An auction invoice is issued to the winning bidder to make partial or full payment on the item won. At an auction, the individual that “wins” the auction is legally obligated to perform the purchase in accordance with the auction’s terms and conditions, usually within five (5) business days. If the winning bidder cannot come up with the funds for purchase then they will be legally bound to the debt and/or penalties. Upon the invoice being paid by the winning bidder, the product or service that was won will be provided by the auctioneer.
Silent Auction Invoice – Instead of an auctioneer yelling out who is the highest bidder there is a notepad next to every good or service. At the end of the auction period, the top bidder will be obligated to make payment in the amount of the invoice issued.
How do Auctions Work?
An auction is a means of buying and selling merchandise, services, cars, homes, and essentially any object that can derive value to a group of individuals that place bets on the item until the highest bid is reached. Auctions can take place in-person as well as through online marketplaces such as eBay, uBid, or Bonanza.
- Reserve – A reserve is the lowest-accepted price that the seller is willing to take. If the bidders never reach the reserve price, the item goes unsold. Auctions without the use of reserves (called “no reserve” or “absolute” auctions) are riskier, although can achieve significantly more attention from bidders due to the potential deal they may provide.
- Starting bid – Sellers can request auctioneers to start accepting bids at a certain monetary value. If no bids are received, the auctioneer will lower the initial bid until the first bid is received.
The Auction Process
For the standard in-person auction, the following events typically take place. Depending on the item or service sold, some events may not occur to due impracticality.
The viewing – Before bidding takes place, potential bidders can view or inspect the item so they can predetermine the highest bid they are willing to make, or to establish their bidding strategy beforehand. Homes sold at auction are rarely allowed to be inspected by potential bidders.
Bidder registration – In order for an individual to bid on an item they must register with the auctioneer/auction house before bidding takes place. All bidders are typically given a numbered card to hold up to simplify the bidding process.
Bidding – Once bidding starts, the auctioneer will either call out a minimum bid or begin receiving bids. Bids can be any monetary increment, although fifteen percent (15%) increments of the total fair market value (FMV) are common. The auction will end when no more bids are received, or the auction has reached a time deadline. When a price is locked in, the auctioneer will drop their hammer, making the highest bidder the immediate owner of the auctioned item.
How to get an Auction License
Special licenses and certifications may be required depending on the type of auction (online, in-person, business, etc.) as well as the location in which the auction is taking place. In whole, auctions are regulated on a state-by-state basis.
For a comprehensive list of licensing requirements, view AuctionSchools.com’s Auctioneer License Requirements by State.
How much does an Auctioneer make?
The yearly salary of an auctioneer is not straight forward due to the majority of auctioneers doing it on a part-time basis. Additionally, many auctioneers are not given a standard hourly rate for their work. Commission rates tend to hover around fifteen percent (15%), plus or minus five percent (5%). The higher value the items that are being auctioned, the more money the auctioneer takes home at the end of the day.
According to CareerTrend, the average auctioneer can expect to earn between $47,000 and $57,000 a year.