Buying at Auction: A Great Opportunity for Acquiring Rare and Distinctive Items
Imagine an event that offers entertainment value plus learning opportunities, and admission is free.
Attending an auction is often an enjoyable and interesting experience, and as a result, these events are attracting growing numbers of followers and participants. Some people see auctions as a means to expand their knowledge of art and antiques, and many actively participate by bidding on and purchasing distinctive items for collections or home decorating. Purchasing items at auction may also be considered a ‘green’ pursuit, as most items have been pre-owned and pre-used by a former owner.
Auctions are an effective way to sell merchandise because the process of competitive bidding allows the final price of each item to rise to reach its market value. This differs from a retail situation where the item sits at a predetermined price waiting for a buyer willing to pay that price
TYPES OF AUCTIONS: Auctions are conducted in two basic formats
LIVE AUCTIONS
With auctioneer - Auction which utilizes an auctioneer and is conducted on a specific date and time in front of an audience of bidders; live telephone and internet bids, plus absentee bids left in advance of auction day may also be executed during this auction
Silent auction – Live ascending price auction with a specified end time that does not use an auctioneer; sequentially higher bids on items are placed in writing until the bidding is closed; competing bidders are aware of the current bid level, enabling them to further advance the bidding
ABSENTEE AUCTIONS
Open bid – Auction with a specified end time where bids are placed remotely by registered bidders; the current bid price is continuously communicated to auction participants until the item closes; many absentee auctions are conducted via the internet (e.g. eBay)
Open bid, extended end time – Similar to the above type of absentee auction, the extended end time format allows bidders to compete until no more bids are made within a pre-set end time extension. This extension is triggered if a bid is received immediately before the item is due to close. Therefore, an online absentee auction due to end at 1:00 p.m. with a pre-set 5 minute extension, will be extended to 1:04 p.m. if a bid advance is received at 12:59 p.m. Another bid advance at 1:03 p.m. will subsequently extend the end time to 1:08 p.m., etc.
Sealed bid – Auction where participants simultaneously submit their confidential bid; the winning (highest) bidder pays the price on their submitted bid
And, there are many types of auctions based on the types of merchandise offered:
Fine art and antiques: Auctions that offer a diverse array of fine and decorative arts items, generally conducted by higher end auction companies
Specialty auctions: Auctions that contain a specific type of merchandise, such as rare books, coins, firearms, toys & dolls, jewelry, modern art, folk art, automobiles, livestock, etc.
Estate: Auctions that include a diverse mix of lots comprising the belongings of a deceased person. These sales may include household items, art, automobiles, tools, farm equipment, and personal collections. In the case of a ‘living estate’ auction, the offered items belong to a person who is still alive.
Real estate: Auctions of land and/or buildings
Liquidation: Auctions of unsold merchandise, government owned items, etc.
Auction companies are located throughout the United States, and most local areas have multiple firms in close proximity. Website www.auctionzip.com is a great tool for locating upcoming auctions within a predefined distance of any US zip code. Users can sort results by type of auction to further fine tune search results.
2. AUCTION TERMINOLOGY
Before attending or taking part in an auction, it helps to understand the terminology used by auctioneers and other participants. Here are some commonly used terms and their meanings related to auctions:
Preview: An opportunity for potential bidders to thoroughly examine and ask questions about items offered in the sale before the auction
Catalog (or brochure): A booklet published by the auction company that provides detailed information about items included in the auction.
Lot: An item to be sold in the auction. A lot may include multiple pieces, as in a ‘box lot’ (all items packed in one or more boxes that will be sold together)
Auction block: The location, usually a podium or platform, where the auctioneer stands while selling items.
Estimate: A range of dollar amounts that the auction company believes an auction lot will sell for, based on research of recent sales of similar items
Paddle (bid card): Numbered card or paddle presented upon registration to each bidder in the auction. The bidder must raise this in order to alert the auctioneer that they are placing a bid.
Opening bid: The first bid on an auction lot
Hammer price: The final bid amount at which the auction …
‘Times the Money’: Bidding for a multi-item auction lot representing what the winning bidder will pay for EACH item in that lot; for example, a ‘times the money’ bid for lot of 8 chairs where the top bid was $25, means that the total hammer price for that lot will be $200
Reserve: A minimum price that a seller will accept for
Absolute auction: An auction where every lot will be sold to the highest bidder without any limiting conditions or reserve.
