Absolute Auction: Defined Number of Qualified Bidders RequiredJuly 21st, 2007 by PA - Bloger
We are seeing a lot more absolute auctions coming across our screens these days. We all know that means the most “motivated sellers” who are willing to accept the high bid at auction, regardless of price, have put their property up for auction. But is an absolute auction that only has two or three bidders really a fair deal to the seller or the auction company for that matter?
An average of 1-3% of the value of the real estate is spent up front by either the seller, the auctioneer, or sometimes both entities for the marketing and advertising campaign to create the auction. So after all that, only a couple of bidders show up at auction: it happens. This is certainly unfair to all the parties involved and grounds for cancellation of the auction are clear.
The exact number of bidders required to create a competitive environment that will result in an auction price that is considered “fair market value” for that piece of real estate, on that particular day, is not really known. Depending on the size of the real estate, you could say five, you could say ten, a seller might say twenty. An auctioneer should note and buyers need to understand that there needs to be a minimum amount of qualified bidders in order to facilitate the auction and have a fair playing field. Anyone care to comment?
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