Almost all auctions use a sense of urgency in that bidders must make up their minds quickly. A live auctioneer may only take bids for 30 seconds, and then say, “Sold!” and an online platform may only allow 30 seconds of bid-less seconds before denoting “Sold!”
Indeed, all auctions feed off emotion, and urgency plays an important role. Yet with [almost] all auctions having urgency, some auctions have the prospect of a deal (heightening emotion even more) and some auctions allow the seller to accept or reject the high bid (lessening emotion.)
Emotion, excitement, and intensity are far more energized by “something will sell” versus something that only might sell. There are very few auctioneers that don’t recognize this difference. I’ve termed this inducement “prospect of a deal” and others have used very similar terms to suggest why bidders participate.
Life is full of risks, and some suggest absolute (without reserve) auctions have the most risk (less price protection,) without admitting that with reserve auctions have risk also — bidders won’t respond (as such, lower prices.) They both have urgency, but one type unquestionably better induces bidders to engage.
Absolute (without reserve) auctions have become a popular choice among thousands of auctioneers worldwide. In these auctions, bidders experience a heightened level of engagement, primarily due to two key reasons: increased disclosure and a resolute commitment to sell to the highest bidder:
Absolute auctions offer a remarkable degree of transparency and disclosure. When sellers provide comprehensive information about the item or property up for auction, it leaves bidders well-informed and enables them to make more confident bidding decisions. This transparency creates a sense of trust and authenticity, resulting in a more engaged and active bidding experience.
The commitment to sell to the highest bidder in absolute auctions adds an exciting element to the process. Bidders know that, regardless of the final bid amount, the item or property will be sold to the bidder who offers the highest price. This certainty fuels a competitive atmosphere, encouraging bidders to actively participate and strive to outbid one another. As a result, bidders feel more invested in the auction, leading to increased engagement and typically higher bid amounts.
Overall, the utilization of absolute (without reserve) auctions by thousands of auctioneers underscores the positive impact of enhanced disclosure and a commitment to selling to the highest bidder. Such auctions create an environment where bidders feel empowered and motivated to participate actively. https://mikebrandlyauctioneer.wordpress.com/2016/08/25/the-power-of-the-word-absolute/.
Urgency is important — but it only works on bidders who are properly registered (https://mikebrandlyauctioneer.wordpress.com/2021/06/03/unnecessary-risk-really-bad-advice/) — and if the inducement to participate is not maximized, nor is the number (and quality) of bidders. It would seem reasonable to assume more bidders = better bidders = more contention = higher prices?
Auctioneers — all over the world — have told me and countless sellers that auctions produce “market value.” Apparently, some auctioneers don’t believe it and must reserve the right to bid as the seller and/or refuse to sell the property — that you have told me otherwise just demanded “market value?” Let me see if I can remember … “It’s only worth …?”
Do auctioneers advise their sellers of risks? They should — in that absolute auctions don’t have price protections and with reserve auctions typically attract fewer bidders. However, if you simply note one type of risk, without the other, and ignore that absolute auctions have at least (if not more) urgency, you aren’t giving your seller wise counsel.
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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