Buyer’s premium: An
Pass: An item that does not sell in the auction because it fails to attract bids, or if it has a reserve, it fails to generate bidding above the reserve amount.
Warranty: Auctioneer’s guarantee
‘As is, where is’: Item is sold without warranty or guarantee
Choice: In an auction of multiple similar objects, first winning bidder gets first pick of the items to purchase for the amount of their winning bid. They may take as many of the items as they want, with each item priced at the winning bid amount. Auctioneer then opens bidding again, and the second winner gets their item choice or choices. This continues until all items are sold.
Absentee bid: A bid left by a registered bidder in advance who is not present at the auction; this bid is generally executed by auction house staff during the live auction
Book bid: Same as absentee bid
Clerk: The individual who issues invoices and collects payments from auction buyers
On-Site auction: An auction conducted at the location where the items to be sold were
Terms and conditions: The rules of the auction that are communicated to all registered bidders either in writing or from the podium before the sale begins
3. HOW LIVE AUCTIONS WORK
REGISTRATION – In order to bid in an auction, participants must register with the auction company conducting the sale. Typically, this involves providing name, address, phone number, and identification, such as a driver’s license. Some auction companies may require credit card information or an advance deposit from registrants who plan to bid remotely (absentee, by telephone, or on the internet) in the sale.
PREVIEW– The preview is a pre-set time period prior to the sale when prospective bidders can thoroughly examine items to be sold. At this time, the auctioneer and/or auction staff is available to answer questions about items in the sale. The preview generally takes place before the auction begins on the day of the sale. In the case of larger and multi-day auctions, the preview may run over a period of days. Bidders can usually register for the auction during the preview.
BIDDING OPTIONS - There are a variety of ways to place a bid in an auction:
Live in house: Bids made during the auction from the floor using a paddle or registration card
Absentee: Leaving a bid in advance of the sale that will be executed electronically (in the case of online absentee bids) or by auction house staff during the auction.
Telephone: Placing a bid by telephone while the auction is taking place; the bidder is on the telephone with an auction house employee who raises a bidding paddle/registration card to communicate their bid(s) to the auctioneer
Live online: Placing a live bid over the internet that is delivered to a console on the auction floor while the auction is taking place; auction staff will execute bids as they appear on the console screen and communicate bidding status to online auction participants as the auction progresses.
THE AUCTION BIDDING PROCESS:
Opening bid: When an item is brought to the podium and introduced, the auctioneer will ask for an opening bid by suggesting a starting amount to the floor. If no bid is made, they will reduce the suggested starting amount until a first bid is made.
Increments: After an opening bid has been made, the auctioneer will request subsequent bid advances in preset amounts. For example, an auctioneer may call for increases in increments of $5 or $10 when bidding is under $100; $25, when bidding is $100 to $500; $50, from $500 to $1,000; etc.
Fair warning: Just before an auctioneer closes bidding on an item, they generally will warn bidders that they are about to close it by using phrases such as ‘fair warning’, ‘all in, all done’, ‘last call’, or ‘going once, going twice’. This signals the final opportunity for participants to place a bid.
Closing the bidding: The bidding is ended when the auctioneer says ‘sold’. Once an item is sold, ownership of the item passes from the consignor to buyer.
TALLYING YOUR TOTAL – Auction bidders often keep track of their spending by recording information about each item won along with the final bid amount on a sheet of paper or their bid card. This process makes check out faster after the sale, and it is a great cross-check of the auction house’s recording accuracy. Be sure to take note of the buyer’s premium (if any) and relevant state/local sales tax when completing an auction tally.
PAYMENT - Bidders are expected to pay in full for their auction purchases, including buyer’s premium and any relevant state/local sales taxes, immediately after the sale. In addition to cash and checks, most auctioneers accept bank transfers or credit cards for auction purchases. Auction invoices are sent to remote bidders (absentee, telephone and internet) after the sale...
COLLECTION OF GOODS – After payment.
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