Foreclosed Home Auctions

Buying At Auction? 

An auction is a place where goods are bought and sold by people on a bid. Several people bid for the item placed on auction and quote their price. The winning bidder would have quoted the highest price for that item. Economics define auction as a trading mechanism that exchanges goods for money. 

 There are several forms of auction and several types of goods are sold in an auction.  There are auction houses like Sotheby’s which have been auctioning precious goods to paintings and other forms of art on auction for ages. The auctions are funded by the seller and the auctioneer is paid for the services rendered in an auction. 

There are different kinds of goods that can be auctioned. It can be movable or immovable property, and tangible goods. There are several methods to auction too. Online auctions, auction houses and public auctions held at public places are common form of auctions undertaken.  

Characteristics of an auction 

The basic function of an auction is time driven. The buying and selling of the items that are being auctioned has to take place in a pre set amount of time. After the auction closes even if a person wants to buy the item being auctioned he can’t. So the prospective buyers have to decide about buying the item being auctioned at that moment. Another characteristic of an auction is that the prices are offered by buyers and the sellers are asked for agreement. Also in an auction the seller offers the goods that buyers ask for and the demand and supply works in the reverse direction.  

Auctions are the best way to sell goods if the goods are limited or single in most cases. Auctions make no sense for bulk goods.  Auctions do not follow a standard market price and are characterized by the demand of the moment. Market price has no bearing on the price an item is sold at an auction. This rule applies to even real estate and gold which are so market driven.  

The items being auctioned cannot be bargained for and there is no reduction on price after it is sold or even before it is sold. In an auction the market is live and everything happens then and there.  

Types of auction 

In some auctions all the bidders bid at the same time and the person who has the highest bid gets the item. In this case one bidder does not know what the other bidder has quoted. There are no announcements made and the bidders quote is not announced like it happens in a general auction.  These kinds of auctions are best suited for government projects which are given to private developers like construction of bridges, or agriculture products and so on.   

The other kind of auction is where all the bidders bid and scream out their prices. This is the most common kind of auction and happens in auctions that sell antiques, paintings and other precious possessions. The highest bidder gets the item that is being sold. Once it is declared the sale cannot be reversed or changed.