Thursday, November 13, 2008

Auctions: Part 2 Types of Auctions

Continuing our series on Real Estate Auctions, this post focuses on the three types of Auctions:
Absolute auctions are what most consumers think of when they hear the term "Auction". It means that once the auction is opened and bidding starts, the property MUST be sold to the highest bidder, regardless of what that bid is. A million dollar property could, theoretically, be sold for $2. It's not likely... but it could happen. Generally, foreclosure auctions are absolute... but be sure to stay tuned for more information; it's not likely that you'll get your Million dollar property for $2, and we'll be explaining why in the next post.

Minimum Bid: With these auctions, the seller has agreed to sell only if the auctioneer can obtain at least a minimum price; and that price is disclosed to buyers. It may be included in the advertising or may be disclosed only upon direct questioning from the buyer or his agent. If the auctioneer cannot obtain that price, then the seller is under no obligation to sell.

Reserve Bid: Here the seller has set a minimum bid, but the auctioneer is NOT PERMITTED to tell anyone what that minimum bid is. We are currently seeing a lot of these types of auctions. After banks foreclose on properties, they will often put a portfolio of properties together and take them all to auction somewhere.

See the next post in our series: What happens at foreclosure auctions.

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