Absolute Auction
Synonyms: No-Reserve Auction، Auction Without Reserve، Unreserved Auction، Sale to Highest Bidder
Last updated: 2026-09-25
Short Definition
An absolute auction sells the property to the highest bidder whatever the amount, with no reserve price; common in Western markets, it is not a distinct legal format in Saudi Arabia, where the brokerage contract must state a minimum award value.
Overview
Legal Basis
Article 4(4)–(5) of REGA's Real Estate Auctions Regulation (REGA Board decision of 1/12/1444H) requires the brokerage contract to include the minimum acceptable award value and the minimum opening value, and Article 9(3)(a) allows the owner to accept in writing an award at the price reached. In judicial sales, Article 50(2) of the Execution Law, issued by Royal Decree No. (M/53) dated 13/8/1433H, prohibits sale below the estimated value and provides that, if no buyer comes forward for real estate, it is revalued, the auction reopens at the latest valuation and the property is sold at whatever the bidding reaches. Article 18 of the Real Estate Brokerage Law (M/130) treats providing misleading information about a property as a violation.
Practical Example
A Riyadh developer wants to liquidate 12 remaining plots in a subdivision before financial year-end. It agrees with a licensed auction establishment to set each plot's minimum award value equal to the opening value (SAR 700,000) and announces that every plot will be sold to the highest bidder once bidding opens. The announcement attracts 90 bidders, and the plots sell for between SAR 735,000 and SAR 860,000, averaging SAR 790,000. Had turnout been weak, the company would have been bound to sell at the opening value — the risk it accepted in exchange for fast liquidation.
Common Mistakes
- ✗Advertising an «absolute» auction while the brokerage contract sets a minimum award value above the opening value — misleading information penalized under the Brokerage Law.
- ✗Omitting the minimum award value from the brokerage contract because the auction is «absolute» — the regulation requires it to be stated.
- ✗Assuming judicial auctions are absolute — in the first round no sale below the estimated value is allowed.
- ✗Choosing an absolute auction for a property with weak demand — it may sell far below its value.
- ✗Assuming the buyer at an absolute auction can withdraw if the price is low — the bid is binding and the contract is formed upon award.
International Differences
Absolute auctions are common in the United States, where auctions «with reserve» are distinguished from «absolute» auctions in which the seller commits to sell to the highest bidder. In the UK, most property auctions carry a reserve, and no-reserve auctions are less common. In judicial sales in Turkey and Egypt, sales are usually tied to a minimum linked to the estimated value. The Saudi system differs in requiring a minimum award value in every auction brokerage contract, while leaving the owner flexibility to accept in writing.
