Types of Auctions

In the world of real estate auctions, there are two types of auctions which are the basis of auction law throughout the United States.  Although some auctioneers may vary the wording slightly, such as minimum bid, seller confirmation, etc. the auction itself is required to be either an Absolute or Reserve Auction:

ABSOLUTE AUCTION -

In an Absolute Auction, once the property is offered for sale at the auction (whether live or online) and a bid is received, the property cannot be withdrawn from the auction by the seller, and therefore must sell for the final top bid being offered.  Absolute Auctions are more popular and draw larger crowds since there is no minimum or reserve price – it creates competition between the bidders.

RESERVE AUCTION -

In a Reserve Auction (sometimes referred to as “subject to seller confirmation”), the seller places a non-published minimum price on the property that must be obtained by the auctioneer in order for the property to sell.  If the “Reserve Price” is not obtained through the bidding process, the property does not sell, unless the owner of the property chooses to accept the final bidded price offered.  However, once the reserve price has been met or exceeded, bidding continues until the Auctioneer has determined that no more bids are forthcoming.  Thus, once the Reserve Price has been met or exceeded, the property will be sold to the highest bidder just like in an Absolute Auction.