Today, as I promised in my previous one, I will tell you about what other types of auctions exist.
The word auction comes from the Latin word “auctionis”, which means “increase”, “growth”.
Auction- public sale of goods, securities, enterprise property, works of art and other objects, which is carried out according to pre-established auction rules. In this case, the object is purchased by the auction winner. The principle common to all auctions is the principle of competition between buyers. In the process of competition between buyers for the right to purchase the goods, the winner of the auction is determined. The winner of the auction is the person who wins the auction in accordance with its rules. The main criterion for determining the winner of any auction is the price.
A little history...
Auctions were common during the Roman Empire and were often held after military victories. They traded prisoners of war, and the proceeds from these auctions went to finance the armed forces. Auction trading was also used to liquidate the confiscated property of debtors. Even Emperor Marcus Orilius sold his household furniture at auction to pay off his debts. The most legendary auction: March 28, 193 - sale of the entire Roman Empire. The winner of the auction was the wealthy senator Marcus Didius Julian, who offered 250 million sesterces for the Empire - 25,000 for each guardsman, which was equivalent to their five annual salaries. However, Didius Julianus was unable to pay, lost the support of the guard and was killed 66 days later.
With the collapse of the Roman Empire, auctions disappeared and then reappeared in Medieval Europe: in 1254, a decree issued by King Louis IX established the profession of auctioneer.
Historically, the emergence of the modern type of auction is associated with the Netherlands at the end of the 16th - 17th centuries. There are suggestions that the emergence of this form of trade was associated with the unprecedented prosperity of the Netherlands after liberation from Spanish rule and the formation of the first republic in Europe, based on the principles of elected government and a market economy. The newly conquered colonies in Indonesia, South Africa and Brazil brought in enormous income; The capital of the United Provinces, Amsterdam, has become the richest city in northwestern Europe. The large number of wealthy people who want to surround themselves with luxury goods has led to the formation of a vibrant art market in Holland. A relatively small circle of collectors never tired of buying and selling Renaissance paintings and works by contemporary artists. Auctions were held frequently, and sometimes catalogs were printed for them.
The development of international trade in the 16th-17th centuries, great geographical discoveries, and the improvement of the global credit and banking system led to the rapid spread of auctions throughout Europe. Already at the end of the 17th century. they became commonplace in England, Germany, France, and in the first half of the 18th century the auction houses Sotheby’s and Christie’s were created, which are currently leaders in the world antiques market.
In Kazakhstan, auctions appeared much later - the first mentions of them date back to the first quarter of the 18th century. The appearance of the first terms of auction trade indirectly indicates that in Kazakhstan at the beginning of the 18th century. Auctions have already been held. This is one of the first regulatory documents regulating sales at auction: in accordance with it, the procedure for transferring “belongings for sale” is established, the rules of bargaining (for example, “whoever will give the most will write for the sale”), and officials are appointed - “ vendor", "broker" and "magistrate" who conduct the auction. It is interesting that the “vendemaster” who conducted the auction did not hit the table with a hammer at the end of each auction, but hit the basin.
The decree does not yet contain the terms “auction” or “auction”, but the expression “public auction” is used. During the 18th century. In Kazakhstan, the auction procedure was regulated, which is very similar to the modern one, a set of basic concepts and terms was created, and the auction sale itself became firmly established in the practice of state trade organizations.
In the USSR, auctions were held solely on the basis of the state's monopoly right to this form of trade. One can note auctions for the sale of furs held in St. Petersburg by the Ministry of Foreign Trade since 1931. They sold the skins of fox, sable, and squirrel (in total about 80% of all furs). Since 1965, an international auction for the sale of thoroughbred trotting and racing horses began to be held in Moscow.
Auctions gained the greatest popularity in the mid-90s. In 1997, auctions for the purchase of food products for the army arose.
Types of auctions
Direct Auction (English)
This is one of the most famous and common types of auctions. It is based on establishing a minimum “starting” price, the basis for further bidding, during which the established price gradually increases. All proposals received are publicly announced. The final price is formed during the auction as the last maximum price offered by the buyer. A direct auction typically lasts for a fixed time (this is used in electronic auctions conducted via the Internet) or until no new bids are received. If a reserve price is set (the minimum price for which the owner of the product agrees to sell it) and it is not reached during the auction, then the product is not sold. And yet, often at such auctions, gambling buyers raise the price very high. One of the striking examples of a direct auction is an electronic auction - www.ebay.com.
An English auction can be:
- direct. In a direct English auction, prices gradually increase either at the suggestion of the bidder or at the request of the bidders themselves. The seller sets an initial “starting” price, then buyers enter into competition, setting a price higher than the starting price. Participants have the opportunity to revise their proposals depending on the proposals of their opponents. The winner is the one who offered the highest price at the end of the auction.
