What’s the value of a painting your daughter (now a well-known artist) painted when she was eight years old selling in tonight’s benefit auction?
What’s the value of a yearling beef calf selling in the Yoder Livestock auction on Tuesday?
One might argue that the aforementioned painting doesn’t really have a market value. It’s a bespoke painting? In other words, unique, special … where on the other hand, this yearling beef calf has a value, a market … in that many sell every day and it is more a commodity.
Therefore every day in the auction industry — in this benefit auction — this painting sells to the highest bidder and is deemed to be worth exactly the final price; in other words, value equals price. And every day in our livestock auction, this calf has a preconceived value and therefore the auctioneer and/or seller may bid to ensure that price equals value.
This is what “market support” is — making sure the price equals the value, rather than selling without market support, and allowing the value to equal the price.
We noted here https://mikebrandlyauctioneer.wordpress.com/2015/09/07/does-an-auction-price-equal-market-value/ that it has been held by The Supreme Court of Ohio that auction prices equal value if sold in non-forced sale situations and in accompanying arms-length transactions.
Yet market support suggests that the seller and/or auctioneer know the true value independent of the price — and that price doesn’t always equal value at auction even if sold in non-forced sale situations and in accompanying arms-length transactions.
If the painting sells for $800, then it’s deemed worth $800. If the calf is deemed worth $800, the auctioneer and/or seller will bid to ensure it sells for about $800 (or more) and if it doesn’t, the calf doesn’t sell.
Of course, what’s paramount is that a market support auction is a with reserve auction — allowing the seller to make or procure a bid. In an auction without market support, the auction can be with or without reserve (absolute,) no matter. We discussed those differences here: https://mikebrandlyauctioneer.wordpress.com/2009/11/15/different-types-of-auctions/
There is no crime here, that is, except if market support is used in an absolute auction or without proper disclosure; unfortunately, that is sometimes the case. As well there is, in our opinion, more merit to the argument that things are worth what they sell for at auction, over the contention that the “appraised” value is a fact, and price is more-so an opinion.
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 Distinguished Faculty at Hondros College of Business, Executive Director of The Ohio Auction School and Faculty at the Certified Auctioneers Institute held at Indiana University.
Comments