Auctions are the process of trading goods through bids made by potential buyers. The offers continue to accrue at higher and higher prices until no one else is willing to pay more for the item in question. Once the seller accepts the price and the bidder pays, the transaction is complete.
In most auctions, there is a preview of the item before the bidding starts. The timeframe ranges from the day before to a few hours or moments before the auction. Next, the potential buyers register with their name, phone number and other identifying marks. The purchasers are then given a numbered sign which they use to indicate their bid. Once the preliminaries are in order, the bidding starts.
What Goods Are Auctioned?
The bidding process is used to buy value retaining physical items such as paintings, antiques and other collectibles. Businesses will also put their company up for sale using auctions. There are also livestock auctions Prescott AZ that trade in animals. There is technically no requirement for what gets auctioned, but it usually involves a highly valued commodity.
What Types of Auctions Are There?
- Dutch auctions are a reverse of the typical auctioning process, in that the seller starts with a high asking price and lowers it until someone is willing to buy. This method is often used with consumable bulk goods liketobacco.
- English auctions are what the average person imagines when they think of an auction. Bidders call out their offers until no one is willing to go higher. This method is used for real estate, art, machinery and other valuable items.
- Sealed-bid auctions, or blind auctions, are common for government contracts and challenging to procure real estate like mines. The bidders submit their prices in envelopes, and the highest bidder wins the right to purchase.
Auctions are a helpful method for selling off highly valued items. They keep products like artwork and antiques in circulation and allow individuals to acquire real estate that would otherwise be unavailable.