Second Price, Sealed-Bid Auctions
B&M Property Solutions is committed to helping you to acquire investment opportunities at prices below your maximum allowable price. We use Second Price, Sealed Bid Auctions in order for this to happen.
In this process, bidders are asked to submit a sealed bid with your maximum price for our available contracts for properties. The bidder who submits the highest bid is awarded the contract for the property but does not buy at the price submitted with their winning bid. The winning bidder is able to purchase the contract for properties at the price the second highest bidder submitted. This allows you to purchase properties at prices below your maximum price.
How To Win The Auction Process
It is to your advantage to submit the most you are actually willing to pay for a contract for a property instead of what you think will win the auction. This is because you will not actually buy at the price and terms you submit. You will win based on what the second highest bidder is willing to purchase the contract for the property at. Some auction strategists would even suggest it is actually to your advantage to submit offers at or slightly above what you would normally be willing to purchase at in order to increase your likelihood of winning since you will always be buying below your actual bidding price.
The B&M 2nd Price, Sealed-Bid Auction Process
B&M Property Solutions second price, sealed bid auction process goes along the following path
- Auction: Auction participants submit your best and highest bid
- Review: B&M Reviews bids to compare and rank offers evaluating price (#1), closing date (#2) and financing source (#3)
- Winner Selection: The best bidder is selected and offered the price submitted by the second (2nd) highest bidder
Note: the winning bidder must make the Earnest Money Deposit within one (1) business day of offer acceptance
There are five bidders bidding for a contract for a property. The bids are as follows
- Bid 1 – $50,000
- Bid 2 – $100,000
- Bid 3 – $150,000
- Bid 4 – $200,000
- Bid 5 – $250,000
The winner of this auction is Bidder Five (5). Although he bid $250,000 under the rules of the auction, he will actually be offered to purchase at Bidder Four’s (4’s) price of $200,000. This saves bidder five (5), $50,000 from what he was willing to actually pay to purchase the contract for the property.
Frequently Asked Questions
Can you tell me what the other bidders have bid for the contract for the property?
No. Unfortunately, we are unable to tell you what the other bidders have bid for the property. In most cases, we are actually unaware of the best bids until after the submission deadline.
When is the submission deadline?
The submission deadline will be defined by the B&M Team.
What if the top two bids are the same? What if there is a tie?
In the case where there are two top bids, the winning bidder will be decided by a coin toss and will win the auction with the second highest actual bid. For example, if two bidders bid $100,000 and the third bid $98,000 then one of the bidders who placed the $100,000 bid would be selected via a coin toss and be able to purchase the contract for the property for $98,000.