A successful auction is not held, it is staged. Buyers go to auctions to find items that must be sold regardless of price, while sellers choose auctions to motivate buyers that must have what is being sold. Well staged, the auction can become an arena for the confrontation of individual wills.
An auction is not simply a sales process, it is also a social process and mechanism for valuing and fixing the price of a particular commodity at a particular place and time. What might appear to be purely economic transactions, auctions rely on the social interactions that are generated during the bidding process. The success of an auction is dependent on these social interactions. The buyer at an auction will always rationalize a high price paid by noting that the back-bidder was right behind them in price. This rationalization validates the process and fixes the price.
The worlds finest and most unique assets are often sold at auction (think Sotheby’s and Christies), and the stock market is a huge auction of securities that goes on most every weekday. Auctions of real estate have become the prominent method for banks to dispose of the huge amount of real estate that they are currently taking back after the financial crisis of the late 2000’s.
An absolute auction is a sale where there are no minimum bids or reserve prices; every item is sold to the highest bidder on auction day, regardless of price. A sale with reserve is sale where the seller agrees to sell, but only after bidding has reached a certain price that may be disclosed or may be private. A Dutch auction is a sale that starts high and works backward until a buyer agrees to buy at a certain price (the first hand up wins). There are many other variations on the auction based on these three methods.
Blackbird provides auction services for our clients in one of three ways:
- on a straight commission basis
- by providing a net minimum guarantee to sellers wishing to mitigate risk
- by purchasing the assets outright