What is a minimum bid at auction? As more and more real estate is sold at auction, buyers must understand all of the terminology associated with buying property at auction. I am often asked to explain the three basic types of auction — absolute, minimum bid and reserve. Most buyers seem to understand that a property sold at absolute auction is sold to the high bidder regardless of price, and a reserve means the property is sold subject to the seller’s confirmation, with no stated reserve price.
Somewhere in the middle of absolute and reserve auctions is the minimum bid method. As an Auctioneer and Realtor, I find that there is a good bit of misunderstanding surrounding the term minimum bid. The National Association of Realtors website explains that a minimum bid is a pre-determined price that is published and that any bid at or above the minimum bid will be accepted by the Seller. Our company policy strictly adheres to this definition. When we publish a minimum opening bid, not only is it the minimum opening bid but the bid the Seller will accept, subject only to the terms and conditions of the auction.
Not all publicly announced auctions readily make this distinction apparent to bidders. Frequently, I see the words “nominal opening bid” or “minimum opening bid”, when in fact these are suggested opening bids and not at all minimum bids acceptable to the Seller. To avoid misunderstandings, or worse, possible legal issues, when you are buying real estate at auction, closely read the terms and conditions of the auction and if you aren’t perfectly satisfied that the “minimum” is the true minimum bid, call the auction company to clarify the terminology being published for that particular auction.
Transparency makes for good, clean business transactions and understanding the minimum bid will assure that you have a stress-free bidding experience. Whether online auctions or live auctions, know your auction terms.
Gina Boyleston is President & Broker of Boyleston Auctions and Boyleston Realty, Member of National Auctioneers Association and National Association of Realtors. Located in Pensacola, Florida, Boylestons is a full-service auction and real estate brokerage company. www.BoylestonAuctions.com