Auction 101

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Absentee Bidding: Making Sure You Get What You Want

Absentee Bidding: Making Sure You Get What You Want

Psst…

 

You…

 

Hey you…

 

(Points to self)

 

Yeah, you…

 

(Looks around to see if there is anyone else)

 

Yes, you…Absentee bidder number 256.

 

(Checks pocket bidder number and shrugs “what?”)

 

Well, would you like a tip for the next auction that you can’t make it to?

 

(Vigorously shakes head yes)

 

Good.  Here it is:  Learn how to place a maximum bid.

 

(“A what?”)

 

A maximum bid.  You know, the largest amount of money that you are willing to pay to purchase an item that you see on-line.

 

(“Huh?”)

 

Ok. Let’s think back to the last on-line auction you “attended”. Now think hard: was it an on-line only auction, or a live auction where you could place an absentee bid on-line before the live auction started?

 

(“You mean there’s a difference?”)

 

Oh yeah. There’s a difference.

 

(“I don’t get it.”)

 

Then let me help you understand.

 

huh

 

On-line only auctions:  These are auctions in which ALL the bidding is done on-line.  You have probably done this in the past, and are familiar with the practices involved in bidding in this type of auction. Here’s how it runs down:

 

  •  Morgan sees an electric guitar that is up for auction on an auction website.

 

  •  He sees that it is an on-line only auction.

 

  • Because Morgan has already created an account with this website, he logs in and finds the lot number with the guitar that he wants.

 

  • Morgan sees that no one has bid on it yet, so he places just the minimum bid amount of $10 and clicks the “place bid” button and sees that he is the high bidder.

 

  • There is still a few days left in the auction, so Morgan’s not worried. He knows he can place another bid if someone outbids him on-line. He will get messaged and know that he has been outbid.

 

  • With only 1 hour left in the auction, Morgan logs back on (knowing that he was outbid yesterday) and discovers that there have been 6 other bids on the guitar and the next bid increment is $70.

 

  • Morgan enters the minimum bid of $70, only to be immediately told that he’s been outbid. The bid is at $80. If he wants, Morgan can enter a minimum bid of $90.

 

  • Morgan now needs to make a choice. He can either just keep bidding the minimum bid amount until he is the high bidder, or he can place a higher bid and hope that no one has already placed a maximum bid of that much. He can also hope that the other bidders don’t check on-line and keep bidding against him at the last moment once he is the high bidder.

 

  • With only 5 minutes left until the auction closes on the electric guitar (did I mention that it’s a Fender?), Morgan has decided to place a high bid of $175, thinking that since the bid is only at $125, he’ll try background-fender-electric-guitarsa bigger bump in price and hope that he wins.

 

  • Yes! High Bidder!

 

  • No! Someone just bid higher.

 

  • Now it’s like the action at a live auction, only it’s all on-line and no one can see each other. It’ll be over when the time finally runs out and whoever was able to type in the last bid wins.

 

Live Auction with the option of absentee bidding on-line:  This is a bit different in that while you can place an opening bid on-line (like a regular on-line auction), you will not be able to continue to place bids on-line once the live auction starts.  A staff member from the auction house will bid on your behalf for the item you want against the people who were able to attend the auction.  In order for you to have the best possible chance of being the winning bidder, you MUST place your maximum bid before the on-line absentee bidding closes. The auction house has to close the on-line absentee bidding about 30-60 minutes before the live auction in order to prepare for the auction. Let’s see what this looks like.

 

  • Bill knows that there is a Barbie up for auction at Hueckman Auction’s monthly Thursday night auction that he doesn’t yet have in his collection. He plans to be at the auction.

 

  • Acacia wants that very same Barbie, but knows that she can’t be there because she has cheerleading practice.

 

  • Acacia is sad until she remembers that she could place an on-line absentee bid and have someone from the auction house bid for her (like having your own personal bidder at the auction).

 

  • Acacia logs in. She sees that the opening bid is $1. She places that bid amount. She’s now the high bidder. However, Acacia is smart enough to realize that chances are, someone will be willing to bid higher than that at the live auction.

