What is an English auction?
An English auction is a process of selling goods and the most common form of auction. The price starts low and increases as buyers bid for the item until one buyer is left willing to pay a certain amount and a higher bid isn't received during the given time period. The auction is overseen by an auctioneer who announces prices and makes sure all bidders have the opportunity to increase the price they are offering against rival bids. When items are entered for auction a reserve price is usually set and the item won't be sold if a bid doesn't pass that threshold.
Where have you heard about English auctions?
Bidding for something on eBay is buying through an English auction process. Art lovers might be aware of record prices paid for paintings at auctions - for example Pablo Picasso’s 1909 painting Femme Assise set a record price for any Cubist work at auction - $63.6 million - at Sotheby's and Claude Monet's 1891 canvas “Meule,” or “Grainstack,” fetched $81.4 million with fees at Christie’s.
What you need to know about English auctions.
An English auction is an open outcry process. It can be quite emotional with the pressure ramping up as bidders compete. The auctioneer will try to get the best price available for the seller, and the end of the sale is usually signalled with the words "Going, going, gone", as an opportunity for buyers to change their minds and make a last-minute bid.
This system can potentially be better for the seller. The auction for Monet's Grainstack lasted 14 minutes and involved five bidders in a high-stakes auction as these pictures rarely come on the market.
English auctions differ from Dutch auctions because the price goes up rather than down. In a Dutch auction the auctioneer sets a high price and gradually comes down in price until someone wants to buy at that price. The risk here is the waiting game and somebody jumping in before it reaches the price you want to pay.
Bidders need to be aware that as well as the price they agree to in the auction room when the auctioneer's hammer comes down to effect the sale (the hammer price), that they will also have to pay auction fees. These usually are the buyer's premium and potentially other fees, for example the artist's resale rights for living artists within the European Union.
English auctions can be used to sell all kinds of goods, from cattle at farmers' markets to governments selling bonds to large financial institutions, or the mobile spectrum to telecoms companies.