Several options are available to a Seller in how the property should be marketed in regard to the Seller’s minimum or reserve price. Essentially, there are three different types of Auctions:

1) ABSOLUTE AUCTION - (Or Auction without Reservation)
This is where the property is advertised and sold to the highest bidder, regardless of the price. This method is by far the best way to generate the maximum response and bidder excitement from the market place. Interested parties know a Seller is motivated to sell on auction day. The prospective buyers can spend the necessary time and expense perform doing their due diligence to be prepared to buy on auction day. The only disadvantage to the Seller is that the reality of the market may be less than what a Seller is prepared to accept at that time for the property.

2) MINIMUM BID AUCTION
Under the Published Minimum Bid Auction, the Seller is committed to sell the property at or above the published minimum bid for the property. The minimum bid is published in all advertising and is a part of the terms and conditions of the auction. This method is only effective when the Published Minimum Bid is well under the anticipated sales price of the property (usually 50-60% of the anticipated sales price). The advantage to the Seller is that they are not obligated to sell the property below the Published Minimum Bid. The disadvantage is that if the Published Minimum Bid is set too high, this will deter bidder interest, response and those bidders may not participate.

3) RESERVE AUCTION
An undisclosed reserve is agreed to by the Seller and the Auction Company, and the Seller reserves the right to accept or reject the highest bid if the bid does not exceed the agreed to unpublished reserve. The advantage is that the Seller is not obliged to accept a price other than one that is agreed to. A drawback to this type of auction is that a prospective buyer may not invest the time and expense of researching a property when they have no certainty that they will get the property even if they are the high bidder.