Types of Auctions

TexTerra Auctions, L.L.C.

1601 W. 38th Street, Suite 208

Austin, Texas 78731

512-419-9052

There are several different types of auctions and it may difficult to determine which type best suits your needs.  We can help you determine which type of auction will help you meet your objectives.  Feel free to contact us to discuss your individual situation.

A.  Absolute Auction or Auction Without Reserve:

• The property is sold to the highest bidder regardless of price. Once the Auctioneer has opened the bid the property must be sold and the Auctioneer is not allowed by law to advance the bid on behalf of the seller and the Seller or Sellers representatives may not bid.
  

• Since a sale will occur regardless of price, buyer excitement and participation is increased.  Absolute Auctions will be clearly advertised and marketed as such.
  

• The disadvantage of this method is that the seller must sell the property to the highest bidder and the price may be below what the seller needs or wants.
  

B.  Minimum Bid Auction:

• The auctioneer will accept bids at or above a published minimum price.  The minimum bid will always be published in all marketing and advertising and will be announced at the auction.
  

• Reduced risk for seller as the sales price must be above a minimum acceptable level.
  

• Buyers know they will be able to buy at or above the minimum so the buyers that attend are aware and serious about purchasing.
  

• The disadvantage of this method is that the seller may limit interest in the auction to only those buyers willing to pay the minimum bid price, and therefore it must be low enough to act as an inducement rather than a hindrance.
  

C.  Auction with Reserve

In this scenario, a minimum bid is not published, and the seller reserves the right to accept or reject the highest bid within a specified time - anywhere from immediately following the auction up to 72 hours after the auction concludes.  Sellers predetermine the price at which the property will be sold and are not obligated to confirm a sale other than at a price that is entirely acceptable to them.  The main disadvantage of a Reserve Auction is that prospective buyers may not invest the time and expense of due diligence when there is no certainty they will be able to buy the property even if they are the highest bidder.

•Generates the maximum response from the market place.

•Has increased in popularity among financial institutions and government agencies.

D.  Sealed Bid

In this method all interested parties are invited to submit a sealed bid on a particular day and time.  The bids are opened by an independent party, such as an attorney or Title Officer.  The highest bid is accepted and a contract is executed if it is acceptable to the seller.

This method is very attractive to sellers of property, but it limits competitive bidding as once the bids are opened the highest one wins and there is no further opportunity for a purchaser to raise his/her bid.

The important thing to remember in all types of auctions is that you, the seller, should remain in control of the transaction.

There are four basic types of auctions:

TexTerra Auctions1601 W. 38th. St., Suite 208    Austin, Texas   78731512-419-9052www.texterraauctions.com