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How Auction Pricing Works: Reserve & Absolute Auctions Explained
When selling or buying real estate at auction, one of the most important concepts to understand is auction pricing. The way an auction is structured directly affects bidding activity, buyer confidence, and the final sale outcome. Two of the most common pricing formats used in real estate auctions are reserve auctions and absolute auctions.
Understanding the difference between these two auction types can help sellers choose the right strategy and buyers participate with confidence. Below, we break down how auction pricing works, the pros and cons of each format, and how to determine which option is best for your property.
What is an Absolute Auction?
An absolute auction is a format where the property is sold to the highest bidder, regardless of price. There is no minimum bid requirement and no reserve price held by the seller.
Key Features:
- No minimum or reserve price
- Property is guaranteed to sell
- Highest bid wins once the auction closes
- Transparent pricing
Absolute auctions are often chosen by sellers who want certainty, speed, and strong buyer participation. Because buyers know the property will sell, absolute auctions typically generate more interest and competitive bidding. In many cases, competitive bidding can push the final sale price to or even above market value.
What is a Reserve Auction?
A reserve auction allows the seller to set a minimum acceptable price, known as the reserve, If bidding does not meet or exceed that reserve price, the seller is not obligated to sell the property.
Key Features:
- Sellers set a minimum price
- Seller retains final approval
- Property sells if the reserve is met
In a reserve auction, being the highest bidder does not always guarantee a sale. If the reserve price is not met, the seller may choose to reject the bid or negotiate after the auction.
Choosing between a reserve auction and an absolute auction depends on your property type, market conditions, and goals as a seller. At United Country Heritage Brokers & Auctioneers, we carefully evaluate each property and market to recommend the auction format that delivers the strongest results.
United Country Heritage Brokers & Auctioneers
Not all auctions are created equal. Choosing the right auction company can make a significant difference in your final outcome.
United Country combines:
- Deep local market knowledge
- National buyer reach
- Proven auction strategies
Our team guides sellers through every step of the real estate auction process. From choosing the right pricing structure to closing day.
Contact us today to learn whether a reserve or absolute auction is the right fit for your property: (877) 318-0438