Auction is a type of sale in which an item is sold to the person who bids, or offers, the most money for it. An auctioneer receives the bids and conducts the sale. Goods often sold at auctions include fine and decorative arts, antiques, collectibles, farm products, livestock, and real estate. Thoroughbred horse auctions are also popular.
Many bidders set maximum price levels, often called limits or stop prices, above which they will not bid. Similarly, many sellers establish minimum price figures known as reserves, below which they will not sell. In an auction with reserve, the seller has the right to withhold an article from sale if he or she has decided that the highest bid is too low. Reserves are usually confidential and determined before the auction between the seller and the auctioneer or auction company. In an auction without reserve, the seller agrees to sell the article to the highest bidder regardless of the price.
Many auctioneers speak in a quick, rhythmic chant to inform participants of an item’s bidding status. Some auctioneers use the famous call of “Going once, going twice, sold!” to warn bidders that the end of the auction seems near. When one bidder outbids all the others—and exceeds the seller’s reserve—the dropping of the auctioneer’s hammer signals a sale. At this point, the final bid creates a binding contract between the seller and the highest bidder. The selling price is called the hammer price.
After an auction, the seller usually pays a selling commission and the buyer often pays a buyer’s premium to the auctioneer or the auction company. Most auction organizations require auctioneers to have official licenses.
In the 1990’s, certain computer websites introduced online auctions over the Internet. The largest and most popular auction website is called eBay. Online auctions closely follow the procedures of live auctions, except that bidders can enter bids from their computers at any time. Another advantage is that the Internet allows sellers to offer a wide variety of items to a vastly expanded international audience. The most reliable auction websites guarantee both the authenticity and the condition of their offerings.
