Market Value vs Auction Value

a bidder holding an auction paddle trying to obtain good value on a bid

When you think about things, they have value, don’t they? With regards to auctions, there’s something known as auction value versus market value. What are these and what are their differences?

Differences Between Market Value and Auction Value

Well, consider a piece of property as an example. You might have a house on one acre of land and if you were to put it up for sale on the market today, based on what prices are in the neighborhood, maybe it could be listed at, say, $200,000. That is its market value. Typically, a realtor would put a “for sale” sign in front of the house and do showings. People would check the house during an open house and interested buyers would “put an offer in” to see if it’s accepted by the seller. Contrast that with auction value, which is the price people are willing to pay for something when it’s auctioned off. Auction value might actually be higher than market value if and when you have two or more very interested bidders who will stop at nothing to own the house. So, a $200,000 house could sell for $255,000 at auction, as an example. At the moment of the auction, different bidders keep trying to outdo one another, offering more money– this can be a very good thing for the seller to make more profit than they expected!

Generally, market value is determined by the laws of supply and demand. The more people want to buy something, the more its worth, and the higher its price. This is especially true for items (or properties) deemed rare, hard-to-find, or “one of a kind.” Higher market value usually means higher auction value!

Auction value doesn’t actually represent the actual worth of something– instead, it’s what something’s worth to someone at a specific time, even if that number is much higher (or perhaps lower) than its market value.

As with most purchases, timing is everything. There are certain times when certain things have high market and auction value, as well as times when/where they don’t– it just depends on both supply and demand and how many people want what’s being sold and are willing to pay the price for it!

If you need help from a reliable auction company, learn how Wilson Auction & Realty can be of assistance.