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AUCTION DEFINITIONS & TIPS
Why are goods sold at auction? What types of goods are sold at auction? How does an Auction work?
An auction is defined as a public sale of goods or property in which prospective purchasers bid until the highest price is reached.
You can bid on an item without attending an auction personally by submitting an "absentee bid". The bid is submitted on an item prior to the auction starting by whatever means the auctioneer has specified.
Not a true auction. Confidential bids are submitted and opened only at a predetermined place and time.
Absolute auctions are won by the highest bidder without any limitations or reserve prices being imposed
This type of auction has a number of items offered at the same price, the highest bid for the most items wins the bidding.
When an item is valued or confirmed by an auctioneer, it is known as an appraisal. The person doing appraisals may also be known as an appraiser.
The person who conducts an auction sale.
Usually refers to auctioneers who hold auctions at their own premises, the company is referred to as an auction house.
These auctions are usually held in a location different to where the actual goods for auction are kept. Viewing of the goods will have taken place prior to the auction.
An auction where a seller has listed multiples of the same item. All winning bidders pay only the lowest successful winning bid amount.
The price reached by the auctioneer when the hammer or gavel is dropped.
On Site Auctions
If a company has gone into liquidation and its assets are to be sold at auction, that auction sometimes will take place at the company site rather than at an auction house. This is done when it is not practical to transport the goods to the sale - the goods are sold "On site".
The auctioneers often place details of the lots for auction on their website. This can be in HTML, i.e.. as a web page, or can be a file made available to you for download. (Both a page of HTML and a file for downloading can be saved to disk on your machine for viewing off-line )
Bidders identities are not disclosed in this type of auction.
Submitting a confidential maximum bid to an auction service. The auction will automatically increase the bid to maintain the high bid. The proxy bidding will stop when the bid has won the auction or reached the limit of the proxy bid.
The seller has set a minimum (reserve) price for the lot and can decide whether to accept or refuse a bid. The reserve price may not be disclosed.
An auction where a seller has listed multiples of the same item. Each winning bidder pays their exact high bid.
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Why are goods sold at auction?
There are several reasons why goods may be sold at auction and it is important to know why the goods are being sold and where they came from. This information can be found by consulting with the auctioneers before the sale or it may be stated in the catalog of lots relating to that auction sale. One of the following may apply:
What type of goods are auctioned?
- The goods are being sold to raise cash to pay of debtors if the previous owner has gone into liquidation, receivership or bankruptcy.
- The goods are being entered in the hope of a dealer making a profit from their sale.
- The goods are being sold by the owner to create space for new stock.
- The goods are surplus to the owners requirements due to new stock being acquired.
- The goods have been part of a leasing agreement and the term of lease has ended and the goods are not required by the leasing company who are now the legal owners.
- The goods will not sell any other way due to poor demand or over supply.
- The goods may be part of an illegal consignment and have been confiscated by an official department who now wish to dispose of them.
- The goods may have been stolen and the previous owner cannot be traced by the appropriate authorities.
- The goods may be government department or armed forces surplus stock due to being out of date or over stocked.
Just about anything can be sold at an auction, here are some examples.
Furniture - Jewelry - Antiquities - Artifacts - Clocks & Watches
Paintings - Sculptures
Stamps - Coins - Books - Postcards - Medals - Print - China & Glassware - Memorabilia
Caravan & Camping - Marine - Aviation - Sports Goods
Houses - Flats - Land - Commercial Premises - Warehouses - Workshops - Studios
Furniture - Appliances - Fridges - Freezers - Washers - Dryers - Electrical Goods - Hi-Fi's - TV's. - Videos - Clothing - Carpets -
Beds - Garden Equipment
Foodstuffs - Wines - Spirits - Beers
Equipment - Furniture - Consumables - Telecommunication Equipment
Home Systems - Business Systems - Parts & Peripherals - Printers - Scanners - Modems
Cars - Vans & Commercials - Trucks. - Motorcycles
INDUSTRIAL PLANT & MACHINERY
Contractors Plant & Machinery - Engineering Machinery - Printing, Chemical & Fabric Equipment - Commercial Catering Equipment
- Stock Materials - Scrap Materials & Equipment
Buildings - Machinery & Tools - Livestock - Vehicles
Armed Forces - Government Department Stock - Seized & Confiscated Goods
How does an auction work?
