What are the different types of auctions in the Philippines?
- English auction
- Dutch auction
- Blind auction
- Vickrey auction
- Silent auction
- Penny auction
- Buyout auction
- All-pay auction
Most people could probably describe what an auction in the Philippines looks like even if they haven’t actually been to one. There are, after all, quite a number of films that have depicted these scenarios somewhat accurately albeit a little overdramatically. Many of them may be international films with international settings but the auction process is pretty much the same for everyone.
There are auctions, bidders, and lots. Both parties actively participate in the event in order to buy or sell an item, lot, or property. We know how it goes and we’ve seen it all on screen. The only problem is that these films almost always uses the same type of auction when there are, in fact, a handful different ones. As a result, people – especially first-time bidders – expect all auctions to be the same, which can lead to them being unprepared and unable to place a winning bid.
If you don’t want to be one of those people who is just aware of one or two types of auctions and are interested in knowing about all of them, then you’ve come to the right place. In this article, we will list the different types of auctions and give you a brief look at what each of them are:
An English auction is the most common one used today and is also the most well-known. Most of us are likely to be familiar with this and have a clear idea of how it progresses. It’s where bidders compete against each other to offer the highest price. There are also times when the auctioneer is the one calling out the price but that’s less common. Once no one tops the current bid, the lot is closed and item/s go to the person with the highest bid.
Dutch auctions are more on the uncommon side and are usually used to sell perishable items like fish, food, and other produce. What makes it unusual is the fact that the starting bid is set high and gets lower and lower as the auction goes on. There’s also a limit as to how low the price can go and the auctioneer is not allowed to go below that. The first person to agree on a certain price is the winning bidder and gets the lot.
Although not that different from English auctions where the items go to the highest bidder, blind auctions are distinct because bidders are only given a single opportunity to bid. The thing that makes this a ‘blind’ auction is the fact that no amount or price is ever announced throughout the duration of the auction. Instead, bids are written on separate pieces of paper that are all submitted to the auctioneer. After everyone has submitted their bids, the auctioneer can then look for the person who bid the highest.
There’s only one difference between the Vickrey auction and the blind auction, and it’s the amount the winning bidder will pay. Normally, in the blind auction, the winning bidder has to pay the amount he/she wrote on paper, but, in a Vickrey auction, he/she will be asked to pay the second-highest bid amount. For this specific reason, a Vickrey auction is also called a second-price sealed bid auction.
Another type of auction that most of us are familiar with is the silent auction. Lots of items in silent auctions are displayed with a sheet of paper placed near them where bidders can silently write down their bids. Everyone can see what they’ve written down and can write a higher number underneath to take them out of the bidding race. Silent auctions always have a set time for placing bids and the highest bidders once the time expires take the items/lots.
Penny auctions are just like English auctions but with a slight twist. When someone participates in a penny auction, they will be required to pay a certain fee every single time you place a bid. In early times, the fee was a single penny hence the name. Like a silent auction, it also runs at a set time and the highest bidder wins. All pennies or fees are kept from everyone, so the winning bidder has to pay the full amount of his/her bid.
Unlike other auctions, there is a set buyout price in this type and bidders are welcome to agree to this price in order to win the lot. There are two subtypes here, namely permanent and temporary buyout auctions. Bidders can choose to pay the buyout price anytime during the bidding process – assuming the current bid hasn’t gone past it yet – in a permanent buyout auction. As for the temporary buyout auction, bidders can no longer choose the buyout price once the bidding has started.
All-pay auctions are probably the most unique of them all and are used with model lobbying, academic interest, and events where bids are political contributions. Participants in an all-pay auction are required to pay their bid at the end of the bidding process even if they don’t win anything. However, that doesn’t mean they all get to share the lot. Much like most auction types, it only goes to the highest bidder.
If you’re planning to delve into the auction scene, it is important that you know every type of auction in the Philippines. The type of auction defines how you will act as a bidder, so you must at least have an idea of how the auction is held. Without the slightest bit of knowledge regarding these auction types, you may find yourself acting inappropriately and failing to secure a good deal!