There are basically two type of real estate auction. An "absolute" auction is where the property is sold to the highest qualified bidder with no limiting conditions or amount. The seller may not bid personally or through an agent. Also known as an auction without reserve, this type of auction means the property will be sold to the highest bidder regardless of price.
A "reserve" auction is when the seller or his agent reserves the right to accept or decline any and all bids. A minimum acceptable price may or may not be disclosed and the seller reserves the right to accept or decline any bid within a specified time.
Ron Taylor and Sons Auctioneers discourages sales with a high reserve price and asks sellers to disclose any minimum or reserve price prior to a sale. In the case of bankruptcy and certain court ordered auctions, many properties are sold subject to a reserve price or final ratification by the Court before the sale can be completed.
If the auctioneer does a good job with marketing, the home will sell at auction. The problem comes in when the expectations of the seller is not fully explored by the auctioneer prior to the auction. Many sellers do not understand that if you have 25 or 30 potential buyers bidding on their property, market value is reached when the bidders stop bidding.
If the seller at a reserve auction rejects the high bid, there may be a "no sale fee" the seller will have to pay to the auctioneer. The auctioneer should have a good feel as to what the home will bring. If the reserve is higher than this figure, the auctioneer should take a bye on the property.
For more information on real estate auctions, go to www.canSellnow.com.