Auction house – What is it, definition and concept | 2022

Auction houses are companies that are dedicated to publicly selling goods to those who offer a greater amount for them. There is the possibility of auctioning various kinds of goods: real estate, works of art, jewelry and even food.

Therefore, the auction house functions as an intermediary, putting buyers and sellers in contact. Starting from a starting price, potential buyers will raise prices, fighting each other to finally be able to acquire the good.

The auction is a very old practice and, usually, the employees of the auction houses have a wide knowledge of the property that they are going to put up for sale in public.

The great advantage of an auction house is the direct contact between bidders and applicants, without forgetting an agile and simple technique when setting prices.

Origins and types of auction houses

The auction of goods is a practice that enjoys a great tradition. Thus, in the 18th century, renowned auction houses emerged, among which the London companies Sotheby’s and Christie’s stand out.

At present, cities like New York and London are the most important cities in the world of auctions.

In terms of typology, it is possible to distinguish between two classes of auction houses. While monographic auction houses are dedicated exclusively to one sector, general auction houses are capable of covering various sectors, with various specialized departments.

Operation of auction houses

When using an auction house, it will be necessary to start by establishing the value of an asset. For this purpose, auction houses have experts who are responsible for determining the value of the property.

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In order to establish the value of the object to be auctioned, the experts of the auction house study the property thoroughly, analyze its historical value and make a confidential report available to the owner.

Once the property has been valued, a catalog is drawn up. This catalog must rigorously justify the valuation made and will indicate the means of payment, the currency used and the way in which the auction will be carried out. Likewise, the details of the seller, a detailed description of the property and the date and place of the auction are specified.

With the catalog already prepared, it is distributed to the public to attract potential buyers.

Prior to the beginning of the auction, it will be necessary to have a record book in which the starting price of the auction is collected.

Already with the auction underway, the objects that will be put up for sale are announced. To do this, the starting price of the different goods will be made known to the attendees. Potential buyers will bid, raising prices to compete for the item in question. Bids can be made in person or online. Now, if there are no bids, it means that the good has not been sold.

At the end of the auction, the winner of the bid, that is, the one who has offered the highest price, acquires the property.

Advantages of auction houses

  • These are companies with great prestige and extensive experience.
  • Their employees are reputable experts with the ability to command substantial selling prices.
  • From a commercial point of view, they have a more than remarkable ability to contact potential buyers.
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Disadvantages of auction houses

  • There is a possibility that, despite the contracted services, there are no bids and, therefore, the sale is void.
  • The services they offer entail a high economic cost.
  • Important administrative procedures after agreeing on the sale.

What services do you offer?

Auction houses offer both face-to-face and telematic sales. Its experts are available to clients for the valuation, advertising and sale of goods.

Within the auctions, they offer two kinds of auctions:

  • Closed: It is necessary to pay a payment to participate in it. This is a measure to confer greater prestige and seriousness to the auction.
  • Open: Anyone can take part in the auction.

Additionally, auction houses offer not only appraisal services, but also take care of the security of the goods during the public sale process.

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