When you arrive at the auction site, you may need to register with the auctioneers in order to obtain a bidding number; the information required is usually your name and address and you may also need to pay a returnable deposit. You should be familiar with the registration requirements for the particular auction before you arrive in case a large deposit is required.
If you have not viewed the lots for auction prior to the auction day you will need to allow yourself time to inspect your prospective purchases before the auction starts, if this is allowed. Some auctions may not allow you to view the lots other than in the specified viewing dates and times; with some "catalog" auctions, you may not be allowed to view the lots after the auction has started. You should confirm these details with the auctioneers prior to the auction date.
When a lot you are interested in bidding on comes up for sale, the auctioneer will announce the lot number (either found in the catalog next to the item or placed on the item during the viewing period) and give a brief description of the item usually tied to the description given in the catalog.
A starting bid will be suggested by the auctioneer and usually bidding will start below this price so do not assume the auctioneers starting bid is the lowest price available. If the item has a reserve price, the auctioneer will often start the bidding above this price and reduce the start bid towards the reserve price until a bid is made. The auction catalog will usually display a guide price for the item which is above the items reserve price.
You are free to start bidding at any time after the auctioneer has announced the starting bid. Some auctions - especially liquidations, bankruptcies and receiverships - have no reserve prices so give it a little time before you start your bidding. If there are no other bidders, your first bid may be the price you pay.
If similar lots are listed together in the catalog and you are the buyer of the first lot, you may then have the option to purchase the similar lots at the same price as the first.
When bidding, it is usual to get the auctioneers attention by raising your hand or making some other clear gesture to the auctioneer followed by the amount you wish to bid (if different to the auctioneers announced price). Now you have started bidding, the auctioneer will return to you every time the bid is against you to see if you wish to raise your offer, a clear shake of the head will indicate to the auctioneer that you do not wish to continue bidding.
Bids go up in steps controlled by the auctioneer and until the bid nears the assumed final price a bid of less than this amount will not usually be taken. If your bid is the final bid and the price reached is above the items reserve price, you have been successful in your purchase.
After you have won the bid you will have to pay an immediate deposit, the amount of deposit will be stated in the terms and conditions of the auction catalog. The type of payment method (i.e. cash, bank drafts, credit cards) will be stipulated in the catalog. The amount of time given to pay fully for the purchase and clear the goods from the auction house will also be given in the catalog. Remember, it is usual for the goods to be the responsibility of the purchaser after the hammer has fallen. If the items for auction are large, heavy or difficult to move, representatives of removal companies will usually be present, but this is worth checking with the auctioneers before you make your purchase.
Hot auction tips:
- Before traveling any considerable distance to the auction, you should obtain a catalog of items to ensure the goods for sale are what you require.
- Certain auctions can be subject to cancellation at short notice and it is therefore a good idea to phone on the morning of the sale to confirm the sale is going ahead.
- You should inspect the items thoroughly as most auction items are sold without guarantees, if items are described as faulty, check that the faults can be easily repaired. Sometimes you can test the goods before the auction starts - ask the auctioneer if this is possible.
- Some motor vehicle auctions give you a period of time after the sale in which to return the vehicle if it is found to be faulty, again check this with the auctioneer prior to bidding.
- Think about setting yourself a price limit on the goods you are interested in and "stick to it", how much would the item cost new with a guarantee? Remember a "buyers premium" may be added to the final bid price at some auctions and local taxes may also be added to the price (check the "conditions of sale" in the catalog or consult the auctioneer before bidding). Catalogs are not set in stone and items listed can change.
- Listen out for any changes stated by the auctioneer in the description they give of the item at the start of bidding. If you bid for the wrong lot, tell the auctioneer immediately, although you have a legal obligation once you have won the bidding, the auctioneer may present the item for auction again, but this is purely at the auctioneers discretion and you may have to make up any difference if the final price is lower than your original successful bid.
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