 

  • So Acacia decides that in order to make sure that she gets the Barbie, she places a maximum bid of $100. That’s how much she wants it. It’s a really cool Barbie.

 

  • The day of the auction arrives.  Shanna closes the on-line absentee bidding and prints out the sheet that has a list of opening bids from on-line bidders and what the highest possible bid price is for each item.  Even though others bid on-line for the Barbie, none has as high of a maximum bid as Acacia, so someone from Hueckman Auction’s staff will bid on Acacia’s behalf. If no one at the live auction bids more than $100, Acacia will win the Barbie.

 

  • The bidding starts. Because the opening high bid for the Barbie on-line is $5, that’s where the bidding on the floor will start unless someone at the live auction starts the bid higher than $5. The staff member will actively and competitively bid out loud for Acacia until either she wins the Barbie (at whatever price beneath and/or up to her maximum bid), or until the price goes above her maximum bid and she’s out of the game.

 

(“Ok, I think I get it now…maybe…”)

 

Here, how about you watch it in action.

 

 

(“Ok…so, I can’t just type in $1 as my bid and expect to win it.”)

 

Nope, you can’t.

 

(“Not even if I double check it right before the bidding closes and no one else bids higher than $1”.)

 

Right.

 

(“Because someone at the actual live auction might bid more than $1.”)

 

Now you’re getting it.

 

(“So, I need to enter the biggest amount of money that I want to spend on the Barbie, I mean, whatever it is I want to hope to win.”)

 

By George, I think you’ve got it!

 

(“Now I know why I didn’t win the item for only $1. I thought that was too good of a deal.”)

 

Great! Now you can do on-line absentee bidding with confidence.

 

(“Yes! I have just one more question for you.”)

 

Sure.

 

(“Did Morgan get the guitar?”)

 

Reserve, Absolute, Minimum? What’s that?

Reserve, Absolute, Minimum? What’s that?

Hey! I’m back! Hopefully you’ve gotten over being confused about the main types of auctions, because now I’ve got a few more auction types for you.  Today, we’ll discuss reserve auctions, absolute auctions, and minimum bid auctions. Ready?  Good!

 

Reserve Auction:  Have you ever had a reservation over something you had to decide? Or booked a reservation at a hotel?  Perhaps reserved a place for your friend next to you in the lunch room?  Well, then you have a sense of what a reserve auction is. When something is reserved, it is held in place until certain conditions are met.

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At a reserve auction, the item up for bid has a reserve price: a hidden price that must be met before the item is allowed to be sold. It’s the minimum amount that a seller is willing a accept for his item that’s up for auction.  The seller is under no obligation to sell unless the reserve has been met.  When bidding on-line, you will see an obvious icon showing either “Reserve not yet met” or “Reserve met”.  Just like any on-line auction, you should probably place your maximum bid, otherwise you risk being outbid by another bidder. If your maximum bid exceeds the reserve (which you don’t know), the program will find the bid increment closest to the reserve price and bid that for you. Confused yet? I’m sure that was clear as mud. SO…let’s look at it this way.

 

Bob goes to Hueckman Auction’s website and sees a trilobite (that’s Wisconsin’s state fossil!) that he would like to add to his collection.  He sees that he has almost 1 day left to bid, that the next bid increment is $10. Bob also sees the words “Reserve Not Met” in bold blue print next to the bidding box.
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Bob doesn’t know that Luanne is selling the trilobite and that she has decided that she needs to get at least $10 for this specimen and so has set a reserve price of $10. If the bidding doesn’t reach this amount, she doesn’t want to sell the trilobite, and is under no obligation to sell it.

