There are dozens of types of auctions. Auctions can be live, online, or both. Most auctions across the United States will fall into one of these categories:
1. Absolute Auction (or auction without reserve)
· Items or property is sold to the highest bidder, regardless of the price.
· If there is a bidder, the sale is guaranteed. Excitement by the participants is high!
· Generates greatest number of bidders.
· Many sellers, including government agencies and financial institutions have begun to use this method primarily.
2. Minimum Bid Auction
· The auctioneer will only accept bids at, or above, a published minimum price. This minimum price is always stated in advertisements and is announced at the auction.
· Reduced risk for seller since the sales price is at or above a minimum set price.
· This type of auction may, however, limit interest in the auction to only those buyers willing to pay the minimum bid price.
3. Reserve Auction (an auction subject to Confirmation)
At the Reserve Auction, the high bid is reduced, in effect to an offer not a sale. A minimum bid is not published, and the seller reserves the right to accept or reject the highest bid. Sellers predetermine the price at which the property will be sold and are not obligated to confirm a sale other than at a price that is entirely acceptable to them. The main disadvantage of a Reserve Auction is that prospective buyers may not invest the time and expense of due diligence when there is no certainty they will be able to buy the property even if they are the highest bidder.