Different auction types and their benefits

Auctions are a straightforward process. You attend your selected auction, place your bids, and possibly walk away with your desired auction item if you have the winning bid. However, there are a range of strategies and auction types employed by auction houses to keep prospective buyers on their toes. 

From the fast-paced drama of English auctions to the suspense of Dutch auctions, each auction type offers a distinct experience and serves specific purposes. To help you understand, here are a few auction types you should know: 

Absolute auction 

An absolute auction is a type of auction where the item being sold is guaranteed to be sold to the highest bidder, regardless of the final bid amount. In other words, there is no minimum reserve price set for the item. This means that the highest bid, no matter how low it might be, will be accepted as the winning bid, and the item will be sold to that buyer.

Absolute auctions are often used in real estate and art auctions, where the seller wants to ensure a quick sale and is willing to accept the highest bid, even if it's lower than their expected price. This type of auction can attract a wide range of potential buyers, as there is no financial threshold they need to meet to participate.

On the other hand, absolute auctions can sometimes result in lower prices for the seller, especially if bidding is not competitive and the final bid is significantly lower than what the seller hoped for.

Reserve auctions

During this auction type, the seller establishes a minimum amount with which to start the bidding process. This is known as the minimum bid or reserve price and is a price that must be met in order for an auction item to be sold. Reserve auctions give sellers the power to accept, reject or counter the “winning” bid. This type of auction is beneficial for a seller who wants to ensure a certain level of return for their item. However, it tends to generate the least amount of interest from potential buyers as the seller can reject the winning bid if they so choose. It’s commonly used during real estate auctions, high-value art auctions, and other contexts where the seller wants some assurance of a minimum price while still benefiting from competitive bidding.

English Auction

An English auction, also known as an open ascending auction, is one of the most common and recognisable types of auction. It involves a public process where participants openly bid against each other, with the auctioneer starting the bidding at a relatively low amount and progressively increasing the bid amount until no one is willing to bid higher. The highest bidder at the end of the process wins the item being auctioned and pays the final amount. English auctions provide a level of fairness that allows all participants to have an equal opportunity to bid and compete for an item. The competitive nature of these auctions is also advantageous for sellers, as it can lead to higher final prices that were not initially anticipated. 

Dutch Auction 

A Dutch auction, also known as an open descending auction, is a type of auction in which the auctioneer starts with a relatively high asking price and gradually lowers it until a bidder is willing to accept the price and make a purchase. The first bidder to accept the price wins the item. Dutch auctions are less common on traditional auction floors and have occasionally been used in a range of sectors for specific purposes, such as surplus industry sales and certain types of government auctions. 

This type of auction offers a unique dynamic where the price is decreasing rather than increasing, which can attract buyers looking for a bargain. There is a level of competitiveness with this type of auction. As the price decreases, the prospective buyer feels increased pressure to accept the price before someone else does. Dutch auctions can lead to quick sales and provide an equal opportunity for buyers to accept the current price. 

Online auctions

As technology has evolved, online auctions have become increasingly popular thanks to its versatile nature. This type of auction is not only easy to market and manage but is capable of supporting different auction types. Because online auctions are easily accessible, it allows for greater marketing exposure and can reach international buyers if desired. Additionally, in-person auctions can be thrilling yet fast-paced and intimidating, leaving first-time buyers overwhelmed. In contrast, online auctions are usually conducted on a user-friendly platform and provide adequate time for buyers to consider each lot up for sale. 

It doesn’t matter if you’re attending your first online auction or you’re an experienced buyer heading to your next reserve auction, browse Auction Calendar’s range of upcoming auctions. From livestock auctions to real estate auctions, you can rest assured you’ll find an auction to suit your requirements. 

Start browsing today!