Friday, May 2, 2008

Understanding the “Bulk Bid” in a Dept. of Revenue or tax lien Auction

May 2, 2008 Colorado Springs, CO

Whenever Schur Success Auction Services conducts an auction for the Dept. of Revenue, or the Dept. of Finance, the sale is always conducted in the same format.

We start the sale by asking for a bulk bid or a single bid to purchase everything for sale in the auction. We'll ask for increasing bids for the bulk purchase the same way we ask for increasing bids on a single item. For example, we'll ask for $20,000 and then $25,000, and then $30,000 etc. Once we get to the top bid, we give that bidder one last chance to increase his or her bid. At that point, we lock in the bid at that top amount, and announce the "bulk bid" price. For example, let's say its $35,000.

Even though we lock in a "bulk bid", that doesn't mean that bidder wins and gets everything. The next step is to sell each item individually. We'll go item-by-item and get the top bid for each item. As we go along, we keep track of the total of all the individual bids. If the individual bids total more than the bulk bid, (for example, $35,000) we declare that the bulk bid is "null and void". That means each individual bid is a finalized sale, and the individual bidder wins the items they were bidding on. They can then pay for and remove the items they won.

If we sell all of the items individually, and we still don't reach the total amount of the bulk bid, then none of the individual bids are valid, and all of the items in the auction go to the bulk bidder.

To demonstrate:

Bulk bid = $35,000 / Individual bids = $29,500: Bulk bidder wins it all for $35,000


Bulk Bid = $35,000 / Individual bids = $35,200: Bulk bidder loses, and each individual bidder wins.

Sometimes, the bulk bid is so low, we'll exceed it very quickly. Sometimes, the bulk bid is so high, that we may "call" the sale after just a few minutes – in other words, we know that we'll never reach the bulk bid price by selling items individually, and we'll declare the sale over in favor of the bulk bidder.

Most of the time, we need to go through the whole sale to see which way it will go. If you decide to place a bulk bid, it is still wise to bid on the individual items that you want – that way if you lose the bulk bid, you can still be the winning bidder on the items you really want to purchase.

The process to obtain a bulk bid only takes a few minutes. But the process to see of the bulk bid wins may take a long time. The benefit to being a bulk bidder is that you get everything in the sale, and can turn around and sell off the things you don't want – but have guaranteed that you keep everything you do.

The drawback to the bulk bid process is that nothing is officially sold until we declare which way the sale will go. That means nothing can be paid for or removed until we make the declaration.

Sometimes, we're asked to help people establish a bulk bid amount. Understandably, we can't do that. Nor can we advise people on how much to bid on individual items. We don't mind sharing with you information about sale prices for similar items, but beyond that, you'll need to decide what level of bidding you're comfortable with.

If you have specific questions about this process, please feel free to call us at (866) 290-2243, or email us at .

We'll see you soon!

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