 

 

Bob decides that he really likes the trilobite and wants it, no matter what. (What? That could happen…). So he places a maximum bid of $100 on the trilobite.  Remember, this doesn’t mean that Bob will HAVE to pay that much, just that he’s willing to pay that much.  The computer sees that Bob has a maximum bid higher than the reserve, so it will make Bob bid $10 (or slightly more depending on the program–some go to the next higher bid increment). Then the words “Reserve not met” change to “reserve met”. At that point, Luanne HAS to sell it to Bob, unless he gets outbid by some other adventure seeing-trilobite hunter.  Which could also happen…maybe…

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Absolute Auction: I’m absolutely positive that you want to hear about this one.  (Hee hee.) At an absolute auction, the item is sold,  or awarded to the highest bidder, regardless of the final price. While this sounds absolutely obvious, not all auctions run this way. But an absolute auction does. Absolutely. (Ok…I’m absolutely running away with that word…mostly because it’s fun to say.  Try it: Ab-so-LUTE-ly. See it’s fun to say. I digress…)  In this type of auction, there is no reserve; there is no minimum bid amount that must be reached in order to sell an item. This usually creates a happy & healthy selling/buying medium (the seller is happy with what he gets for his item, and the buyer is  happy with the price he pays).  But this means that you might be able to buy a $140,000 house for only $55,000 because there was no reserve price set. Wasn’t that a great deal? Absolutely! (I couldn’t resist saying it one more time!)

 

 

Minimum Bid Auctions:  In a minimum bid auction, the auctioneer will set a minimum amount that must be bid in order for the item to be sold at auction.  For instance, an auctioneer might insist that he will not take a bid lower than $5 for a box of toy trains. That’s the minimum bid. He won’t take a bid of $1, like some folk like to do.  If he can’t get someone to start the bidding at $5, he’ll set the trains aside and move on to the next item.

sfotrain1

Did this help you?  I absolutely hope that you hold no reservations, no matter how minimal, about types of auctions.  (Clever, eh?) If you do have questions, send us a note and we’ll try to answer it the best we can.

 

Happy Auctioning!

 

Everything you wanted to know about auction bingo lingo–part 2

Welcome back to “Everything you ever wanted to know about Auction Bingo Lingo! As promised, here are a few more words that you may see and hear at live auctions.

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Terms & Conditions: Since I mentioned “Terms & Conditions” in “As Is” in the last blog , I figured I better define that. The terms and conditions are a list of the rules of the auction and certain aspects of the purchase/sale agreements. This list may include things such as items are saying that items are sold as-is, stating buyer’s premiums to be charged, the amount of sales taxes that must be charged, what kinds of payment are accepted, and when items need to be removed.

 

Lot: A lot doesn’t necessarily mean a lot of stuff. (See how I did that there? It’s ok…go ahead and laugh. I did.). A lot is simply an item up for auction. Each item, or group of items, is given a lot number. This helps keep the clerking easier and helps the flow the of the auction. If a catalog has been printed, or the auction is on-line, it also allows you to also keep track of which items you are wanting to bid on. Sometimes things are put into a box lot. This just means that a group of things have been put together in one lot, often placed in a box and will usually fetch just one price for the entire box.

 

Choice: Sometimes an auctioneer will announce that she is going to allow the next winning bidder their choice of items/lots on a table. There might be 10 different things on a table and the bidding starts. The winning bidder is allowed to chose what they want from the table, and how many items they want to purchase for that price. Say Bill is the high bidder at $15. Bill chooses the box of jewelry and a fishing reel. Bill pays $15 for EACH item he chose making a total of $30. The auctioneer can either let the rest of the bidders make a choice of items for $15, or start the bidding all over again.

 

Times the money: The auctioneer will announce that this lot is a times the money lot. This means that if there are 4 items in a lot (say 4 chairs), and you are the high bidder at $20, you will be paying 4 TIMES the money ($20 in this case), or $80 total.

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Free Space: Just kidding…there is no such thing as a free space in an auction, just in Bingo. Although you don’t usually have to pay to attend the auction. So that’s free.There’s that.

 

Preview: This is a chance for people to look at the items in person before the auction starts. Take time to look the item over, take notes, and make some decisions about how much you really want to win that item (and you know you do!).

 

Clerk: This is the person who is frantically trying to record who (which number) bought what (which lot) for how much (money). It can get crazy when choice is being auctioned.

