The Different Types of Auctions

By Emily Southey | 7 minute read

Real estate auctions represent an incredible opportunity for both buyers and sellers. But did you know that not all real estate auctions are the same? That’s right, there are many different types of auctions out there, and knowing the differences between them is key if you want to increase your chances of success. Continue reading as we break down each type of real estate auction below. 

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What Are the Different Types of Auctions?

In-Person Auctions 

As the name suggests, in-person auctions occur live. They may take place in a local courthouse, ballroom, or another event venue. In-person auctions tend to be more exciting than online auctions, due to the electricity that comes with bidders physically gathering in the same space. However, on the flip side, they can also be more stressful for buyers. It’s worth noting that for in-person auctions, even though the actual auction is conducted live, the property listing and auction registration are all found online on the auctioneer’s website. In a live auction, bidders will raise their numbered paddles to place a bid. Bidding continues until no more bids are made, and the last bidder is the winner. Sometimes, more than one home will be sold at an in-person auction, so when one home is sold to the highest bidder, the auctioneer simply moves on to the next home being sold. 

Online Auctions

Online auctions are the opposite of in-person auctions in that they are conducted entirely online. Real estate auctions that are conducted online are more accessible as bidders from all over the world can participate. This might lead to increased competition and a higher sale price. Online auctions work similarly to in-person auctions in that bidders attempt to outbid the competition in an effort to win the home. In addition, all bidders must register in advance on the auction company’s website. Online auctions can be quick, however, they can also take place over days or even weeks. Generally, online auctions start at a slower pace and result in a flurry of activity at the end as bidders race to place the winning bid. 

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Public or Foreclosed Auctions

Public auctions, also known as foreclosed auctions, are when homes are sold as a result of the foreclosure process. Typically, public auctions are conducted by mortgage lenders, such as banks, that want to liquidate the property by selling it to the highest bidder through an auction. Homes sold in public auctions tend to be the best deal, however, these events tend to have strict requirements. For example, most homes sold in foreclosed auctions are sold as is and buyers are unable to access the home before the auction. They may also require the winning bidder to pay for the home in cash within 24 to 48 hours of winning. 

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Open Bid Auctions

Another type of auction is an open bid auction. Open bid auctions allow bidders to see the amounts that other people have bid on the home before placing their own bid. Homebuyers typically prefer open bid auctions as the increased transparency reduces the odds of overpaying for a home. Open bid auctions allow buyers to bid strategically, incrementally raising their bid based on other bids. This auction type tends to take longer than the alternative, blind bid auctions (more on those below).

Blind Bid or Sealed Bid Auctions

One final type of real estate auction is a blind bid or sealed bid auction. In this type of auction, bidders must place their bids without knowing how much other participants are bidding. Sellers tend to prefer blind bid auctions as they are more likely to lead to higher bids and therefore a higher sales price. 

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Real Estate Auction Bidding Systems

Beyond the different types of real estate auctions, there are also different types of auction bidding systems. We dive into the three main real estate auction bidding systems below. 

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Reserve Auctions

Reserve or with reserve auctions are when the seller has the right to accept or reject the highest bid, no matter the price.

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Absolute or No Reserve Auctions

The opposite of reserve auctions is absolute, no reserve, or without reserve auctions. If a real estate auction has this type of bidding system, the seller agrees to sell the home to the highest bidder, regardless of price. 

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Minimum Bid or Reserve Price Auctions

Lastly, minimum bid or reserve price auctions are when the seller sets a reserve price in advance of the auction, and if the highest bid does not meet the reserve price, the sale will not go through. In essence, the minimum bid or reserve price is the lowest price at which the home can be sold. If the highest bid doesn’t meet the reserve price, the property remains unsold. Please note that the minimum bid is made known to the participants ahead of the sale, and it is almost always higher than the opening or starting bid.