Property Auctions

Property Auctions are nothing but the process of buying and selling properties by offering them up for bid, taking bids and selling for the highest bidder. In economic theory an auction is a means for determining the value of a commodity that has an undetermined or variable price. If the bidding does not reach the minimum or reserve price, there is no sale. In the context of auctions, a bid is an offered price.

Some of the auctions are publicly visible and some are less visible. Auctions are seen publicly in a number of contexts. We can see auctions in the traditional business, in the sale of collectibles such as stamps, coins, classic cars, luxury real estate, and fine art; in thoroughbred horseracing, where yearling horses are commonly auctioned off; and in legal contexts where forced auctions occur.

Though there are some auctions which are less publicly visible, but the most economically important auctions are those in which the bidders are businesses or corporations.

Examples of this type of auction include:

Spectrum Auctions, in which companies purchase licenses to use portions of the electromagnetic spectrum for communications.

Timber Auctions, in which companies purchase licenses to register on government land.

Electricity Auctions, in which large-scale generators and consumers of electricity bid on generating contracts.

Environmental Auctions, in which companies bid for licenses to avoid being required to reduce their environmental impact.

Debt Auctions, in these auctions governments sell debt instruments, such as bonds, to investors. The auction is usually sealed and the uniform price paid by the investors is normally the best non-winning bid. In many cases, investors can also put so called non-competitive bids which indicates an interest to purchase the debt instrument at the resulting price, whatever it may be.

Auction Catalogs
Auction catalogs are normally printed and distributed prior to auctions of rare and/or collectible items; these catalogs may be very elaborate works, with significant details about the items being auctioned. Auctioneers are usually trained in the legal and practical aspects of conducting auctions. Some jurisdictions require auctioneers to be licensed and bonded.

Types of auctions

English Auction: In this auction participants bid explicitly against one another, with each bid being higher than the previous bid. The auction ends when no participant is willing to bid further, or when a pre-determined "buy-out" price is reached, at which point the highest bidder pays the price. The seller may set a 'reserve' price and if the auctioneer fails to raise a bid higher than this reserve the sale may not go ahead.

Dutch Auction: In the traditional Dutch auction the auctioneer begins with a high asking price which is lowered until some participant is ready to accept the auctioneer's price, or an encoded minimum price is reached. That participant pays the last announced price. This type of auction is suitable when it is important to auction goods quickly, since a sale never requires more than one bid. The Dutch auction is named for its best known example, the Dutch tulip auctions; in the Netherlands this type of auction is actually known as a "Chinese auction". "Dutch auction" is also at times used to describe online auctions where several identical goods are sold simultaneously to an equal number of high bidders. Economists call the latter auction a multi-unit English ascending auction.

Sealed first-price Auction:
This is also known as Sealed High-Bid Auction or First-Price Sealed-Bid Auction (FPSB). In this type of auction all bidders simultaneously submit bids so that no bidder knows the bid of any other participant. The highest bidder pays the price they submitted.

Sealed second-price Auction:
This auction is also known as a Vickrey auction. This is somewhat similar l to the sealed first-price auction, except the winning bidder pays the second highest bid rather than their own. In theory, this is mathematically the same to the English auction, since in both the first-place bidder receives the item at a price equal to the second-place bidder's willingness to pay, plus the bid increment. Proper strategic equivalence requires a modified model of the English ascending auction in which the price rises constantly with bidders choosing when to drop out. When all but one bidder drops out, the good is owed to the remaining bidder at the price at which the second-to-last bidder dropped out and often called a Japanese Auction.

Silent Auction: This involves the simultaneous sale of an item and it is a sealed variant often used in charity events. Participants submit bids generally on paper, near the item. They may or may not know how many other people are bidding or what their bids are. The highest bidder pays the price they submitted.

Procurement Auction: This kind of auction reverses the roles of seller and buyer. The buyer puts out an RFQ for a given commodity and providers offer gradually lower prices in hopes of getting the business. The lowest bid wins at the end of the auction.

Digital art Auction: In this indefinitely long auction, planned for unreleased works that are immaterially reproducible at zero cost (recordings, software, drug formulae), bidders plainly submit their maximum bids. The seller may evaluate the bids and close with a price of their choosing at any time.The successful bidders that pay this price are that whose bid meets or exceeds it, and these are the only bidders who get a copy of the item.

Open outcry Auction: In the stock exchanges and commodity exchanges this type of auction is used where trading occurs on a trading floor and traders may enter verbal bids and offers concurrently. Transactions may take place concurrently at different places in the trading pit or ring. This type of auction is being replaced by electronic trading platforms.

Unique bid Auction: In this type of auction users post blind bids and are given a range of prices they can place a bid in, often a capped limit. The highest, or lowest, unique bid wins. For instance an auction is given a maximum bid of 10. If the top five bids are 10, 10, 9, 8, 8 then 9 would be the winner being the highest unique bid. If more than one identical item is sold, there are two probable generalizations of the second-price auction. In a uniform-price auction, all of the winning bidders pay the price submitted by the highest non-winning bidder. Bidders will not normally bid their true value in a uniform-price auction with multiple units.

Bidders in the traditional Dutch auction and sealed first-price auction will tend to underbid what they believe the item is truly worth in hopes of getting the item for less, or in order to avoid the winner's curse. This behavior is known as bid shading. These two auctions are also theoretically equivalent, but in practice Dutch auctions will produce less revenue than sealed first-price.