There are two kinds of auctions. Any shrewd buyer will ask the question right out of the box. Is the property being sold "absolute" or with a "reserve". "Absolute" auction means the highest bid wins. A "reserve" auction reserves a price that no offer will be accepted below a specific price. On the one hand, a "reserve" type auction will cut down the attendance, as there is a perception that the seller is not really serious about selling. The sellers in an effort to protect themselves will opt for the "reserve" auction. By limiting ones potential loss, interest wanes. The "absolute" auction gets the most interest and therefore a higher price.

Many practitioners have honed the skill to perfection. It is one thing to have an enthusiastic auctioneer to move the attendees to a fever pitch, it is quite another to fill the location with a large group of qualified buyers who are looking to buy at a "deep discount" considered by most, a "deal". As things have changed from pre-internet days, serious monies must be spent up front to market the sale. It is way more than just sticking an ad in the local paper and waiting for potential buyers to show up. A seller will need to put serious up front cash money to give the property maximum exposure. It may take $5,000 to $10,000 to build a campaign with sufficient momentum to pull in strong interest leading to a heavily attended auction. It will take months of lead-time to build a proper tempo and momentum for a well-attended sale.

In some instances, an auction house will combine ten to twenty properties with staggered sale times all on the same day. Some auction sales may have a "reserve price". Some auction sales will be at "absolute price" at auction. Weather may be a consideration in some cases with the auction house posting sale restrictions of the sale conditions. There would have to be pretty drastic conditions for that to happen, as a lot of serious money is being spent up front. However, with the use of on line virtual tours with 360 degree viewing and a thorough property data sheets with attached appraisal references and perhaps a list of comparable properties and city, state demographics, a lot of out of state or out of country buyers can participate.

The depth of experience and reputation of the auctioneer house will play big in having a good sale. The auctioneer's database of all past customers and registrants will be notified by mail or e-mail with customer opt-in lists. This is a powerful list. Included will be investors, bottom feeders, and regular retail customers. Active tax sale buyers and discount land contract paper buyers are targets of marketing. Circles of influence are directed towards attorneys, physicians, CPAs, Book Keepers, Stock Brokers, Insurance Brokers all in hopes of peeking further interest with money buyers. In addition, depending on the location and area, specific magazines, such as horse farms, farming, local real estate for sale magazines, newspaper print ads can be used. E-mail opt in lists as well as direct mail by post card or brochure coordinated by the use of data mining from multiple niches to build a strong contact base all directed towards building momentum for the sale. A good copywriter and graphic artist are employed to build a strong sales piece. In a larger auction houses there may be someone in house or the printing house may have the talent necessary to produce a contact marketing piece that will turn heads and gain attention to the sale.

It matters little regarding of societal status of the attendees. Rich or poor, auctions are exciting and for many an ego trip to display their financial prowess. It's the ultimate ‘keeping up with the Jones' play with all the towns' people having a front row seat.

The details of the auction sale will indicate the "Price" will be understood to be the winning auction price plus 2% or 3% or higher for the auctioneering fee. There may be a co-broker fee offered to Realtors who bring a buyer and is the winning bid. It is all done by agreement in advance. A Realtor would register their buyer before the sale. The offered fees can vary. A bidder will need to have at least a 5% of the projected price or say a minimum $5,000 or $10,000 bank drawn checks to get a card to participate in the bidding. It will all be spelled out in the sale conditions. The successful bidder will be given the same day, the next day, or two days (whatever the conditions of sale might be) to pay the rest of the cash. Inspection periods will be one to two days before the sale and a few hours before the auction.

A well-planned auction will be a happening. If the auction ticket is big enough, there may be entertainment by musical groups or other circus like performers including jugglers (apropos), mimes, barbecues and such. A large tent to shield the attendees from the elements may be installed. Slush machine, balloons and possibly a local radio station may be part of the marketing costs. The whole purpose is to get enough bidders to the auction to make a purposeful bid and sell the property.

As tension mounts before the sale, there is a fever pitch of excitement. Again, if the price is "absolute" then this will ensure a big attendance with maximum bidders with bidding cards. With the bidders signing in and displaying their verified bank checks. Many will post a Letter of Credit from their respective banks demonstrating they are a "player" in attendance. With the bidders being identified the auctioneer's front people start working the participants. Pulses are felt to determine the level of interest. A lot of the auctioneer's front people establish a verbal banter with the bidders for what is to come.

Ideally, twenty or thirty bidders or more would be a good start. As the time approaches, the auctioneer in combination with the front people gather the bidders away from all the other distractions and the music and entertainment is quieted as the bidders put on their game faces and push close to the auctioneer lectern. With gavel in hand the opening bid opens. It's like watching a Wimbledon Championship Tennis Match with back and forth action. The front people have their hands on the bidders urging them to press on and get this "deal". A nod here, a hoisted card there, a wink, a front person confirmation of the bid all come into play. The action lasts for less than five minutes. All the preparation, marketing, promotion all come into play as the auctioneer's gavel swings down the words "Sold!" are announced to all. The seller is thrilled as he got a little more than he expected. As often happens with an "absolute auction price" the winning bid is over the reserve price.

A seller with a mortgage has to be keenly aware of selling a property less than the mortgage as he will be on the hook for the difference and will buying a lawsuit (legal advice required) if the difference is not made up. However, at the same time, a "reserve type auction" will insure a low attendance. It is however a very calculated gamble that will bring more buyer's to the sale. If a seller is upside down in the property (owes more than the property is worth) or has low or no equity then this is not the vehicle to use unless they are able to make up the difference just to get the property sold.

Auctions are a well used device in foreclosures, art, antiques, bankruptcy liquidations, surplus government property, property tax sales, equipment liquidations, storage unit liquidations, law enforcement seized properties, to just about anything that has to be sold. Simply, it is a device that can be used to sell a property, which did not move through normal means or did not sell quick enough. In it's simplest form it will satisfy the requirement of competitive bidding. The market sets the sales price with proper marketing and exposure. If a seller has to sell, this can be a tool to get the job done.

Auctions are not for everyone, but with the right auctioneer and a strong marketing plan, the property will be sold. It can save a borrower from going into foreclosure and the destruction of their credit for what could be many years. It's a good tool when property has to be sold. It allows families to reunite if there is relocation or a sudden family or job change. When things get tough auctions continue to work. It should be noted, if a "reserve price auction" does not go at sale, due to the market exposure, the property may sell within a few weeks.