— reverse. In a reverse English auction, the initial maximum price is set by the buyer. This is the price he is willing to pay for the product. Sellers make offers to him, gradually reducing the price. The price is reduced until there is a seller willing to sell his goods at that price.
First price auction
A first price auction is a closed auction. The price is not publicly announced. In this auction, participants submit their bids in sealed envelopes, and the winner is the highest bidder. For the lot, he pays the “first price” - the value of his offer (bid). According to statistics, more than 2/3 of world auctions are conducted precisely according to this scheme. Typically, government contracts and various properties, including companies, are sold at a first-price auction.
Second price auction
Just like the first price auction, the second price auction is closed. The rules for determining the winner are identical - the highest price wins. The lot goes to the highest bidder, but he pays for the item an amount equal to the second highest bid (“second price”). In practice, this type of auction is rarely used, since it artificially limits the maximum profit of the owner of the lot. An example of the use of a second price auction is the sale of securities, postage stamps, etc.
Reverse wholesale auction (Dutch)
This is a wholesale auction in which the seller can offer several items at the same time. Accordingly, buyers can qualify for the purchase of several units of goods. The initial price is set deliberately higher and is reduced step by step until a buyer is found. All winning buyers pay only the minimum of the winning price. A wholesale auction differs from a Yankee auction, in which each winning buyer pays the price they bid.
Example: The seller put 3 laptops up for sale. All three winning bidders bid on 1 laptop each. The highest bidder was $1,000 and the lowest bidder was $850. All three will purchase laptops for $850. Despite the fact that the highest price was $1000.
At a Dutch auction you cannot set a reserve price. Dutch auctions were originally used to sell perishable goods and took place in a very short time frame. Currently, this type of auction is most often used for the sale of securities, used goods, construction projects, licenses, etc.
Reduction (reverse auction)
A reduction is otherwise called a rebidding or a down auction. When carrying out a reduction, the customer does not sell, but purchases the products he requires (product, work or service). He sets the initial price that he is willing to pay for it, and sellers (reduction participants) make him their offers, gradually reducing the price. The winner of the reduction is the participant who offers the lowest cost.
Yankee auction (discriminatory), own-price auction
These are auctions that are closed from other participants (unlike English or Dutch) and the winner who gives the highest price receives the goods for the price he named. As a rule, each participant submits only one bid (price proposal), so preparation for such an auction is especially important.
A closed auction consists of two phases - the bid submission period and the winner determination phase, when all bids are opened and a winner is determined (sometimes no winner is announced).
If there is a single product, then there is only one winner. But if a lot of several units of goods is offered, then not only the one who gave the highest price wins, but also those who gave the lower price. Because not all winners pay the same price, such an auction is called “discriminatory.”
In a “discriminatory” auction (more than one item per lot), blind bids are sorted from maximum to minimum and the product is distributed in that order until it runs out. Participants who win such an auction pay different prices for the goods.
Auction where everyone pays
In this type of auction, each participant pays the amount offered during the auction, however, the lot goes to only one - the winner. In their pure form, such auctions are practically never found at present, but are components of many other procedures.
For example, when preparing their competitive (auction) bid, all suppliers incur some financial costs that no one compensates. However, the contract (lot) goes to only one of them.
Private auction (VIP)
Such auctions usually involve a “selected few” who require special accreditation. The bet (offer) is accepted for a strictly limited time, and the participant does not have the opportunity to find out the size and number of bets of other participants. The participant has the right to make only one bet.
(see choosing a profession based on interest in school subjects).
Auctioneer- the person leading the auction (leader of the auction).
Features of the profession
An auction is a public sale of goods that have individual and even unique properties, according to pre-established rules. For example, at international specialized auctions, consignments of goods such as furs, tea, tobacco, flowers, tropical forest species, horses, fish, used cars, etc. are sold and bought.
Unique items sold at auctions include works of art, historical rarities, collectibles, and antiques.
Essentially, an auction is a competition between buyers. The starting price for the product (lot) is set, which gradually increases. The day and hour of the auction are set in advance, and the “auction step” (the minimum premium for changing the price) is specified. Each buyer is assigned a member number.
There are public and unspoken ways to change prices during trading.
With the vowel method The auctioneer announces the lot number, names the starting price and asks: “Who is higher?” A buyer who is willing to pay more names a new price, which is higher than the previous one (taking into account the minimum premium). The auctioneer calls the buyer number under which he is registered at the auction, the new price of the lot and again asks the question: “Who is more?” If, after repeating the question three times, no one offers a new price, the auctioneer hits the hammer. This means that the item is sold to the highest bidder.
