It’s not unusual to hear about an auction in the Philippines. Agencies and organizations from both the private and public sectors host auctions. Government agencies, for example, love to host auctions to get rid of goods and products. The Bureau of Customs (BOC) usually sell seized and abandoned goods through auctions. Even the Metropolitan Manila Development Authority auctions off impounded vehicles from time to time.
Some of the most common items for auction in the Philippines are artworks, antique furniture, collectibles, and watches. In fact, the most expensive watch ever sold in an auction in the Philippines was the Paul Newman Rolex Daytona Reference 6263 – one of the holiest of grail-status Rolexes. The hammer price was approximately PHP 22.2 million. You can buy at least 3 Porsche Cayman or 41 Toyota Wigo or a luxury upscale condominium with that amount.
Speaking of condominiums, one kind of auction currently gaining popularity in the Philippines is the property auction. It’s one of the best ways to learn about real state and purchase your dream house and usually at hefty discounts. It is, however, not the only auction type in the Philippines.
That said, there’s a lot to know about auctions. What they are, what kinds there are, auction terminologies, auction do’s and don’ts, and, the most important, how to make a winning bet. We will go through all this in this article, so just keep on reading to find out everything there is about auctioning in the Philippines.
What is an Auction?
In order to really understand what auctions are, especially for those who don’t often take part in them, the first thing you have to do is forget everything you know about auctions that you learned or witnessed through any film. While those scenes where tense bidding happens continuously with the slight raise of hand make for great movie material, it doesn’t really mirror reality.
Auctions are a form of sale where goods and services are publicly put up for sale. These products or properties are offered up for bid and people take turns taking bids. In the end, the item is given to the highest bidder. You can liken it to bargaining when a sale is conducted through negotiation. The only difference is that an auction has the element of public and open competition among buyers.
Similar to any form of sale, there is always a seller and a buyer. In an auction, the buyer is called a bidder and there’s usually a respective number of them. They can be physically present or participate by phone or through the internet. These bidders compete with each other by offering different prices. There must at least be two bidders to conduct an auction but they don’t have to both offer bids. And as said earlier, whoever of them can offer the highest amount will eventually walk away with the item.
The seller, known as the auctioneer, can be the actual owner of the item/s or an agent hired by him/her. How an auctioneer determines the winning bidders differ for every auction and it’s really up to the host to set the rules, but acceptance of a winning bid is usually denoted by the fall of a gavel or any other audio or visual cue. Once the auction is done, the auctioneer, if a hired agent, is paid based on commission.
An auction is a legally binding agreement between the bidder and the seller. Before or while participating in an auction, the bidder needs to sign a contract where he/she agrees to pay the exact bid amount within a stipulated time in case he/she wins. In some high-profile auctions, potential bidders need to provide evidence of their capacity to pay the bid amount and deposit surety money.
Types of Auctions
- English Auction – Also known as the open ascending price auction, this is the most common auction type held and the ones we often see in movies. In an English auction, the auctioneer gives a low starting price and bidders can openly bid against each other. The price increases drastically as more bids are made and the bid is closed once the top bidding price is reached. A wide variety of items and properties are sold through English auctions.
- Dutch Auction – Dutch auctions are more commonly held in Europe and is also known as the descending price auction. As opposed to the English auction, the auctioneer starts the bid at a price higher than the original value of the item. He/she will then gradually lower the price until there is some form of response from the bidders. Items sold through Dutch auctions are usually in bulk and the highest bidder takes first pick on the items. Often, perishable items like fish, produce, and food are sold in this type of auction.
- Blind Auction – A blind auction is also called a first-price sealed bid auction and is far different than the first two types described. During a blind auction, bidders write their bid price and submit it to the auctioneer, and they can only do this once. Moreover, bidders do not know what their competitors are submitted, so they won’t be able to adjust their own bids. The person to offer the highest bid price will then close out the bid and get the item for sale.
- Vickrey Auction – Vickrey auctions are also known as second-price sealed bid auction and works similar to blind auctions. The only difference is that the winning bidder pays the second highest bid amount instead of the bid price he/she submitted.
- Silent Auction – Silent auctions also require bidders to write down their bids. Each item will have a list price and bidders are few to write their bid offer on the sheet placed by the item. Since, all bidders will use this single sheet of paper, they will be able to see the amount the others put and appropriately adjust their bid offer. Silent auctions are commonly held for fundraising campaigns.
- All Pay Auction – All pay auctions are often used when the bids are political contributions like with academic interest and model lobbying. In this type of auction, all bidders are required to pay their bid even if they didn’t win. Still, the highest bidder is the only one that receives the item.