 

Buyer’s Premium: This is an additional percentage added to the winning high bid. This is not a tax. See one of our previous blogs for more detailed information on Buyer’s Premiums.

 

Collusion: Sometimes two people will collude (or get together and make an agreement) to not bid against each other in an attempt to keep the bidding low so they can buy it for a cheaper price. It can also go the other way where someone will try to inflate the price by being a “fake” bidder.

 

Ringer: A ringer is a staff member that is bringing the next lot or item up for auction to the front. He or she will hold it up, sometimes giving a comment about it, and helps to identify bidders on the floor. This is not to be confused with a dead ringer…yes, that was a joke. You can laugh.

 

No Reserve: This means that there is no minimum price that the auctioneer must get for an item. Sometimes, however, for items that are known to be worth more or the seller needs to receive a certain amount of money, there will be a reserve price set (only known to the auctioneer), and if the bidding does not reach that set amount, you won’t win the item, even if you were the high bidder. Kind of like calling “Bingo” and then realizing that you still have a spot empty on that diagonal row.

 

Hammer Price: This is the winning bid amount that will be recorded by the clerk once she hears the auctioneer’s “SOLD”. In an auction house, the auctioneer will have a have hammer or gavel that he will use to pound the podium as another attention getter to let people know that lot is done and you’re moving on to the next.

 

Pass: This is when the auctioneer makes a judgement call to pass, or skip over, a lot for any number of reasons, usually the reserve has not been met, or no one seems interested in bidding.

 

Provenance: This is just a big fancy word for being able to provide or prove the history of an item. For example, it’s one thing to say that your grandmother’s hand mirror which was made in France by Colbert and came over on the Mayflower, and another thing to have the documents that back up that history. Those documents can mean the difference between an item being worth several thousand dollars or only worth $10.

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Well, are you ready to play the auction game now? I hope so. If by some chance I missed a word that you would like to know more about or just plain don’t understand, please ask, and I can try to explain it for you. Because, you know, it really is fun to get a “BINGO!” and bring home a prize. Even if you have to pay for it.

Everything you wanted to know about Auction Bingo Lingo–part 1

Everything you ever wanted to know about Auction Bingo.  I mean Lingo…

 

I remember one of the first auctions I ever went to. I was an adult. It was cold. It was drizzly. I was pregnant. I was tired of waiting. My husband was buying things that I saw no purpose for at all while waiting for the one thing he (note, he, not me) really came to the auction for. (“But it will look neat hanging up on the wall” he said…”Not in MY house”, I said”…)

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And then there was the lingo…

 

Sometimes it did feel like playing Bingo…Unless you know what B2, N34, free space, horizontal, diagonal, black out, and four corners mean, you can’t play Bingo. At least not well. Same with auctions. You know, the auctioneer calls out a lot and people start pulling out their bid cards. Instead of marking their cards with the item, they start raising their hands, nodding their heads, or yelling “Yep!” as the auctioneer rattles off a bunch of mumbly gobbledygook.  And then, when someone finally wins the item, it’s almost as if they got “Bingo!”. Some of them are so excited you would think they forgot they had to pay for the item later on. It’s so easy to get caught up in the moment.
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So anyway, in the next couple of blogs, I’m going to help try make some sense out of some common auction lingo terminology, so that you, too, can play the game. Please note, that like in Bingo, these terms have been drawn and explained in no particular order.

 

Bid:  While this should be obvious, a bid is the amount of money you are willing to pay for an item. You will let the auctioneer know you are bidding by holding up your hand, number, nodding, or some other form of obvious communication. And I mean obvious. Because if the auctioneer doesn’t know you are bidding, how is he going to know to acknowledge your bid?

 

Absentee Bid/Absentee Bidder:  Ok, you know what a bid is, and you know what it means to be absent, right?  It means you’re not there. So an absentee bid is when you give the auction company the maximum amount you are willing to bid (and ultimately pay) for an item. Then someone from their staff bids on your behalf for that item, up to your max bid if necessary. So you’re bidding, but you’re absent. It’s like having a friend bid for you. We have a video here explaining more about absentee bids.

