There are no reserves! There will be 450-500 lots total! There will be 100 or more jewelry lots!!!View Results
What do you think of when someone says the word “auction”, or says that they are going to an auction? Do you immediately think of a bunch of upper-class people dressed to the nines, sitting on fancy chairs, silently holding up a paddle to bid (or lightly touching their nose or giving an almost imperceptible nod of the head) while an auctioneer is dressed in a tuxedo with tails and the ringers in evening gowns and tuxes show off the items like Vanna White? Or do you envision of a bunch of county farmers chewing on strands of straw, standing around a barn yelling “Yep!” each time they want to bid on a bunch of old rusty stuff? Or perhaps you think of a bunch of items on a table with a piece of paper on them and people write down their bid and then keep walking around enjoying the fair, coming back on occasion to see if they’ve been outbid?
Obviously, the word “auction” means different things to different people.
So, if you’ve looked at some of the past blogs, you’ll notice that we’ve referenced a couple different types of auctions. Hopefully, by the time you finish reading this blog, you’ll understand what each main type of auction is, and why that type of auction is chosen. The easiest reason why there are so many different types of auctions? Different reasons may lead you to try a different type of auction. Different strokes for different folks.
Live Auction: A live auction is your traditional auction. Within this, you have a couple different variations. There is the auction house / ballroom format, and the on-site or on-location auctions. These are open or transparent auctions in that people know what the other person is bidding and who is doing the bidding because you can see them. Let’s take a closer look at both of these.
Auction House: At an auction house or a ballroom auction, the auction is held in a large room. The auctioneer stands at the front of the room and items/lots are brought to the front by ringers to be auctioned off by the people in attendance. Each auction house has its own “flavor”. Some favor a very quiet bid floor where people hold up their little paddles and nobody other than the auctioneer says anything (or much of anything). Other auctioneers like a bit more life in their auctions and encourage people to move around and be vocal about their bids. This type of auction lends itself best to consignments and may have several different sellers. If you only have a couple choice items to sell, this may be the way to do it.
On-Site / On-Location: If when someone says “auction”, this is what most people envision. You drive out to the location, usually someone’s home, and the auctioneer conducts the auction, often moving around from one area to another to auction off items. Sometimes this is called an estate auction, as people are auctioning off a great many items from their estate to the highest bidder. To paraphrase Forest Gump: “An estate auction is like a box of chocolates; you never know what you’re going to find to bid on”.
On-Line Auction: This has become more popular as the internet has gained popularity. Perhaps you have items to sell and want to reach a larger audience than just your city and surrounding burgs. Yes, now, you too can enjoy some of the benefits of an auction in the comfort of your own home. You don’t even have to change out of your jammies if you don’t want to. To take part in an online auction, you simply register as a bidder (including your credit card number to secure your bids), then scroll through the items for that auction. Then if you see something you really like, you type in the amount you want to bid, click a button and Viola! You are now the high bidder on a basketful of great-grandma Johanna’s handmade aprons and embroidered dishtowels! Or not. You might have already been outbid by someone who placed a higher maximum bid. But more on THAT in a latter blog.
Sealed Bid Auction: This is usually when something of greater value (selling a home perhaps) or a contracting a service (like the city is looking for sealed bids on the construction of the new pavilion in the city center) is being considered and when confidential bids are preferred. People put down their bid (and sometimes terms) in an envelope, seal it, and deliver it to a certain place by a specific time. The party involved in the selling/purchasing will then look at the bids and make their decision.
Silent Auction: This is a very quiet auction. No talking aloud. Ok. Not really. But it is quiet in the sense that there is none of the traditional auctioneer banter and no one calling out bids. Often people donate items for a silent auction in the hopes of raising money for some charity or event. In front of each item is a piece of paper. Often the paper states the approximate value of the item. People then write down their name and the amount of their bid. Then the next person sees it, decides they want it, and records their name and a higher bid amount. The silent auction has a set ending time when people can come to see if they managed to win the gift certificate for a pedicure, pay for their pedicure voucher, and take it home.
Now, obviously, there are a few more specific auction types within these auctions mentioned above. There is the absolute auction, the reserve auction and the minimum bid auction, just to name a few. But I won’t confuse you with those now. I’ll save that for another time.
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!