In a secret way buyers give the auctioneer a conventional sign (for example, by raising a sign with his number) that they agree to raise the price. The price premium is standard and specified in the bidding rules. The auctioneer announces a new price each time without naming the buyer.
The auctioneer ensures that all bidders comply with the rules and at the same time manages the process of increasing the price, maintaining competition between bidders.
The pace of auction trading is very high and requires maximum attention and quick response from buyers and auctioneers. On average, it takes less than 50 seconds to sell one lot.
Some auctions are not held with an increase in price, but on the contrary: first, the highest price for the product being sold is announced, and then the bids are reduced to the one that the first buyer to whom the product is sold agrees to.
The auctioneer's work begins even before the auction. He participates in the preparation of the auction: communicates with auctioneers (persons who transfer goods under a contract for sale at auction), gets acquainted with the lots, and participates in setting prices.
When the auction is over, the auctioneer participates in the formalization of the transaction for each lot sold.
Workplace
Salary as of 02/25/2020
Russia 45000—50000 ₽
Auctioneers work in auction houses and galleries. And also in large trading companies, unions or associations of sellers or special auction brokerage firms.
Important qualities
The auctioneer must have a good memory, artistry, good diction, and self-control.
Auction /Auction (Sale) - bidding process for catalog lots. There are different types. The most common (and well-known) is an auction with in-person participation of applicants for the possession of lots, or with their representatives by telephone with a gradual increase in bids. The biggest one wins.
Auctioneer /Auctioneer- the main person during the trading process. It depends on him whether the bid will be accepted, and at his word the lot is declared sold or withdrawn.
Auction house /Auction House- organization conducting auctions. It may include departments in various areas of collecting, financial and even educational institutions.
White gloves /White Glove Sale- an auction in which 100% of the lots were sold. “White Gloves” is a traditional award that was given to the auctioneer on such occasions. Nowadays it is more often replaced with applause or even a bottle of champagne.
Bid number (card) /Bidder (Paddle) Number- a plate with a number that each auction participant receives. Raising the bid number is a sign that the participant wishes to place a bet.
Absentee bid /Absentee Bid- a bid that a bidder can make without being in the auction room. Simply put, the participant tells the auction house employee the maximum amount for which he wishes to purchase the lot, and the auction is conducted on his behalf within this amount.
Hubadabagiv- this is the auctioneer’s inviting phrase, pronounced in accelerated mode according to the pace of the auction. It stands for “How about a give?”, that is, “Who wants to raise the bet?”
Catalog /Catalog- list of lots in electronic or paper form. The catalog usually contains the number, description and preliminary estimate (estimate) of the lot and, in some cases, a photograph. In addition, the electronic catalog can sometimes display the starting price, trading conditions and even their result.
Buyer commission /Buyer" s Premium- a commission that the auction house adds to the price of the lot. It can reach from 10 to 20% (less often - 25%) of the lot price received during the auction.
Seller commission /Commission- the commission that the auction house receives from the deliverer. By agreement with the auction house, it may not exist.
Lot /Lot- an item or group of items that are put up for auction.
Lot withdrawn from auction /Withdrawn- if the sale of a lot may lead to problems of various kinds, the lot is removed from the catalog before the start of the auction: most often due to doubts about authenticity or provenance. In rare cases, a lot is withdrawn because it was purchased before the auction began.
The lot did not reach the reserve price /Pass- the lot remains unsold, even if several participants were bidding for it at once, since the bids did not reach the reserve price.
Lot not sold /Unsold- there were no bidders willing to buy the lot among the auction participants, or bids did not reach the lower limit of the estimate or reserve price.
Initial (starting) price /Starting (Opening) price- the starting price from which the auction for the lot starts. It may be equal to the lower limit of the estimate, or it may be significantly lower than it, say, 1 dollar or even 100 rubles.
Online auction /Online only Auction- an auction taking place on a special platform on the Internet.
Offline auction /Offline Auction- an auction taking place in the auction hall, with the participation of the auctioneer and buyers, personally (or through their representatives) present during the drawing of lots.
Buyer /Buyer- a registered bidder who offered the highest price for the selected lot that the auctioneer accepted.
Last chance /Last Chance- last chance to place a bet. Usually the auctioneer says this phrase either before counting to three, or before the number three and the blow of the hammer, after which the item is considered sold.
Half step /Half Bid- a bet is half less than the opponent’s bid, or half less than the increment step (usually 10% of the current value of the lot). Such a bid can only be accepted with the consent of the auctioneer.
Provenance /Provenance- history of the lot. An obligatory part of the description of any work of art of the highest price segment, along with an indication of the dimensions, material, execution technique and other characteristics.