 

Bid Increment: This is the amount that a bid is raised after one bid has been accepted. The auctioneer has set increments in her head that she will jump to as a matter of course. Obviously, she could change her mind and jump the next bid a smaller amount ($5 instead of a $10 jump) depending on the audience and how the bidding on the floor is going.

 

Bid Card/Bid Number: When you check in to the auction (giving them your name, address, telephone number, and e-mail address), you will be given a bid card with a number on it. This is your Bingo card, so to speak. Whenever you see something you want to bid on, you’ll raise this card (or some other obvious to the auctioneer signal) that you are bidding. When you win, the auctioneer needs to be able to see your number so the clerk can record that you won that item. Often people will bring along a pen or pencil and write on their bid cards the item they won and how much they paid for it.  This helps them to keep track of how many things they bought, and what their grand total will come close to being.

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Appraisal: When something has been appraised, you are given an estimated value for the item. Keep in mind that the price an item has been appraised at, might not be what it fetches at an auction.  For example, an auctioneer might say that he has seen a specific item go for upwards of $100, but depending on the auction, the item might only sell for $50. On the other hand, it might sell for $150.  It all depends on who wants it, and how badly they want it.

 

Auction Price:  This is the actual price an item sells for at an auction.

 

Chant:  This is when the auctioneer really gets going and lets numbers and words roll off his tongue as a part of the bidding process.  Usually you will hear the current bid price and the next bid increment being asked for (along with a few other words…real or otherwise…).  Don’t worry if you can’t understand all the words. Just listen for the prices and for the all important, “Going once, going twice, GONE (or SOLD!)!”.  Then you know you (or someone else) just won the Bingo game for that round.

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As Is:  Often as part of terms, you need to know that you are buying something “as is”, with no warranties or guarantees. This means simply that you are purchasing the item for the bid price in whatever condition it currently is in.  You can’t come back later and say, “hey, I thought it was in perfect condition. I didn’t notice that crack there,” and expect to get your money back. Kind of like saying “Bingo!” when you hear B7 but thought B11 was called. You aren’t guaranteed a Bingo…

 

Well, at this point, it’s time to take a short break to allow you to go get some food from the concession vendor (they’re the people selling food and drink at the auction). If you’re reading this at home, the vendor is your fridge. Stay tuned to our next blog for a few more terms that you can mark off on your Bingo Auction Lingo Card.

What is a Buyer’s Premium and why do Auction Houses charge them?

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A lot of people don’t understand what a buyer’s premium is or why auction houses even charge them. Not every auction house will charge a buyer’s premium, however more and more auction houses are choosing to charge a premium.

 

So what exactly IS a buyer’s premium? Simply put, a buyer’s premium is a additional charge, usually a straight percentage, that a buyer is charged based on the hammer price. This becomes the actual price that the buyer is charged for the item when checking out. For example, if Bob is the winning bidder on a table and chair set that he bid $100 on, and the buyer’s premium is 10% for that particular auction, Bob will actually pay $110 for the item plus any other fees charged by the auction house such as sales tax. Remember, the buyer’s premium is an additional charge, not an additional tax.

 

While auction houses are pretty quiet about the commissions they charge to seller, they do advertise what the buyer’s premiums are going to be. Not every auction house calls it a buyer’s premium. Some auction houses try to get creative and call it things like a “Service Fee”, or a “commission”. Whatever the auction house decides to call it, it still serves the same purpose. Regardless of what they name they give it, U.S. taxing authorities call the buyer’s premium part of an item’s sale price. This is because it’s rolled into the hammer price and the total amount becomes taxable.

