Different Types of Auctions

The Different Types of Auctions

Auctions are an efficient way of raising funds through the sale of items at the best price possible. The selling price of the item is determined through a competitive bidding process. Some of the most common types of auctions are live auction, silent auction and online auction. The distinction between these types of auctions comes from the action of the bidders.

Live Auction

It is also called the live on-site auction. This type of auction is usually conducted in a meeting facility or room such as a hotel convention or indoor location meeting facility. Most likely, the interested bidders have already inspected the goods being auctioned. Pictures and descriptions of the items on sale may be displayed in the ballroom when the bidding process is officially opened.

The auctioneer at the event stands before the audience of bidders and onlookers as he or she calls out the bids and asking for higher bids on the item. This type of auction is said to be transparent because all the bidders compete openly at the same time. Although a competitive bidding environment usually produces the highest selling price, the winning and the losing bid might not be separated by a significant gap.

Online Auction

During online auctions bidders compete on a particular service or product and submit their bids online, over the internet. Internet auctions have become an important part of electronic commerce because of the flexibility and possibilities they provide.

In this type of auction, the property is put on sale on the internet. Therefore, there are no on-site bidders. The sale happens over computers connected to the internet. Auctions done on the internet have specific timelines (opening and closing dates), and sometimes with fixed bid increments. Bidders enter their bids against other competing bidders on the internet for the same item. Sometimes, proxy bids are used when a bidder would like to set a predetermined highest bid.

Sealed Bid Auction

This type of auction is used where confidential bids are preferred. If the seller is considering optional terms of sale, sealed auctions are usually chosen. Also, when there is more than just one item or service in the same auction, the auctioneer may choose to use sealed auctions so that each bidder can determine the best combinations that meet their own needs.

The Best Type of Auction

When selecting the type of auction, you ought to consider your goals. Whereas live auctions are one of the traditional types of auctions, it limits you to bidders who can make it to the event. It also involves a lot of logistics such as reserving a venue, which might be expensive.

Sealed bid auctions may not be the best because they lack the competitive aspect that auctions are meant to have. As a seller, you might not benefit from this lack of competition that might drive the price up

On the other hand, online auctions have proven to be the best because as an auctioneer, you have access to a global market regardless of your physical location. Mutual trust and transparency are also established in online auctions, making it easy to regulate underpricing and overpricing. Online auction can be varied in many ways, making it the most advantageous mode of selling.