The Basics of an Auction
The World of Real Estate Auctions
When everybody hears of an auction, the first image that usually comes to mind is the auctioneer. The auctioneer is typically envisioned reciting an auction chant, the rhythmic repetition of numbers and words while conducting the auction. While auction chanting is what the general public usually thinks of when referring to auctions, it is a common misconception that auctions are as fast-paced as they are in television shows and movies. Although many auctioneers still use an auction chant while conducting their auctions, it is much more common in the mid-western regions of the United States.
Starting Bids, Increments, and Reserves – Oh, My!
Even though auctions are often the simplest way to buy and sell real estate, we understand that they can be a bit confusing to you, the buyer, if you have never participated in an auction before. Let’s take a quick look at three numbers that matter to you – starting bids, bidding increments, and reserves.
Starting Bid
Unlike traditional real estate transactions, auctions do not have an advertised sale price. Instead, they have a starting bid. The starting bid, also referred to as the opening bid; it is the amount suggested by the auctioneer to open up bidding.
Bidding Increments
Once the auctioneer opens up the auction, they will begin their auction chant. While calling bids, the auctioneer will recite the current bid and will call out the asking price, the amount required for the next bid. The asking price is determined by the auctioneer, matching a bidding increment that they have chosen to help establish the flow of the auction.
Reserve Price
The reserve price, also commonly referred to as the minimum bid, it is the price at which the seller will agree to sell the property.
Reserve Auctions
Are you new to auctions? Learn more about reserve prices and how they may impact the outcome of a reserve auction.
