Auctions traditionally occur in a physical location with a gavel-wielding auctioneer leading the proceedings, but the thrill of bidding can now take place from the comfort of your home computer. Participating in an online auction might feel daunting at first, but once you understand the ins and outs, you’ll realize it’s actually quite simple. Let’s explore just how online auctions work.
What is an Online Auction?
This digital version of a traditional auction is where goods or services are sold to the highest bidder. Buyers and sellers from across the globe convene on online auction platforms, offering a wider array of items and a larger audience than local auctions provide. The items for sale can encompass anything under the sun, from guns and cars to heavy equipment and real estate. In the world of online auctions, diversity is the name of the game.
Online Bidding Terminology
Before going any further, it’s helpful to understand the lingo used during online auctions. Here’s a quick rundown to get you started:
- The auctioneer is the person responsible for conducting the auction. They manage the bidding process, maintain the auction’s pace, and ensure fair play.
- Lots are individual items or groups of items up for auction.
- The catalog is a comprehensive list of all the lots in the auction. It includes detailed descriptions and often images of the items up for sale.
- Valuation is the process of determining an item’s worth before it’s put up for auction. This helps set a baseline for the starting bid.
- The bid increment is the minimum amount a bid must exceed the previous one. For items under $100, the bid increment might be $5. But for pricier items, the bid increment might be $10, $50, $100, or more.
- The hammer price is the winning bid when the auctioneer closes the bidding.
- The buyer’s premium is an additional fee paid by the winning bidder. It’s usually a percentage of the hammer price.
- The seller’s commission fee is the charge paid by the seller to the auction house for facilitating the sale.
- Fair warning is the auctioneer’s last call before the hammer falls, giving any hesitant bidders one final chance.
- The preview period or exhibition is a time frame before the auction when prospective bidders can inspect the lots, either physically or digitally.
Types of Online Auctions
Online auctions primarily operate under two formats:
- Timed auctions are online auctions that occur over a specific time frame, often lasting for several days or weeks. Buyers place their bids during this window, and when the clock runs out, the highest bidder wins. It’s like a digital silent auction, and there’s no need to be present at a specific time.
- Live auctions mirror the hustle and bustle of an in-person auction event, but digitally. Bids are placed in real time, and the action unfolds quickly. You compete with other participants until the hammer price is reached, marking the end of the auction for that lot.
Placing Your Bid
Two main types of bids exist in online auctions:
- Pre-bids allow you to place a bid on an item before the live auction commences. This is ideal if you can’t be present during the live event, giving you the freedom to participate at your convenience.
- Live bids happen during the live auction event. They offer an adrenaline rush as you compete directly with other bidders in real time.
Reserve Price vs. Buy It Now
To make your online auction experience more successful and enjoyable, it’s essential to understand two other concepts:
- The reserve price is a minimum price that must be reached for the item to be sold. It’s set by the seller and often kept confidential, known only to the seller and the auctioneer. If bidding doesn’t reach this price, the seller is not obligated to sell the item.
- “Buy It Now” is an option some auctions offer, allowing a buyer to purchase the item immediately at a set price without having to wait for the auction to end. This option is usually only available until bidding reaches a certain level. It’s a great way for eager buyers to secure an item without the risk of being outbid.
Online Bidding Tips
Remember these key tips to help you successfully navigate your next online auction:
- Do your homework. Always research the items you’re interested in, comparing prices, assessing conditions, and gathering as much information as possible before the auction starts.
- Understand the terms. Make sure you’re familiar with the auction house’s terms and conditions before you start bidding.
- Set a limit. Decide the maximum amount you’re willing to bid beforehand to avoid overspending in the heat of the moment.
- Track the auction. Monitor the progress of the auctions you’re interested in, especially as the end time nears.
- Bid smartly. In timed auctions, consider bidding late to avoid driving up the price prematurely.
- Factor in additional costs. Don’t forget to account for the buyer’s premium and potential shipping costs.
Choosing a Reputable Online Auction House
Not all online auctions are created equal, so proceed with caution before joining one. Keeping an eye out for reputable auction houses like Dakil Auctioneers, Inc. can make a world of difference in your online auction experience. With an established auctioneer like us, you gain the assurance of a fair, transparent process backed by professional valuations and various high-quality lots.
Dakil is a family-run auction house based in the Oklahoma City metro area. As a full-service auctioneer, we have the capability to conduct any type of auction, including in-person and online. Whether you’re a seasoned collector or dipping your toes into the bidding world for the first time, we promise a user-friendly and exhilarating online auction experience. Please contact us at (405) 751-6179 for more information, or feel free to explore the online auctions happening now.
