We have two questions here: One, can bidders pay too much? Second, can they pay over value?
Quite frankly, we’re a bit surprised with these two questions — that they actually deserve detailed answers.
Can bidders pay too much? As we’ve alluded to in prior writings, bidding is voluntary. In other words, bidders choose to bid, and thus buying at auction is a voluntary act. Whatever they choose to pay is their choice.
Certainly a bidder could say, “I paid too much” but it would certainly be no one’s fault other than the buyer’s, assuming all prior bids were genuine and not fictitious.
Further, there would be the presumption that the second-highest bidder was willing to pay just a bit less than the high bidder, further substantiating the claim the high bid was indeed not “too much,” and rather “just enough.”
Can bidders pay over value? A common saying when it comes to arriving a true value is that anything is worth: “What someone is willing to pay for it.” As such, the final bid at auction is the value. The Supreme Court of Ohio said as much in a 2015 ruling: https://mikebrandlyauctioneer.wordpress.com/2015/09/07/does-an-auction-price-equal-market-value/
A point of clarification here: Value is generally an opinion (what we think something is worth.) Price on the other hand is a fact (what it sold for.) Yet, at the point at an auction when the auctioneer says, “Sold,” price and value converge. It just sold (price) for what it is worth (value.)
After an auction, for the new owner, price stays fixed (what he paid) while value can and does tend to fluctuate. A Beanie Baby purchased at auction in 1999 for $1,900 might only be worth $2 today; similarly, a Hot Wheels car that might have cost $3 in 1969 might be worth $1,000 today.
Auctioneers are charged with maximizing their client’s (seller’s) position. As a result, almost every auctioneer endeavors to maximize price. Yet, a few auctioneers in wholesale markets claim they stop the bidding and “pass out” at that price to many buyers … a curious technique which we’re not sure actually maximizes price, nor the seller’s overall position.
Statements such as “You get too much for your stuff at auction,” or “Your prices at auction are too high,” are some of the best things auctioneers like to hear. And as I’ve told our auction crowds for over 35 years, if you think our prices are too high, we welcome your consignments.
Auctions are touted as “price discovery” mechanisms where market value is exposed though competitive bidding. We concur that auction prices equal market value and that high bidders pay exactly that …
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, RES Auction Services 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.
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