What Are the Types of Land Auctions?: Reserve vs. Absolute

What are the types of land auctions you can use to sell land in Florida?

1. Absolute Auction: A land auction in which the highest bidder wins no matter how low the winning the bid actually is. This is ideal for an urgent sale.
2. Reserve Auction: A land auction in which a property is not sold unless a minimum price set by the seller is met. This is great for properties with mortgages.

To find out if an auction is right for you,
request a consultation with our auctions experts.

You’ve weighed your options and want to sell your land at auction. You’ve heard the terms such as “reserve” and “absolute” thrown around, but what do they mean? These two terms represent the two main approaches an auction will be conducted.

Type 1: Absolute Auction

In an absolute auction, the property will be sold to the last, highest and best bidder, regardless of price, with no minimums or reserves. This type of auction typically produces the most urgency and excitement among bidders, which translates into higher bidding. Ideal situations for absolute auctions can include properties in high demand and those with no mortgages or liens.

Type 2: Reserve Auction

With a reserve auction, the auctioneer will submit the last and highest, or most viable bid to the seller, who has the right to accept or reject the offer. This is a great way to offer properties that have mortgages, liens or other factors that must be considered prior to sale.

A variation includes setting a published or unpublished minimum bid price. If the auction meets or exceeds the minimum bid, then the property is confirmed sold. In essence, the lower the minimum bid, the higher the interest generated among bidders. If the minimum bid is perceived as too high, then the auction may see less interest.

Auctions vs. Traditional Real Estate Sales Process

Auctions introduce a competitive factor, unlike traditional negotiations. During an auction, every time someone bids, the market value is reinforced while simultaneously promoting more bidding. Traditional real estate sales consist of the buyer negotiating the seller down until they both agree on a price. With an auction, there is more competition and only the highest bidder can buy the property.

Professionally-conducted auctions also eradicate what could otherwise be a lengthy and costly sellout period. Many have experienced their property sell in a matter of minutes for top dollar when it would not sell in a traditional market. There are two reasons for this. Professionals are the ones leading the proceedings at the auction and the property is being marketed to a large group of engaged buyers.

Knowing what type of sales approach is best for your property is dependent on many factors. There are many benefits to using auction to sell land, but it’s important to ask a professional for help to ensure you get the best result for your specific financial needs.

To find out if an auction is right for you,

Request a consultation with our auctions experts