Timed Vs. Live Auction

Posted by Jim Olson on Jun 11th 2020

Auctions have been around since Roman times. They are a great way to move product in a timely manner and a way to find true market discovery. For most of that 2000 years, live auctions were pretty much the main option. However, since the 1990s, internet timed auctions have been around. Now-a-days, many folks get the two confused. These two distinctly different formats are often intertwined, blended and thought of in terms of having one set of standards. However, there are differences you need to know.

Timed auctions typically run online and happen between the bidder(s) and the computer. As far as an event goes, there is little or no production involved. Timed auctions happen with no auctioneer, as mentioned, computer software handles the bidding. The lots are open for bidding for a pre-determined time period, usually from a few days up to a couple of weeks. Maximum bids left on a specific lot in a timed auction are prioritized by the computer system (for example, if two identical bids are left by different bidders, the bid left first will be prioritized and the seconds bid will be automatically rejected). At timed auctions, the closing of a lot is sometimes automatically extended if a bid is left in the last couple of minutes. This allows other bidders a chance to raise their bids when outbid at the last minute. Timed auctions generally have a reserve amount factored into the system, so that if a certain floor is not reached for the price of an item, it is passed out (not sold). From a contract standpoint, at any point during the period in which lots are open for bidding, if a buyer leaves a bid online which is accepted as the current high bid (subject to possible reserves or other various conditions), a contract has been created between the bidder and auction house (seller) whereby the bidder will purchase the lot for the specified amount (plus applicable fees) and this contract is enforceable until there is a higher bid accepted.

Live auctions happen with a crowd (in person, online, by phone or otherwise) and are usually an “event,” often a big production. An auctioneer conducts the live auction and is responsible for acknowledging bids and accepting them (or is some cases rejecting them). Although there may be pre-bidding offered online, or by absentee bid, a lot in a live auction format is opened for bidding when the auctioneer announces that he is now going to sell that certain lot and closes when the auctioneer says “SOLD!” (this usually takes about 30 seconds to 1 minute). In a live auction format, absentee bids may be left beforehand, but once the auction starts, absentee bids are typically handled the same as if the person who left the bid was standing there in the room bidding (this varies from one auction house to another). Many live auctions have reserves set in advance by sellers, but you are more likely to find lower reserves or “absolute” sales happening in a live auction format (this also varies from place to place). A key difference between a live and timed auction format is that in a live auction, until the auctioneer acknowledges a bid from a potential buyer, the bid has not accepted as the current winning bid. It is merely an offer at that point and becomes an enforceable contract once acknowledged by the auctioneer. The auctioneer is the conductor and has the final say.

Term and conditions vary from one auction house to another, so it is important to know the specifics for each auction you participate in. Some timed auctions have hard closes (meaning the lot closes at a certain time no matter what) while others have extensions built in (ie: if a bid is left in the last minute, the closing for that lot is automatically extended for another minute). Some live auctions are held with an online component as well. This can get tricky when dealing with the absentee bids and so-called tie bids. Some auction houses have it built right in to their terms and conditions that any ties will go to the floor bidder, others give preference to a certain platform or to the earliest absentee bidder. While others give it to the person who’s turn it was in the bidding. Some auctions will ship the items for you, others will not (they have you call a third party shipper). Most auctions today have buyer’s premiums, but not all. Those premiums can vary widely. It is important to know how each company conducts their particular auction so your best bidding practices/strategies can be implemented. Remember, if in doubt, ask questions first.

An important thing to keep in mind is auctions can and should be fun. They are a great way to buy and sell items at a fair market value in a timely manner. And auctioneers/auction houses are your friends in the process, not adversaries. Treat them as such and know the rules (terms and conditions) and you will get along much better at the auction!