Can auctioneers bid at their own auctions? Should they bid at their own auctions?
What about the auctioneer’s staff bidding?
Can they bid at auctions when they are working for the auctioneer? Should they bid at auctions when they are working for the auctioneer?
We addressed this issue here: http://mikebrandlyauctioneer.wordpress.com/2009/11/15/can-the-auctioneer-bid/
For most auctioneers there are typically one of two policies regarding this issue: Auctioneer and staff can bid and buy, or auctioneer and staff cannot bid and buy.
What about a policy that says the auctioneer (and staff) can bid under certain circumstances? One such policy I read about the other day said that the auctioneer can bid and buy if buying to keep for himself, but not bid or buy if buying to resell.
In other words, you can buy depending upon your length of subsequent ownership? As I’ve said lots of times, there is substantial evidence we can’t, “take it with us,” upon our death.
Looking at just the auctioneer or one staff member, what if he or she …
Buys and keeps for six months, and then sells?
Buys and keeps for 12 months and then sells?
Buys and keeps for a few years, and then sells?
Buys and keeps for 21 years, and the sells?
Buys, keeps, dies, and children sell?
Or is the “intent” at the moment of the first bid (or last bid) the key issue? For example, how are these situations viewed?
Buys with the intent to resell but after repeated attempts to sell on eBay, Craigslist … he decides to keep it.
Buys with the intent to keep … but a neighbor offers to buy for $500 more the next day and he sells.
Buys and isn’t sure of his intent. He might keep or resell and will decide next weekend.
For that matter, what if he buys and gives the property away? He’s neither keeping it nor reselling it? And how would such a policy be administered? Does the auctioneer or a designated staff member monitor all property purchased to see if it’s retained or sold?
It has been my view that generally the auctioneer and staff should be permitted to bid and buy because fiduciary duties owed the seller are paramount.
So long as these bids constitute the genuine intent to purchase, or disclosed bidding for the seller, and not shill bids or the like, they are just as legitimate as any other bids being offered at any auction. We previously wrote about shill bidding here: http://mikebrandlyauctioneer.wordpress.com/2010/11/25/what-is-shill-bidding/
The issue for some seems to be perception. By the auctioneer or staff bidding, other bidders sense an unfair advantage or something not right. If this is true, then bidders respond by not participating, thus causing the seller financial harm. This argument suggests that to increase the bidder pool, thus benefiting the seller, fiduciary duties dictate restricting such auctioneer or staff bidding.
It would seem to me that if the auctioneer and staff are buying extensively, the problem isn’t those bids, but the lack of other bids. Instead of restricting bidding, the auctioneer may want to work to increase the bidder pool otherwise.
And if there is a perception problem, auctioneers should maybe work to communicate better about them or their staff bidding, and the benefit of such for their client. After all, it’s all about the seller.
Mike Brandly, Auctioneer, CAI, AARE has been an auctioneer and certified appraiser for over 30 years. His company’s auctions are located at: Mike Brandly, Auctioneer, Keller Williams Auctions and Goodwill Columbus Car Auction. He serves as Adjunct Faculty at Columbus State Community College, Executive Director of The Ohio Auction School and Faculty at the Certified Auctioneers Institute held at Indiana University.
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