I talk about the merits of auction sellers committing to sell (instead of maybe selling or maybe not.) Some auctioneers disagree and don’t believe that auctions necessarily result in market value. https://mikebrandlyauctioneer.wordpress.com/2024/02/29/you-believe-it-then-you-dont/.
Indeed there are without reserve (absolute) auctions that aren’t successful, just as there are with reserve auctions that aren’t successful. So, if any absolute auction didn’t produce the desired results, all auctions need to be with reserve? What if there was a with reserve auction that didn’t work?
The auctioneers who endorse with reserve auctions typically cite some without reserve auctions that failed and conclude no auction should be without reserve (absolute.) Yet, if an auctioneer who endorses without reserve auctions could cite some with reserve auctions that failed, then we should conclude no auction should be with reserve?
It has been our contention after selling thousands of real properties at auction that without reserve (absolute) auctions draw more attention, increase the bidder pool, and typically result in higher prices for sellers. It’s hardly only our view: https://mikebrandlyauctioneer.wordpress.com/2016/08/25/the-power-of-the-word-absolute/.
We keep asking this question … if your auction is properly marketed and the seller has committed to “sell to the highest bidder” why isn’t the final bid price “market value?” You’re telling me bidders respond to “maybe selling” more so than “absolutely selling?”
Let’s see … bidder sees the auction advertisement, goes to the bank to get a cashier’s check, a few days later wakes up, gets dressed, drives to the auction — stopping for a quick uneventful breakfast — arrives to finally find a place to park, registers, sits in a folding chair and waits to then hear opening announcements, worried and stressed, but bids nonetheless only to hear “Nope, we’re not selling this property today.”
You “seller confirmation” fanatics are telling me bidders like this? You’re telling me bidders are drawn to this inconvenience and uncertainty? You’re telling me this auctioneer would have had fewer bidders (or no more bidders) if the advertisement noted the seller was “selling to the highest bidder?” You can’t be serious.
I’ve heard auctioneers say that no real (or personal) property should be sold “absolute” if there is money owed on the property. Really? https://mikebrandlyauctioneer.wordpress.com/2016/08/18/yes-you-can-sell-absolute-with-a-lien-present/. One seller we had about 2 years ago had a payoff of $180,000 on a real property appraised for $279,000. We sold it at an absolute auction for $471,800.
Have we sold all our real and personal properties absolute? We haven’t. Some real property auctions have sold with an advertised academic minimum bid — so for example, we recently sold a real property appraised for $196,800 with a published minimum bid of $157,440, for $431,250.
What did these two auctions have in common? They both were properly and extensively marketed, and both had the “prospect of a deal” which is essential for any auction to truly succeed. We wrote about both these auctions and one other here: https://mikebrandlyauctioneer.wordpress.com/2022/12/12/what-makes-any-auction-work/.
I have also heard that at “this auction …” nobody showed up — nobody registered, nobody bid. Nobody. There would have to be a valid reason for this circumstance, which may well not be that the auction was absolute. We explored here: https://mikebrandlyauctioneer.wordpress.com/2013/10/23/auctions-where-nobody-shows-up/.
Without reserve (absolute) auctions are not open to one bidder “naming his price” as this is lunacy. As is widely held in state law and the courts all over the United States, at an absolute auction, the property may not be withdrawn if there is a calling for bids and a bid is made within a reasonable time. Therefore absolute auctions can be canceled anytime before a “calling for bids.”
I’ll say it again — if you can show me one single absolute auction that failed and conclude all auctions should be with reserve, then if I show you one “with reserve” auction that failed, so you better conduct only absolute auctions, right? I’m not sure I’ve ever heard an auctioneer ask “I sure wonder if we would have received a higher price if we sold this ‘with reserve’ rather than absolute?” Have I heard auctioneers wonder the opposite? Many times.
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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