Let’s say it’s 1930 — for example — auctioneers were primarily known in their “community” and we knew his or her spouses, their kids’ names, where they lived, what church they attended, and where they typically ate lunch … however, today, that’s largely not the case.
With the Internet, bidders and buyers are engaging in the auction method of buying and selling like almost never before — sometimes in the same neighborhood and/or across the country or world. Relatedly, today, I don’t know the auctioneers’ spouses, kids, residences, nor where they eat.
I might only know they are auctioneers and/or have something up for sale.
For that matter, I look at countless online platforms these days with personal and real property for sale — and I have no idea who the auctioneer is — or even if there is an auctioneer. What are all these online platforms’ reputations? I have no idea.
Yes, most auctioneers develop standard practices, but the issue is not many auction bidders today know those reputations. So, if I’m known for taking sellers with the genuine intent to sell — or rather taking sellers that I’ve called “maybe sellers” who may or may not want to sell — you the interested bidder don’t know which it is.
As a result, it’s more important than ever there is a precise marketing message. Is the auction absolute? Does the auction have an “academic” opening bid that the seller has agreed to accept if that’s all it demands? Or, is the reserve secret, or does the seller reserve the right to accept or reject any and all bids?
These are two distinctly different messages:
Absolute auctions or auctions with “academic” minimum acceptable bids have the essential prospect of a deal.
Auctions with secret reserves, or with the seller reserving the right to accept or reject the high bid lack the essential prospect of a deal.
What is this prospect of a deal? We’ve referenced it many times including here: https://mikebrandlyauctioneer.wordpress.com/2022/12/12/what-makes-any-auction-work/. Most auctioneers have conducted auctions that didn’t work and now realize the auction likely lacked the prospect of a deal.
Two Nobel Prize-winning economists noted that bidders respond with more disclosure. https://mikebrandlyauctioneer.wordpress.com/2020/10/16/providing-as-much-information-as-possible/. Too, many auctioneers know good news attracts bidders. https://mikebrandlyauctioneer.wordpress.com/2016/08/25/the-power-of-the-word-absolute/.
Given it’s more probable these days that I don’t know the auctioneer, nor his (or her) reputation, what do I do now? Call him? Email him? Text him? What do I ask? “Does the seller have reasonable expectations?” “Is the seller living on earth?” More likely, “What does it take to buy it?”
Since the auctioneer works for the seller, you and I both know what those answers are going to be. In fact, it may be the auctioneer’s fiduciary duty to paint a positive picture of the circumstances given this agency relationship. Could I hear “He’s really ready to sell” when the secret reserve is twice market value? Should I hear that?
Finally, if you are having auctions with secret reserves or seller confirmations, you probably don’t want to publicize that — in that bidders detest both formats. Except for Louisiana, your auction is with reserve by default, so no notation is necessary, nor prudent. Yet, get ready for less-than-optimum results given you have provided no proper inducement to participate.
Mike Brandly, Auctioneer, CAI, CAS, AARE has been an auctioneer and certified appraiser for over 30 years. His company’s auctions are located at Mike Brandly, Auctioneer, Brandly Real Estate & Auction, and formerly at Goodwill Columbus Car Auction. He serves as Distinguished Faculty at Hondros College, Executive Director of The Ohio Auction School, and an Instructor at the National Auction Association’s Designation Academy and Western College of Auctioneering. He has served as faculty at the Certified Auctioneers Institute held at Indiana University and is approved by The Supreme Court of Ohio for attorney education.
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