 

Buyer’s premiums are not a new idea and have actually been used on and off throughout history. The buyer’s premium was a feature in Roman auctions during the reign of Augustus, when buyers were required to pay a one percent tax on purchases. The modern times the buyer’s premium was introduced by Christie’s and Sotheby’s in London in September 1975 and in the United States is 1977.  While major auction houses (like Sotheby’s) will even charge up to 25% on items, most smaller auction houses charge anywhere between 1%-15%. The amount of the buyer’s premium will normally be clearly stated in the auction house terms and conditions. Some Auction Houses like Hueckman Auction only charge a buyer’s premium at their auction house, but do not charge them at the auctions that are on location.
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The buyer’s premium is considered to be a necessary contribution to the costs of the administrative process for the auction house. Yet many members of the auction community consider it an unreasonable extra charge by the auction house because they do not fully understand why they are charged. Buyers often think this is just another way to get more money out of them. Auction houses sometimes market themselves as “not charging a premium” to gain favor with customers. Regardless, buyer premiums are now becoming a commonplace at auctions and they will continue to grow. In fact, about 80% of all auction now charge some sort of buyer’s premium.

 

But why charge a buyer’s premium anyway? There are several reasons an auction house may choose to charge a buyer’s premium. For most auction houses, especially smaller ones, the buyer’s premium helps to cover the costs of running the auction house and its ongoing auctions. There are many costs that go into an auction house that people don’t consider or even know about. These costs include building rental, heating & air conditioning so customers stay comfortable during the auction, auction software (to keep track of items for both the seller and the buyer), advertising & marketing, staff wages, auction house set-up, time spent taking pictures and creating on-line catalogs for the auction, and general upkeep of electronic equipment.

 

Hopefully this blog gave you a bit more of an understanding about buyer’s premiums and why auction houses choose to implement them. Happy auctioning!

How Does an Auction Work?

If you are new to auctions you may have many questions about them. One of these questions might be “How does an auction work?”. The answer to this question can vary depending on the type of auction that it is.

 

Let’s start by explaining what an auction is. An auction is where property is sold at a specific time and place to the highest bidder. Most auctions require a person to get a bidder number or other identifying item prior to bidding. When an item you want goes up for bid it will usually start low. The auctioneer will raise the bid amount every time someone bids until there are no more bids on that item. Then they will sell the item for the highest bid. Typically, the items in an auction are sold over the course of several hours. You don’t necessarily have to stay for the entire auction if there’s only one or two items you’re interested in.

 

There are many types of auctions. Some of the most common are charity, estate, liquidation, consignment, automobile, antiques, coins, storage units, foreclosures, and real estate. All of these can be done as either a live auction, and on-line only auction or a combination of the two.

 

The Auction Process – Auctions typically have a preview period. This can be on a day before the auction. It may even be only a few hours before the auction starts. The preview gives people a chance to see what is going to be auctioned. It also gives them a chance to look at the item’s condition and make notes.

 

When buyers arrive at the auction, they have to register in order to bid. If you are a new bidder to one of our auctions, you will need to have an address, phone number and driver’s license number handy. Once you are registered, you will receive a bid number. Once the auction starts, the bidders sit or stand in view of the auctioneer as items are brought up one by one to be sold.

 

Placing bids on items – The auctioneer will briefly describe the item that’s about to to be sold and starts the bidding at a price he or she thinks is a reasonable opening bid. If nobody there are no takers on the item, then the auctioneer will often try a lower opening bid.

 

Here is an example of this:

 

Up for bid is this antique crock. Who will give me $50 for the crock? Do I hear $50?  No? Who will give me $25 dollars for the crock?… Ten dollars?… Who will give me $5.00 for the crock?

 

At this point multiple people might be thinking that this is a really good deal and more than 1 person raises their bid card. The auctioneer will choose one of them and then say: “I have $5 over here. Do I hear ten?” Each auctioneer will usually have preset bidding increments (each next bid jumps up $2.50 or $5, etc.), and not all auctioneers have the same ones. The bidding picks up and continues to go higher and higher.

 

At this point the auctioneer starts speaking at a rapid-fire pace, this is a tradition known as the “Auction Chant”: “Forty, now fifty, now fifty, now fifty, do I hear fifty?” Translated he is saying “I have a bid of $40.00. Does anyone want to offer $50?”. He will repeat this a couple of times. Another hand goes up across the room. The auctioneer doesn’t always see the hand go up straight away, but one of the assistants, known as a “ringer”, might spot it and shouts “YES!”, pointing toward the bidder. This will draw the auctioneer’s attention to the new bidder. As bidders reach their max bid, they drop out until there is only one bidder left.

