Auction Savvy

Definition of Auction

An auction is a process of buying and selling goods or services by offering them up for bid, taking bids, and then selling the item to the highest bidder. The word "auction" is derived from the Latin Augeō which means "I increase".

History of Auctions

History of Auctions

For most of history, auctions have been a relatively uncommon way to negotiate the exchange of goods and commodities. In practice, both haggling and sale by set-price have been significantly more common. During the Roman Empire following military victory, Roman soldiers would often drive a spear into the ground around which the spoils of war were left, to be auctioned off. From the end of the Roman Empire to the eighteenth century auctions lost favor in Europe, while they had never been widespread in Asia.

Types of Auctions

Types of Auctions

English auction, also known as an open ascending price auction. This type of auction is arguably the most common form of auction in use today. An auctioneer may announce prices and participants bid openly against one another, with each subsequent bid required to be higher than the previous bid.

Types of Auctions

Dutch auction, also known as an open descending price auction. In the traditional Dutch auction the auctioneer begins with a high asking price for some quantity of like items; the price is lowered until a participant is willing to accept the auctioneer's price. If the first bidder does not purchase the entire lot, the auctioneer continues lowering the price until all of the items have been bid.

Types of Auctions

Sealed first-price auction or blind auction, also known as a first-price sealed-bid auction. In this type of auction all bidders simultaneously submit sealed bids so that no bidder knows the bid of any other participant. The highest bidder pays the price they submitted.

Types of Auctions

No-reserve auction, also known as an absolute auction, is an auction in which the item for sale will be sold regardless of price. Advertising an auction as having no reserve price can be desirable because it potentially attracts a greater number of bidders due to the possibility of a bargain.

Types of Auctions

Reserve auction is an auction where the item for sale may not be sold if the final bid is not high enough to satisfy the seller.

We participate in an English, Reserve Auction every meeting of the Greater Houston Coin Club.

Effective Auction Tips

Effective Auction Tips

• The majority of auctions I attend are of the English type with no-reserve. Dutch auctions are the most fun, but are rare. I have participated in blind auctions but have won very little; I feel it encourages over bidding.

• On most auctions there is a Buyer's Premium or BP. The premium is the amount the auctioneer keeps for calling the auction, facilities, and salaries of the runners and money handlers. Sometime there is a seller's fee as well for the owner of the sold item.

Effective Auction Tips

• Don't be scared of attending an auction. It is not like the movies where you scratch your nose and you have bought a $2 million dollar Bentley. You can retract bids, ask for clarification, or to look at the item during the bidding. But if you submit a real bid, you are expected to pay for it or run the risk of being barred from future auctions.

Three things to do before engaging an auction

Three things to do before engaging an auction

• 1.Know how much funds you are willing to commit to the auction. It is very easy to get carried away and spend too much.

• 2.Visit the preview, preferably the day before so you can return home and do your home work. The Internet is great for doing comparisons, EBay and Heritage Auctions are great locations for doing comparable. There are specialty catalogs by subscription only that will help with pricing as well, they are usually very specific to your interest e.g. glassware, furniture.

Three things to do before engaging an auction

• 3.Determine the price you will buy the item for and subtract out the Buyers Premium and shipping. Bid to this price and no further. Do not get Buyer's Fever and try to outbid competition; this is what the auctioneer is encouraging. You will have buyers remorse if you overbid.

Happy Bidding

Finally, have fun. Auctions are social events and opportunities to meet like minded individuals. You can learn of other auction venues and information about items you have never considered before.