As auctioneers, we’re all trying to maximize the seller’s position. In that spirit, some argue that if a higher bid (or even another bid of the same amount) is recognized by the auctioneer, the auctioneer should accept it — or reopen the bidding — to increase the sale price.
Many others have noted that the integrity of the bidding process matters, and actually benefits sellers (by encouraging aggressive bidding) with finality and certainty:
Integrity and finality in the sale process – also receives serious attention from the courts and, functionally, is integral to the sliding scale approach. “Accepting a late bid may mean more money for [sellers] in the short run, but by upsetting the expectations of those who thought the bidding was at an end, it may in the long term undermine confidence in sales and discourage prospective purchasers from making their best offers in a timely manner.” Ironically, the integrity of the process and respect for bidders’ reasonable expectations is generally consistent with the goal of asset maximization, as most courts have found that the risk of an upset bid stifles aggressive bidding and ultimately results in lost value to the estate. James M. Peck, Attorney At Law
Let me repeat Mr. Peck’s last sentence again for your consideration: ” … as most courts have found that the risk of an upset bid stifles aggressive bidding and ultimately results in lost value to the estate.” Does it matter what anyone else says, if a court is generally going to view it as unreasonable?
Nonetheless, our topic today is the “customary closing” and what some auctioneers do to complete the sale while also using the same to not close the bidding. It’s a precarious strategy, to say the least. In other words, any particular customary closing can’t mean two different things.
For example, if an auctioneer uses “You bought it” to signal a completed sale, then in the event of a higher bid coming in late, after “You bought it” the auctioneer can’t claim he “didn’t say sold.” Actually, he “said” “Sold!” when he said, “You bought it.”
Once an auctioneer establishes a customary manner of completing the sale, that is the same thing as saying “Sold!” — and therefore that has meaning — that the buyer and seller are in contract; it can’t also mean that they aren’t in contract; it can’t be sold and not sold at the same time, outside of an ever-so-narrow allowance in the law.
Speaking yet again about “reopening” the bid — it’s not a tied bid, disputed bid, missed bid, late bid, early bid … only a higher bid (outside of Kentucky) that is made at the moment the hammer is falling, and if you reopen a “tied” bid in Kentucky, tell me what you do if both [tied?] bidders decline to raise their bids … so it’s not a tie anymore?
Auctioneers can do better. Make sure your bidders know — as best you can — who’s “on” and who’s not, and say “Sold!” (or whatever you use as your customary manner) and mean it. Provide integrity, finality, and certainty to encourage bidders to have confidence in your auction event. This strategy benefits all your present and future sellers.
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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