Types of Auctions

The “Minimum Bid” or reserve auction is the method in which the seller states the minimum price they are willing to accept for their property. This marketing technique can be successful if the minimum is low enough to entice buyer interest. However, the seller sets a precedent of a low price. If the minimum is too high, not enough motivation will be generated to attend and bid in an auction.

A  “Seller Confirmation” auction is a marketing method in which the seller reserves the right to accept or reject the high bid for their property. The main disadvantage of a reserve auction is that prospective buyers may not invest the time and expense when there is no certainty they will be able to buy the property even if they are the highest bidder.

An “Absolute” auction method states that the property will sell for market value as determined by the buyer. There is no minimum or reserve price. This method of marketing attracts the most potential bidders. Buyer excitement and participation are heightened through this method. However, this method is initially perceived, by the seller, as the most risky method of marketing. This method does, in fact, generate maximum response from the market place.