What is an auction ? How does it work in practice? Can anyone participate in an auction of cars, motorcycles, real estate, jewelry, or other types of materials? What is the minimum bid to participate in such an event? Do you need a lot of money to buy a car seized by the Federal Highway Police or not?
Although many people are unaware of it, auctions are ancient. Studies by historians believe that auctions were created by the Assyrians around two millennia BC. At the time, auctions were created for the sale of fish, with a minimum bid already in place, with negotiations taking place to seek the best prices offered by interested parties.
Speaking a little more historically, about 1.500 years later, 500 BC, women were auctioned off in ancient Babylon. Therefore, auctions aren't new. On the contrary: they emerged a little over 4 years ago, evolving into the variety of auctions we know today.
In this article, going far beyond history, we will define, characterize, and explain the main types of auctions to help you better understand how they work. So, if you want to know what an auction is , follow us to the end of the article to find out more details on the subject. Let's go, read along!
What is an auction?
But what is the real definition? What is an auction ? Well, besides what you already know and have understood, it is an occasion where there are negotiations of various products, usually niche ones (car auctions, motorcycle auctions, jewelry auctions, cattle auctions, real estate auctions).
The highest bidder at the end of the auctioneer's narration wins the item (or more than one, if there's a negotiation). To further clarify the definition, we've included the formal definition of "auction" below, found on Wikipedia. Read:
“Auctions are a form of negotiation, widely used in public bodies and private companies, as well as fishing auctions, in which the sale and purchase of goods or services requested by the supply and demand are carried out quickly and easily.”
Therefore, an auction is a place where you go to "bid" a specific amount on an item being auctioned. These items can come from a variety of sources, from the painting collection of a deceased celebrity to cars seized by the Federal Highway Police, often being resold for a ridiculous price.
Main characteristics of an auction
We already know what an auction is ; now, let's look at its three main characteristics. See below for a better understanding of how it works:
minimum bid
Regardless of what's being auctioned, there's always a minimum bid. Let's use the example of a car, which is always clearer: if the auction house is full and the auctioneer is offering a car valued at 24 reais (FIPE), he might start with a low minimum bid, such as 12 reais.
Because there are so many bidders, it's natural for bids to end up close to the vehicle's true value. The opposite is also true: if there are few bidders, the value will be slightly closer to the FIPE (National FIPE Index), in this example. But one thing is certain: there will always be a minimum bid. It's a way to guarantee profit for the auctioneer.
Low or high values
The characteristics of an auction extend to the prices. The scarcer the product and the more exceptional the occasion, the higher the prices. Imagine an auction of works by Leonardo da Vinci: prices will always be sky-high, as these are extremely valuable works of art and are usually displayed in museums, not auctioned.
On the other hand, when we talk about auctions of vehicles or properties that have been seized by the bank due to lack of payment, the opposite is true: properties and vehicles at auction will always be cheaper than in other locations, since they have been seized.
Everyone can participate
Finally, as long as you are of legal age, anyone can participate in a