 

If nobody else bids, then the auctioneer will close the bidding and announce that bidder as the winner. Then the next item will be auctioned. The above process happens in less than 2 minutes and the process is repeated until everything is sold.

 

When bidding, there are a couple of important things to keep in mind:

 

1) The auctioneer’s call is final. That means if you were not paying attention and try to place your bid after the auctioneer says “SOLD”, or in rare cases where the auctioneer & ringers don’t catch your bid – Sorry, you are out of luck! This situation can easily be avoided by making sure to pay close attention when your item comes up and holding your bidder card up clearly so the auctioneer can see it. You can make a loud noise if you don’t think the auctioneer has your bid to make sure that you get noticed.

 

2) If you win the bid, you become the legal owner of the item and ownership transfers to you immediately. An invoice is generated and you will need to pay for any items you’ve won before leaving for the night. If items are handed to you,then you are responsible for keeping an eye on your item to ensure it doesn’t get damaged and no one else walks away with it. If it’s a small to medium sized item, it’s a good idea to collect it and bring it back to your seat. Larger items are usually moved to the loading area or left in place on the auction floor. All items are sold as is and you can not change your mind about buying the item once the auctioneer says “Sold”.

 

“Lots”, “Your Choice” and “Times the Money”- There are a couple of variations on the standard bidding procedure outlined above that you need to be aware of. Occasionally items will come up where you are bidding on a “lot” of items. A “Lot” simply means “more than one”. One term you’ll see often in auction listings is “tray lots” or “box lots.” To help keep things more organized, small items from the same seller are often grouped together on plastic trays or in boxes. One example is a tray carrying 9 necklaces, all coming from the same seller, is considered a “lot”. This is so the auction company can keep track of the seller’s items so he or she can be properly paid for their items.

 

Before the auctioneer starts the bidding for a “lot”, he or she will decide on how the lot is going to be sold and explain what exactly your bid will get you. It’s important to listen carefully at this point!

 

Your bid might buy you the entire lot, in which case the auctioneer might say something like, “You’re buying all 9 necklaces for one money” or “On the pair of vases, let’s start the bidding at $10”. In this case, the amount you bid is the total amount you pay for all 9 of those necklaces (or for both of those vases).

 

Another way lots can be sold is on a “choice” basis. Let’s use the necklace example again. The auctioneer starts with “Now bidding on your choice of the necklaces…” Bidding continues as normal. Let’s say you win the bid at $10. This means that you have bid $10 on one necklace on the tray. A helper will bring the tray lot up to you and you decide that you want 2 of the necklaces. The helper shouts to the auctioneer “Bidder number 17 takes 2!”. When you leave you’ll pay $20 ($10 each) for the 2 necklaces. Now there are 7 necklaces left on the tray. Other bidders can decide if they want any for $10 otherwise they go up for bid again. You can even bid again if you want. Since you took the best necklaces already, the remaining ones might sell at a lower price. There might be one more round of “your choice” followed by selling all of the remaining necklaces for “one money”.

 

Sometimes when a lot is sold, the auctioneer will specify that all of the items in the lot will be sold for your bid amount multiplied by the number of items in the lot. Using the necklaces example again, the auctioneer might say “On the necklaces, 9 times the money”. Let’s say you win the bid at $10. You are now the proud owner of 9 necklaces for a total of $90. This is commonly done with items such as dining room chairs, where you are bidding on one item but your bid gets multiplied by the number of items.

 

The Buyer’s Premium – Many auction companies will charge the buyer a 10-20% “buyer’s premium” to purchase at the auction. This charge is pretty historic and allows the company to offer a reasonable commission rate to the seller. This premium also helps to ensure good quality merchandise for offer to the buyer.

