What Is an Absolute Auction?

An absolute auction is a type of auction in which the sale is awarded to the higꦜhest bidder. Absolute auctions do not have a reserve price, which sets a minimum required bid for the item to be sold.

How an Absolute Auction Works

There are many different types of auctions. A sealed bid auction, for exa𓃲mple, is an auction in which people submit secret bids, while in a Dutch aucti🌞on, the auctioneer starts at a high price and decreases it until somebody agrees to buy the item for that price.

An absolute auction is the "classic" type of auction where the item—whether real estate or any other type of produce—is sold to the highest bidder, regardless of the price. This is also called an English auction. Since there is no reserve price or minimum floor above which bidding must start, the bidding in an absolute auction starts at $0.

Absolute auctions can occur in various venues, including the 澳洲幸运5官方开奖结果体彩网:foreclosure marketplace, the online marketplace (such as eBay.com), or live aucti💟on events. School foundations and charities, for example, often hold absolute auctions to raise money.

Absolute 🥃auctions are often i𝓡mplemented where there is an immediate demand to sell an item.

Absolute Auction vsꦬ. Lender Confirmation Auction

One type of absolute auction relates to foreclosed properties, where the win🧔ning bid acquires the foreclosed property. Although it is highly unlikely, if on🎶ly one person were to show up at an absolute auction, their bid would be accepted, no matter how low the amount of money being bid.

An absolute auction is different from a 澳洲幸运5官方开奖结果体彩网:lender confirmation auction, in which the lender must approve the bid in order to complete the transaction. In real estate, if a foreclosure is sold at a lender confirmation auction, the highest bi♕dder does not necessarily win. The individual with the winning bid must not only have the money to spend but must also be vetted and accepted by whoever is holding the mortgage, be it a ba🍒nk or the government.

Example of an Absolute Auction

John and Jane have decided to close their farm equipment business. They want to immediately liquidate all of the items in the business and do not have a minimum price they are trying to get for any of ꦯthe items. They hold a live auction in which the bidding starts at $0 for the items and the highest bidder for each piece of equipment wins it. This is an example of an absolute auction.

The Bottom Line

A💫bsolute auctions are auctions where there is no reserve requirement and the sale goes to the highest bidd🌊er.