What is a "tender auction"?

A "tender auction" is characterized by the process in which bidders submit sealed bids. This format requires participants to present their offers in a confidential manner, typically using written documents that are not disclosed to other bidders until the bidding process concludes.

This method is distinct from other auction styles like live bidding, where bidders openly call out their bids, or formats that might use predetermined bids, which limit the participants' flexibility. The sealed nature of the bidding in a tender auction can encourage more competitive pricing, as participants do not have visibility into what others are offering until the final decision is made.

In situations where there is no minimum bid or only preset bids, the dynamics of the auction would differ significantly, altering the competitive atmosphere and potentially affecting the final selling price. This sealed bid format ensures that the bidding process is straightforward and focused on the respective values that bidders place on the item, ultimately reflecting their own assessment without direct influences from other participants.