There are generally three types of auction used in a real estate situation. They are:

• Absolute Auction – The property is sold to the highest bidder regardless of the price (no reserve).

• Minimum Bid Auction – An auction performed at an announced minimum price, which is stated before the auction commences.

• Reserve Auction – An auction where the minimum bid is not published, but the seller privately determines a minimum bid which he is willing to accept on the property (reserve). The auction goes through as if without a minimum price, but if the unannounced reserve is not met, there is no winning bidder for that auction and no one receives the property.

The methods by which these auctions are performed can vary depending on the type of property and the venue in which the seller prefers to present his property. These can include:

• Sealed Bid – Bids are mailed in to the specified location prior to the opening time of bidding. Bids are not modifiable after they bidding has opened, and the property is awarded to the highest bidder. The trick to this type of auction is that a bidder cannot see the amount of any of the other bids, and has no way of knowing whether or not he has won until after the auction has ended.

• Public Auction – The most recognizable form of auction, where a bidder registers and brings the bid deposit to the auction. Bidders make their offers in the presence of an auctioneer until the bidding stops and the highest bidder is awarded the property.

• Auction by Mail – A bid deposit is mailed to the appropriate office and bidders are allowed to increase their bids by mail, e-mail, fax, on-line, or in person. The auction lasts a few days and the high bidder is awarded the property when bidding stops.

• On-line Auction – The bidding system whereby all activities take place online and the highest bidder is awarded the property.

Depending on the type of auction and the preferences of the seller, the auction type used in any situation could be any combination of these, and it is important to find out what kind of auction best fits your preferences before auctioning or bidding on a property.

Often a buyer tends to assume that if a property is up for auction instead of being sold in the regular real estate market, there is a defect or something about the property that the seller believes will hurt his sale or does not wish to disclose. In reality, this is often untrue – a legitimate auction is not arranged to swindle an informed buyer, and can be an excellent way to sell a property quickly and efficiently, regardless of the state of the property. Government auctions often include perfectly good property that has been seized or foreclosed upon, and can be excellent markets for the thrifty buyer who does his research on the property and knows what he is purchasing.

If you are an investor trying to sell your property quickly and do not necessarily care for what price it sells, auctioning it off may be the avenue you wish to take. However, whether buying or selling in an auction, it is important to know the market so that the transaction is favorable to all parties involved. If you are a seller, an auction can expose your property to a number of buyers who are prepared to offer a fair price for the property. As a buyer, you can enter a market where you are likely to encounter many sellers who are ready and willing to commit to sell their property quickly and fairly.

All real estate is salable by auction. However, not all real estate is well suited for auction – if it does not appeal to a broad market, it may not be profitable to try to auction your property.

• When Buying:

Government property auctions operate similarly to private property auctions, but on a larger scale. Many different types of properties are sold side-by-side, with thousands of properties ranging from undeveloped land to houses to office complexes available all over the country. The government conducts auctions both on-site and online, depending on the type of property. Government auctions tend to be stricter with regards to deposits and closing times, but the procedures for registering and bidding on government property auctions are essentially the same as for any other auction. It is possible to find good deals on many types of property through the Department of the Treasury and other government organizations, both locally and throughout the country.