- Penny Auction – Bidding fee or penny auction got its name because hosts require bidders to pay a fixed amount – or a “penny” – in order to participate. Every time they wish to place a bid, they will be charged a penny. A penny auction will run for a predetermined time and the highest bidder will pay the amount of their last bid. The pennies or initial fees collected do not go against the price and are kept from everyone, so the winner must pay the full amount of his/her bid.
Auction Terminologies You Need to Know
Not knowing auction terminologies will hurt your chances of placing a winning bid, so we’ll help you by listing and defining the terms you most definitely need to know:
- Absentee Bidder – An absentee bidder is someone who is not physically present during the auction but has submitted a written or oral bid in advance.
- Appraisal – Appraisal is the act or process of estimating value.
- As Is – “As is, where” or “in its present condition” is a sign that no return privileges will be granted.
- Auction Block – The auction block is the podium or platform where the auctioneer stands while holding the auction. Placing something on the auction block means to sell something.
- Bid Increments – Bid increments is the standardized amount the item’s price increases after each new bid. Some auctioneers while require bidders to bid in increments of one thousand or ten thousand. Say the current highest bid is at PHP23,000 and the auctioneer set a bid increment of PHP10,000, this automatically makes the next bid PHP33,000, the one after that is PHP43,000 and so on and so forth.
- Buyer’s Premium – This is an additional service charge that is added to the price of sold items. If there is a buyer’s premium, it will be indicated on the item page and the buyer will shoulder the charge.
- Catalog or Brochure – A publication that describes the properties available for sale at a public auction. Often a catalog or brochure will include photographs, detailed descriptions, and terms and conditions of the sale.
- Grading – Grading is the process of determining the condition of the item. It is also important to note that different items have different grading systems.
- Gavel’s Up/Hammer’s Going Up – The auctioneer usually says “Gavel’s up/hammer’s going up!” to warn prospective buyers that the lot is about to close.
- Hammer Price – We’ve used this in the first part of this article and it refers to the price for which the item has sold. The auctioneer brings his hammer down to mark that a sale has been made, hence the reason for the previous terminology.
- Lot – Lot refers to the item up for bid. It can be a bulk of items or a single item.
- Opening Bid – Opening bid is the first bid made on a lot by a bidder.
- Paddle – Every bidder needs a paddle to bid and it usually has a number that is affiliated with the bidder’s account.
- Price Realized – Price realized is simply the hammer price plus the buyer’s premium and is the total amount the winning bidder has to pay.
- Starting Price – The starting price is given by the seller or auctioneer and is the starting and lowest bid for any given lot in an auction.
Do’s and Don’ts for Auction Beginners
Here are the auction do’s:
- Check the payment terms before the auction – Prior to attending the auction, ask the auction house or seller if checks and credits cards are expected especially if you plan to pay using those. It is also wise to ask about extra charges like the buyer’s premium and refundable deposits.
- Utilize the preview period – The catalog won’t tell you everything you need or want to know about the auction lots, so make sure to attend the preview days and personally inspect the goods. If there is damage to an item, see if it’s worth to have it repaired. You should also take note of the lot numbers you want to bid on during the actual action.
- Double check lot contents – Always check the lot contents of the items you plan to purchase on the morning of the auction. It’s common for some unscrupulous bidders to switch around the contents of their lot boxes.
- Keep your conversations low – Communication is very important during an auction and both parties – the bidder and the auctioneer – must be able to communicate without having to shout. So if you’re talking with a friend or colleague, make sure to keep your conversations low or take your conversation someplace else.
- Dress appropriately – Dress appropriately and practically. Auctions are held in a span of several hours, so you need to be comfortable. You should also value proper grooming because you’ll be in close proximity to other people.
- Set a maximum amount you’re willing to spend – It’s easy to get caught up in the moment and spend far more than you intend to and are capable of, so make sure to give yourself a limit. Set a maximum amount you’re willing to spend for each lot you desire and stick to it. You can employ the help of a friend to keep you in check if you doubt your willpower.
- Secure your purchases – Immediately secure your items after payment to avoid having them stolen and/or damaged. Auctioneers are not liable for any loss or damage done after purchase, so lock your items in your car and hide them well.
And here are some things that shouldn’t be done in an auction:
- Don’t show excitement – Try to act calm and composed when you see an item you want to acquire during the preview. Openly expressing excitement announces your intentions to other bidders. It also gives them a reason to go for a second look and ultimately increases your competition.
