In this type of auction, there is a minimum bid amount on a property. The minimum bid is published in advance, and if you’re bidding in person (more on that below), the auctioneer will announce the minimum bid amount before opening bidding on the property. The minimum bid is generally the balance owed on the mortgage in the case of foreclosure, or taxes owed in the case of a tax lien. All sales at the minimum bid or higher are final. Reserve Auction In a reserve auction, bids are treated more like offers in that the seller can accept or reject the bid (but not counteroffer, as they may in the typical real estate transaction.) In these cases, the seller usually has a minimum bid in mind, but doesn’t want to share the amount, in the hopes they’ll get more at auction. If you’re bid is lower than the minimum amount the seller is looking for, they may simply reject the offer. Types Of Bids Sellers choose the bidding arrangements they want to try and increase the sale price. Open In an open auction, bidders know the amount of any other bids that have been made. Bidders like open bids, because they can see what the competition is doing and raise their bid gradually, as needed. If there is no competition, a lowball bid might just win. On the other hand, open bidding can result in bidding wars, and sometimes sellers reap a windfall. Blind Sellers generally prefer blind bids, even if it reduces competition. This process is more like bidding on a job. You’ll have to make a bid without knowing how others are bidding. Motivated buyers need to make a bold bid upfront instead of taking a wait-and-see approach.
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