To determine the strength of a bid in a government auction, a bidder can calculate the percentage above or below the government estimate on the sales price. In government auctions, the government will often quote an estimate they believe an auctioned item will sell for. Calculating the percentage above or below is very important for expensive items. A $1,000 difference between a bid and estimate may be seem like a lot, but in a very expensive auction, like one for $100,000 items, it is not much in terms of percentages. You need to use a percentage change formula when comparing a bid to an estimate.
Place your bid and find the government estimate. For example, at auction you bid $101,000 for a house. The government estimate for the house is $100,000.
Subtract the government estimate from the bid price. In the example, $101,000 minus $100,000 equals $1,000.
Divide the difference calculated in Step 2 by the government estimate. In the example, $1,000 divided by $100,000 equals 0.01 or 1 percent. Therefore, the bid is 1 percent below the government estimate.
Place your bid and find the government estimate. For example, at auction you bid $95,000 for a house. The government estimate for the house is $100,000.
Subtract the government estimate from the bid price. In the example, $95,000 minus $100,000 equals -$5,000.
Divide the difference calculated in Step 2 by the government estimate. In the example, -$5,000 divided by $100,000 equals -0.05 or -5 percent. Therefore, the bid is 5 percent below the government estimate.
