A “Reverse Auction” is a type of auction where the roles of buyer and seller are reversed. In a traditional auction, multiple buyers bid for a single item which is owned by a seller. The price typically increases as buyers compete to purchase the item.
However, in a reverse auction, there is one buyer (or buyer’s representative) and multiple sellers. The sellers compete to provide their goods or services at the lowest price to the buyer. In the context of domain name investing, a reverse auction could be used when the owner of a highly desirable domain name invites domain investors (the sellers in this case) to bid on how low they are willing to sell their rights to the domain.
The bidding starts at a high price and goes down with time or rounds. The auction ends when no seller is willing to lower the price further, or when the buyer’s maximum acceptable price is reached. Reverse auctions can be a strategic tool for domain name investors looking to acquire premium domains at competitive prices.