All auctions offer buying opportunities, but some are much more likely to include super buys than others. Auctions run the gamut from “gotta sell” to “will only part with for top dollar” events. The former often include a lot of bargain buys, while the latter more likely include no bargains. If prospective buyers can nail down what type of event they are considering attending, this is a big step toward determining whether bargains will likely exist in the auction and, furthermore, whether these buys will be plentiful or scarce.

Last week, we looked at some of the key indicators for bidders to watch for when they search for bargain-rich auctions. We saw that the identity and type of the seller, along with the identity and characteristics of the auctioneer could both hold important signals. Now we will resume our review with the types of auction which we will classify as “good,” “maybe,” and “low” for the likelihood that good bargains will be found in them.

Auction types – ‘good’

A seller’s strong need to sell always creates a good opportunity for a smart buyer. Here are four auction types that will include assets that have to be liquidated and, as a result, are prime targets for bargain shoppers. 

Salvage auctions deal in goods that the seller does not want due to some undesirable circumstance. That could be a manufacturing overrun, inventory surplus, damaged goods, goods lost in transit, etc.

Whatever the situation is, when a seller has a strong need, and not just a desire, to sell something, the bargain bell is ringing. 

Liquidation auctions are held to sell all of the subject property. These auctions are commonly done for businesses that are closing, farms that are ceasing operation, and households that are being emptied due to the resident’s relocation, retirement, or other need to downsize. In such circumstances, it is obvious that the property has to be sold, so it is equally clear that bargains will be available. 

Regularly-scheduled consignment auctions typically include itemsfrom a number of sellers. This is particularly true for those auctions that are held weekly and this is why these events are frequented by dealers. Dealers know they can buy at wholesale and lower levels at these auctions and then resell for retail prices and turn a profit. Other bidders can purchase at the same bargain levels if they just do what the dealers do. 

Estate auctions (for a decedent) are another form of a liquidation sale. An administrator or executor of the estate is charged with turning the estate’s property into cash for use in paying the debts and administration costs of the estate, and then distributing the balance to the heirs or beneficiaries. 

Auction types – ‘maybe’

Now here are five types of auctions that might, or might not, hold the kinds of bargains that bidders hope to find.

Bank ordered auctions seem to indicate distress and an urgency to sell, but that might not be the case. Such an event signals that there is, or was, distress and urgency for the bank’s debtor that is, or was, involved with the property, but the term “bank ordered” reveals something else that is important - that the bank is in charge of the auction and not the desperate debtor. This means the bank will make the decisions on the important aspects of the auction, including whether the property will be sold for the highest bids for it. Banks have the money to be patient - sometimes to the point of appearing to be unreasonable. A number of factors, including some unknown, will determine whether such an auction will be a good buying opportunity or not. 

Repossession auctions are much like bank-ordered auctions and sometimes are the same. Behind such an auction, a creditor will have taken collateral back from a debtor in default that the creditor wants to sell, but that does not mean there is the urgency to sell for just any amount that bidders would prefer, so bargains night or might not be available.

Court ordered auctions also signal an urgent need to sell but, like with bank auctions, this could be glitter without gold. Courts often order that assets be offered at public auction, but the terms of such an offering might not be to sell to the highest bidder. Instead, a court might order that the top bids are to be brought before the court for consideration at a hearing where the court will hear any challenges to the auction and decide whether the assets will be sold to the bidder(s) or not. The more valuable the assets are, the more likely a court will hold a post-auction hearing to decide whether to the sell to the highest respective bidders for them.

Bankruptcy auctions are much like other court auctions. A debtor has sought the protection of federal bankruptcy law and a court trustee has been ordered by the judge to offer certain property of the debtor at auction. The idea is to raise money to pay to the creditors on the debts they are owed by the debtor. Like with other court-ordered auctions, the bankruptcy court might require a post-auction hearing on the auction results to hear challenges and decide whether to order the sale of the assets to the highest bidders, or to retain the assets for some other means of liquidation. 

Estate auctions (for a living person) are far different critters than estate auctions for decedents.

With a living person, there is no administrator or executor working to liquidate the assets to raise cash to cover the debts and administration costs of a decedent’s estate and then pay the balance to the heirs or beneficiaries.

Instead, this type of auction involves an offering of property by a live seller where the decision to sell or not will be made by the seller and the money realized from sales will go into the seller’s pocket. Think of this kind of auction as a regular consignment auction, because that is what it is, and it is not nearly as likely to include the bargains that a decedent’s estate auction might have.