Open, closed… sold! How auctions work
There are different types of auctions, before you decide on anything it is important to know the full details of everything. So do a thorough research to avoid being ripped off or at the worst.. outbid.
Auctions have long been a fun and exciting way to buy or sell items of value. Technology has allowed auctions to be conducted online, but if you are not technophilic you can still be catered for in an in-person auction house.
Auctions bring together eager bidders, enticing items, and an atmosphere of anticipation. They take place at specified times and venues. Some auctions can run for weeks and others only for hours.
Accessibility and convenience
Online auctions provide a platform for participants to bid on items from the comfort of their homes. This accessibility opens up a wider range of items which are inaccessible locally.
In online auctions, bidders place their bids digitally, mostly in real-time, through bidding websites. Proxy bidding is common and allows participants to set their maximum bid. This feature allows the system to automatically place bids on participants’ behalf, gradually increasing the bid until the maximum is reached.
Transparency and documentation
Online auctions offer a transparent record of the bidding process, with detailed information on bid history and final sale prices. This transparency increases trust and allows participants to track the progress of their bids.
In-person auctions often give participants an adrenaline rush because of the excitement and energy of bidders competing for their desired items. The live experience adds a personal touch, allowing participants to physically inspect items before bidding.
An auctioneer serves as the conductor of the event, consistently engaging bidders, facilitating bids, and maintaining the pace of the auction. Their charisma and expertise in the field contribute to the overall experience which people look forward to.
In a physical auction, bidders raise their hands, nod, or otherwise signal their bids. The auctioneer acknowledges and accepts the bids, creating an interactive and dynamic environment.
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“In-person auctions can also be more expensive than online auctions. In-person auctions often have higher fees and commissions, and buyers may have to pay for transportation costs to get to the auction,” according to crown auctions.
Auctions have two categories, open and closed biddings. Open biddings allow all bidders to see all the bids submitted. While bidders are not made aware of other bids in a closed bidding.
“The asset or service in question is sold to the party that places the highest bid in an open auction and usually to the highest bidder in a closed auction,” according to Investopedia.
Open bids refer to open competition. “In an open tender, the tendering process is open to all interested and qualified bidders. Any eligible supplier, contractor, or service provider can submit a bid or proposal in response to the tender notice,” according to Medium.
Examples of auctions include livestock markets where farmers buy and sell animals, car auctions, or an auction room where collectors bid on works of art or collectables.
Closed bids are similar to VIP events, there is a limited number of buyers who know about the auction and auction items.
According to Medium auction houses have better control over the selection of bidders in a closed bid, because they are able to choose their own pool of participants based on specific qualifications, experience, and expertise.
An example of a closed auction can be the sale of a company, where the price is only known by the seller and other factors excluding the price may influence who wins the bid.
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