Tips About Auctions Tips

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How do I find auctions in my area?

Finding Auctions in Your Area

Finding auctions in your area involves doing some simple research. Your first step should be to contact local auction houses. A quick search of the yellow pages should give you a healthy list. Call the auction houses or go to their websites to see if they have any auctions scheduled. You might also look through the classified sections of local newspapers.

Classified sections often list local auctions and estate sales. While it may sound morbid, if you're looking for estate sales, you should look through the obituaries section of the local paper, which sometimes lists estate sales. Finally, it's worth contacting your local government to see if any government auctions are going to be held soon.

   
Are there different kinds of auctions?

The Kinds of Auctions

There are several different kinds of auctions, that can be divided in to three main categories: public, private, and online.

  • Public auctions usually focus on antiques, art, and collectibles. Public auctions are usually held for horses, livestock, cars, and estates. Auctions at which assets seized by the government are sold are also public auctions. Attending public auctions as a spectator is an excellent way of shopping around for auction prices.
  • Private auctions usually occur between corporations, and the goods auctioned are usually large scale commodities, such as timber, electricity, phone service, and cell phone bandwidth. Private auctions are also held on certain kinds of environmental licensing and on debt.
  • Online auctions sell any number of goods, often the same objects that you would find at public auction.

   
In an auction, what does the term escrow mean?

Escrow

Escrow is a service offered by a third party at an auction in order to assure the quality of the transaction. Escrow services create security by acting as a middle man. After a sale is completed, the seller gives the goods in question to the escrow service. The buyer then gives the money to the escrow service. When both parties are satisfied by the goods and payment, the escrow services releases the money and the goods to complete the transition.

The escrow service makes money by charging a certain percentage of the seller. Escrow services are often used when expensive items are being sold at auction. If you choose to use an escrow service, be very careful to check their reliability.

   
What is the difference between a live auction and an online auction?

Live Auctions Versus Online Auctions

The difference between a live auction and an online auction is simply the method in which the auction is brokered. A live auction happens at a certain location -- usually an auction house, stockyard, or estate, while an online auction takes place via the Internet. Live auctions have the advantage of allowing the buyer to examine the goods being sold, helping to prevent fraud. Additionally, live auctions at reputable auction houses are less prone to fraud because the houses screen goods to preserve their reputation.

The disadvantages of live auctions include lack of accessibility, as you must travel to the site of the auction to participate, and expense, as holding a live auction can be costly to the seller. Online auctions, while somewhat more open to fraud, allow people from all over the globe to participate. This helps to lower overall prices for both the buyer and seller.

   
Are there different rules for auctions?

The Rules of Auctions

There are several different kinds of auction, each with its own set of rules. Each rule set revolves around bidders making bids for certain objects. The traditional auction, often called the English auction, involves bidders making successively higher bids until only one bidder remains, who is then declared the winner.

A Dutch auction begins with the auctioneer asking a very high price, and then slowly lowering the price until one person is bidding, after which that person is declared the winner. At a sealed bid auction, each bidder submits a bid in secret, and the highest bidder wins. In a silent auction, bidders submit sealed bids on multiple items, with the highest bidder winning.

   
How do I know when to stop bidding in an auction?

Don't Overbid!

One of the greatest dangers at any auction is the possibility of overbidding. Depending on the kind of auction, this can be very easy to do. In silent and sealed auctions, it is very easy to overbid, because you have no idea what the other bidders are bidding. In a live auction, the intensity of the bidding itself can lead you to overbid. The easiest way to avoid overbidding is to do your research.

Know about the items that you are bidding on. If you can, get a hold of the auction catalog beforehand and research the values of any of the items in which you are interested. Then, prior to the auction, inspect the goods and see if there are any additional factors, such as wear and tear, that you will have to take in to account. Also, take in to account the estimated appreciation the goods may realize in the coming years. Once you have set a comfortable price for yourself, make sure that you don't exceed it when you bid.

   
What is an auction?

An Auction

An auction is an expedited buying interaction -- allowing a seller to sell goods quickly for the highest possible prices, and the buyer to acquire goods quickly for the lowest competitive price. An auction service, either a company or online service that manages an auction, profits by charging a certain percentage to the seller.

The auction is conducted by the seller listing the product, accepting bids for a certain time period, and then selling the product to the highest bidder. Many items at an auction will have a reserve price. The reserve price is the minimum price that the bidding must reach in order for the goods to be sold.

   
What precautions can I take during an auction?

Things You Should Consider During An Auction

Taking several precautions during a live auction can help guard against fraud. First, examine the group that is brokering the auction. If it is being done through a reputable auction house, then chances are good that the items for sale have already been screened for instances of fraud or forgery. If you are unfamiliar with the auction house, do a background check with the local better business bureau.

The most important thing to be careful of when bidding at an auction is to carefully estimate the price of goods involved. A common trap that catches many auction participants is something called the "winners curse". The winner's curse occurs when a person wins an object by bidding the highest, but exceeds the actual value of the object. This way, the person wins the object, but is cursed by overpaying for it.

   
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