Pusher /Pusher- an unofficial representative of the auction house (or even the owner of the lot), whose task is to raise the price of the lot as much as possible: seeing that there is a person in the hall who is very interested in buying, he creates temporary competition for him in order to create excitement. Pushing is not a completely legal and rather complicated activity: it is important to understand the price limit beyond which the buyer will not go, and to stop in time so that the lot goes to a real participant at the highest possible bid. Sometimes at English-language auctions such bids are called Dummy Bid, Ghost Bid or Vendor Bid (the latter option is for cases when the owner of the lot acts as a pusher).
Reserve price /Reserve price- the price that is negotiated with the seller before the start of the auction; the lot cannot be sold below it. The reserve price is not indicated in the catalog and can only be seen by the auction leader. If bidding for a lot does not reach the reserve price, it is said to be withdrawn without reaching the reserve.
Delivery /Consignor- the owner or the owner’s representative who provides the item for auction, with whom the reserve price is agreed upon and a contract for the sale of the item is concluded.
Spotter /Spotter // Ring man // Floor man- an employee of the auction house, pointing to the auctioneer at the visitors in the hall who decided to take part in the fight for the lot.
Csecretary /Secretary- an employee who records everything that happens at the auction.
Bet (bid) /Bid- price offer from a registered auction participant. Usually the bid is equal to the auction step - 10% of the current price for the lot, but, depending on the rules of the auction house, the step can be more or less (sometimes even half a step). By the way, if one of the bidders makes a half-step bid, his opponent has the right to a mirror response.
Silent auction /Silent auction // Blind auction with sealed bids- a type of bidding when all bids are accepted before the auction, and the highest one wins.
Online bidding /Online Bid- bids offered by participants registered online during face-to-face trading.
Bidding by phone /Telephone Bid- the bids that the bidder voices over the phone to representatives of the auction house.
Bidder /Bidder- registered bidder.
Handler /Handler- the person who brings the lots into the hall.
Hammer price /Hammer price- the maximum price of a lot, fixed during trading when the hammer hits (excluding commission).
3 D - auction “dimension”, built on threeD:
- Divorce (divorce),
- Debt (debt),
- Death (death).
The term, often found in auction slang, conveys what often becomes the reason for the sale of objects or entire collections at auction (think of the sale of the collections of Yves Saint Laurent and David Bowie).
There is a special language in the auction world, and our vocabulary only covers a small part of it. An auction agency will help you master the magical slang of an auctioneer to perfection in order to get the full benefit from the bidding process.
(cm. choosing a profession based on interest in school subjects).
Auctioneer- the person leading the auction (leader of the auction).
Features of the profession
An auction is a public sale of goods that have individual and even unique properties, according to pre-established rules. For example, at international specialized auctions, consignments of goods such as furs, tea, tobacco, flowers, tropical forest species, horses, fish, used cars, etc. are sold and bought.
Unique items sold at auctions include works of art, historical rarities, collectibles, and antiques.
Essentially, an auction is a competition between buyers. The starting price for the product (lot) is set, which gradually increases. The day and hour of the auction are set in advance, and the “auction step” (the minimum premium for changing the price) is specified. Each buyer is assigned a member number.
There are public and unspoken ways to change prices during trading.
With the vowel method The auctioneer announces the lot number, names the starting price and asks: “Who is higher?” A buyer who is willing to pay more names a new price, which is higher than the previous one (taking into account the minimum premium). The auctioneer calls the buyer number under which he is registered at the auction, the new price of the lot and again asks the question: “Who is more?” If, after repeating the question three times, no one offers a new price, the auctioneer hits the hammer. This means that the item is sold to the highest bidder.
In a secret way buyers give the auctioneer a conventional sign (for example, by raising a sign with his number) that they agree to raise the price. The price premium is standard and specified in the bidding rules. The auctioneer announces a new price each time without naming the buyer.
The auctioneer ensures that all bidders comply with the rules and at the same time manages the process of increasing the price, maintaining competition between bidders.
The pace of auction trading is very high and requires maximum attention and quick response from buyers and auctioneers. On average, it takes less than 50 seconds to sell one lot.
Some auctions are not held with an increase in price, but on the contrary: first, the highest price for the product being sold is announced, and then the bids are reduced to the one that the first buyer to whom the product is sold agrees to.
The auctioneer's work begins even before the auction. He participates in the preparation of the auction: communicates with auctioneers (persons who transfer goods under a contract for sale at auction), gets acquainted with the lots, and participates in setting prices.
When the auction is over, the auctioneer participates in the formalization of the transaction for each lot sold.
Workplace
Salary as of 02/25/2020
Russia 45000—50000 ₽
Auctioneers work in auction houses and galleries. And also in large trading companies, unions or associations of sellers or special auction brokerage firms.
Important qualities
The auctioneer must have a good memory, artistry, good diction, and self-control.