qualified bids and 10% to 20% higher sales than other types. Absolute auctions are popular because they communicate a motivated seller.
In a Reserve Auction, the seller reserves the right to accept or reject the highest bid over his or her Reserve Price. The Reserve Price is set by the seller and communicated to the auctioneer, but will not be advertised to the public. Once the reserve is reached, the auction becomes absolute and the property will be sold.
There are variations on both absolute and reserve auctions. One such variation is called a Sealed Bid Auction. In this type of auction, buyers are required to bid in writing. This method can be effectively combined with a live “out-cry” reserve auction to identify and extract the highest bids from an audience before buyers can get a feel for the competition. Auction Brokers will work with you to determine the best auction strategy for your situation.