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What is an Open Bid?

By Ken Black
Updated May 16, 2024
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An open bid, or unsealed bid, is a bid that is available for all other bidders to see and possibly act upon. These bids may be done through a traditional live auction, where an auctioneer calls out prices as bidders indicate their willingness to pay. Open bids can also be awarded for things like construction projects, where the lowest bidder often gets the contract. Some projects and sales may require an open bid and others may not.

At a traditional auction for merchandise, all bids are open because all bidders can hear or see the offer being made. All bids can be changed as well, provided another bidder bids higher. Eventually, the auctioneer declares a winner when no more bids are offered after a certain period of time has lapsed. The highest open bid is generally declared the winner, unless there are extenuating circumstances, such as a failure to pay. This is a common process for real estate and other estate sales.

If the open bid is being sought in relation to a project or to award some type of contract, the process begins with a bid request from the sponsoring agency, which is usually a government or private company. Once the request has been published, the specifications will also be available for different bidders to review. Bidders that find the job a match for their skills are free to submit a bid. The bidder should then watch the bid board, which may be a physical board or an online presentation, to see if their bid is competitive with others.

In some cases, a waiting period is enforced before any adjustments to an open bid can be made. This is to ensure all bidders have a chance to submit their original bid. Then, once the waiting period has expired, adjustments can be made. Bidders must weigh their costs against that of other bidders in an attempt to come up with their best possible bid, but also be sure the project does not cost them more than it pays. The procedure for determining whether a project or auction is done by using an open bid or closed bid is often determined by law.

The open bidding process has both advantages and disadvantages. The benefits of an open bid are that it is easier to uncover unethical behavior among the bidders and competition could provide a bigger advantage for the seller. On the other hand, there is not likely to be much difference between a winning bid and losing bid in an open bidding process, which may be a disadvantage to the entity seeking proposals.

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Discussion Comments
By SteamLouis — On Jun 27, 2012

Commercial online stores that have auctions, like ebay, bid openly too. In theory, it's the same thing as a live auction, except that it's all happening on the internet. If any of you participated in last minute bidding on an online auction, you know how exciting it is.

I have never participated in a live open bid auction. But I have bid on online auctions several times. It's very exciting and when you don't end up winning an auction, it feels awful.

And everyone waits until the last minute to bid so that they may get the item for cheaper. Bidding early seems to drive up the price because everyone can keep track of the price and keep bidding. They even notify you by email when someone has outbid you in an auction.

By ddljohn — On Jun 26, 2012

@turkay1-- My wife and I bought our house with a sealed bid and we weren't happy with that process at all. I completely agree that an open bid is better.

Some sellers think that if they go with a sealed bid, they will get a higher price for their property. I don't think that's true. If someone can afford to pay more, they will bid more even when the bid is open.

While we were bidding for our house on a sealed bid, I couldn't help but feel that some of the bids were completely made up by the agent to make us bid more. Since we had no clue what anyone else bid, we had no way of knowing whether the bids were in fact real or not.

On moral grounds, I think an open bid is much better. Others might disagree and I suppose it depends on what you really care about. If you want to really push up the price, legitimately or illegitimately, you might decide to go with a sealed bid.

By candyquilt — On Jun 25, 2012

I'm getting ready to sell my house and my real estate agent has left it up to me to decide whether I want an open or a sealed bid auction.

I personally think that an open bid would be better because it's more transparent and fair. As far as I know, with a sealed bid, the bidders don't know each other's bid and have to guess. It's kind of confusing because no one will know what their chance of winning the auction is.

I think an open bid will be better. I don't mind people knowing each other's bid. I know some people are looking to buy a house and move in soon. I don't want them thinking that they have a good chance of getting the house if that's not the case. So an open bid seems more fair to me.

Has anyone here sold a house on an open bid? How did it go? What did you think about the process? Please share your thoughts.

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