What is a silent auction?
A silent auction, or tender, occurs when bidders privately offer specific price points at which they wish to buy a property to the estate agent. The highest bidder gets the property, much like in a public auction. However, in a tender, it is often the case that higher prices are offered to start with. A silent auction demands that a bidder offer the highest possible price according to their financial circumstances, as they are conscious that they are in competition with all the other bidders. But they do not know what other bidders are naming as their price, so they must step forward with their best offer from the start. Once all submissions have been received, the estate agent reviews them with the seller. The seller can do one of three things; accept one bid and agree to a sale, reject all offers and try again to sell the property, or say no to all requests and take the property off the market.
What makes a silent auction different?
The auctioneer is the heart of a public auction, with bidders indicating their bids to them physically or verbally. There is the element of spectacle to a public auction, and offers can happen as emotions rise and the feeling of competing with the other bidders right there beside you. A public auction will usually occur on the site of the property. A silent auction may happen over two days. It begins after the first offer is made, after which other bidders are prompted to make their bids. There is no public bidding war in this case, as the agent deals directly with each individual interested party. After the close of bidding, the seller will usually agree to accept an offer.
What are the advantages of a silent auction?
Choosing a tender over a public auction has quite a few benefits. Here are some of the top advantages:
- The lack of a listed selling price means that bidders cannot compare your home to others in a similar price bracket. They do not know the property’s sale price, so they cannot ascertain if they think the property price is inflated.
- One bidder will not know what other bidders are offering, so they have no external gauge for their bid. Thus winning bids are often much more significant than other offers for the same property.
- A seller may receive many more offers than they expect during a tender.
- The seller is in control of the sale of the property. They can choose the highest bid to win the property, or they can use the knowledge of the highest bid to negotiate with another bidder.
- When marketing a property for sale via tender, there is a smaller period of advertising, and efforts can be more concentrated and effective.
- If a property value is hard to gauge, a silent auction can provide an idea of value by ascertaining how much people are willing to bid.
- While a public auction relies on competition between two bidders to raise the sale price, a tender requires only one interested person willing to pay a high price.
- In a public auction, sellers often need to make split-second decisions in the moment, but in a silent auction, this is not necessary.
- While in a public auction, a bidder will stop bidding when their competitor stops bidding, but in a tender, the bids are not known, resulting in higher bids.
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