 

Since many auction companies operate on a shoestring budget, often times the costs of credit card transactions are passed along to the buyer as well. So the buyer’s premium may be (for an example), 13.5% for credit/debit card purchases, and 10% for cash or check payments. On-line auctions with Internet bidding often charge a higher buyer’s premium as well, as there are many more costs that are involved. On-line auctions will often include a per item fee (usually around $1 per item) for each item that you win on-line.  The bottom line is to always pay by cash or check when possible to pay the minimum buyer’s premium available. At the auction, when bidding, keep in mind the additional cost of the buyer’s premium, as well as sales tax.

 

I hope that this has helped you understand how auctions work a little better so that you will be better prepared for your next auction!

What Is The Difference Between An Online Auction & Online Absentee Bidding?

In the world of auctions and estate sales, it is sometimes confusing as to how things work with technology becoming more and more a part of our lives. We hope to be able to help you get a deeper understanding of these things by answering common questions to the best of our knowledge. One question that we get asked a lot is “What is the difference between an online auction and online absentee bidding?”.

 

Online Auction: An online only auction is automated and takes place solely online. The bidding for each lot is opened at the price set by the auctioneer. It usually starts at a set time, stays open over an extended period of hours or days, and closes at a set time. During this period of open bidding one will be able to see the current high bid on each lot. You will not be able to see what the other bidders’ max amounts are. You may place a higher bid at a defined bidding increment you choose. The bidders are sent an email if they are the high bidder, or if they have been outbid by another competing bidder. At the end of the bidding period, if the highest bid offered meets the minimum price designated by the seller as acceptable, the lot is sold. Bidding on all lots in a online only auction begin to close at a specified time. They usually have lots closing at regular intervals until the auction has ended. Some timed auctions allow extended bidding. This is often referred to as soft closing. This happens if a bid is placed on a lot within a specified time before closing; the bidding then may automatically be extended for a set period of time. Length of extended bidding is set by the Auctioneer before the opening of the auction.

 

Online Absentee Bidding: Say you find a lot (item) that you really like but you can’t make it to the live auction…You don’t have to! Instead you can place an “absentee” bid.

 

The process works as follows:

 

When you find a lot on which you want to bid, register to take part in the corresponding auction. Once you’re approved, go back to the lot page and input the maximum amount you are willing to pay for the particular lot in question. This amount is your absentee bid (left bid).

 

Approved bidders can place absentee bids up to one hour before the start of the live event. Once the auction starts, we then “process” all the absentee bids and calculate the winning absentee bid. This is the second highest bid plus one bid increment. This winning absentee bid value will then be communicated to the auctioneer.

 

Here is an example of how that would work:

 

• Corrie places an absentee bid of $1,000 for Lot #123
• Bob places an absentee bid of $1,500 for Lot #123
• Frank places an absentee bid of $2,000 for Lot #123
• Once we clear all the absentee bids, Frank will emerge as the winning bidder. The winning absentee bid amount for $1,600 ($1,500 plus one bid increment of $100).

 

When the live auction starts, we tell the auctioneer about the Internet absentee bid for $1,600. If no higher bids are received during the auction, Frank will be the winner. If a floor bidder places a bid above $1,600, the computer software (or the person bidding on the absentee bidders behalf) will then bid on Frank’s behalf up to his maximum of $2,000. We will never bid higher than Frank’s maximum amount.

 

Sometimes bids will be caught in the middle or what is also sometimes referred to as footing.

 

Here is an example of that:

 

• Bill places an absentee bid of $1,300
• Brenda is on the floor bidding live
• The auctioneer opens the bidding at $1,000, which goes to Bill
• The next increment is $1,100, which Brenda raises her paddle for and wins
• The computer (or person) proxy bids to $1,200 for Bill
• Brenda places the next bid and wins the auction at $1,300.

 

So even though Bill has a max bid of $1300, Brenda wins the item at $1300 because she had the high bid at that point .

 

Hopefully that helps give a clearer picture of what is going on with online auction bidding and online absentee bidding. We will have another common question soon for you to look at. Also, if you have questions that you would like to see answered on this blog, just send us a message.