Jim has sold his home and is moving to a much smaller abode.View Catalog
(Points to self)
(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 maximum bid. You know, the largest amount of money that you are willing to pay to purchase an item that you see on-line.
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.
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 a 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”.)
(“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.”)
(“Did Morgan get the guitar?”)
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.
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.