- Don’t get yourself involved in a bidding war – Keep your competitiveness in check and don’t allow yourself to get riled up. If you get caught up in beating a bidder, you’re sure to go home with a lot of regrets.
- Don’t start with your maximum bid – Don’t use your maximum bid as soon as the bidding starts. Allow the price to increase naturally and bid until you reach your limit. Who knows? You might even get the item for a much lower price.
- Don’t bid if you don’t intend to buy – Bidding just for the sake of increasing the price is called artificially pushing bids up and is a big no in the auction scene. If you have no intention of following through, then just don’t make a bid.
- Don’t bad mouth items or people – Naturally, you won’t find all lots impressive, but that doesn’t give you the right to say something bad about them. Doing so insults the potential buyer as well as the seller. The same goes for people involved in the auction. You should avoid insulting them since there’s a chance that you’ll see them on a regular basis. If you think someone bid to much for something, just keep it to yourself. It is, after all, their business and not yours.
- Don’t push the auctioneer along – Auctions follow a certain schedule and put up item in a specific order, so don’t push the auctioneer along just to get to the lot you want. If you do this, you’re likely to get admonished, thrown out, or blackballed. Seriously, just wait your turn.
- Don’t steal – This should go without saying but you’ll be surprised at how often it happens. This is not only a breach of etiquette but is also against the law. If you have done this but are yet to deal with retribution, then consider yourself lucky but know that it will come.
7 Tips on Making a Winning Bid
We’ve now come to the most important part of this article – tips on making a winning bid. Now, doing these won’t guarantee a winning bid but will definitely help you acquire the lot you want in a live or silent auction.
- Be clear when placing a bid – It is important to make sure that the auctioneer is seeing you place a bid. Wave your bidding card, listen carefully, and ensure that the auctioneer is calling it out.
- Stay close to the auctioneer – One way to ensure that the auctioneer is aware of your bid is to stay close to him/her.
- Leave your emotions at home – Don’t let other bidders or the auctioneer see how you feel. Confidence is the only thing you need to give off as it sends an incredible message of authority and power. Soon, you’ll find the auctioneer looking to you with every bid as if asking for your permission. When this happens, you become the deciding factor and you control the room and have it at your bidding.
- Make the first move – Statistics show that people who bid first win auctions more than anyone else. Making a strong opening bid proves that you know what you’re doing and that you know the property’s value. However, remember one of the don’ts and don’t open with your maximum bid. Moreover, don’t go too fast because the auctioneer may reject your bid if they feel that you are moving too quickly.
- Try placing a bottom feeder bid – A bottom feeder bid is an extremely low bid that is issued way before the auctioneer is finished describing the item. You can place this by racing your bidder card or your hand and signaling to the auctioneer that you will take the item at that price if no one is able to bid higher.
- Enlist a buddy to help you – Here’s a tip you can use during a silent auction. Pick out someone who isn’t a competitor – meaning they are not bidding on the items you want – and enlist their assistance. They can help you by informing you of the current high bid or authorizing them to write a bid for you while knowing your bid limit. Of course, you will be doing the same things for them.
- Wait until the last minute – Placing a bid towards the end is a typical technique for big-ticket items. For a live auction, last-minute bids are usually made after the auctioneer says “Gavel’s up.” As for a silent auction, the final 15 minutes are the most critical. During this time, stay close to your desired item and pay close attention to anyone that stops by. You should also pay a final visit to the bid sheet as the auction closes.
Why You Need to Participate in HMR’s Auctions
Whether it’s a car auction or a buy-and-sell, auctions are always ready to give buyers the thrill of scoring a winning bet! Beginner or not, it is important that you know all of this to raise your chances of placing a winning bid in an auction in the Philippines. That said, now that you’re in the know, how do you actually find an auction in the Philippines?
The best way is to actively seek it out. A quick search on the web should lead you to multiple sites and advertisements. In truth, there are many agencies and organizations that often hold an auction in the Philippines. However, out of all them, one particular organization stands out – HMR Philippines.
HMR Philippines has helped many businesses, individuals, and industries through holding countless auctions in the span of over two decades. They are guaranteed to provide accurate valuations of the highest-quality items – small or big. You can take part in their live auctions if you want to completely immerse yourself and have a feel of the actual thing. Or you can opt to participate in their online actions if you don’t have the time to travel to actual auction sites.
Moreover, HMR’s personnel are properly trained to handle goods safely and efficiently, which ensures that items enter and leave the auction house in the same pristine condition. So, if you’re ever in need of anything from collectibles and antiques to the most basic items, try looking for it at HMR Philippines. You never know what they have up for auction!
For more information, you can click here!