I want to bid at your auction. Do you require me to give you a deposit (money) to bid, or do you require me as the eventual high bidder to give you a deposit (money?) These are two distinctly different methods to protect the seller (client.)
A deposit required to place a bid — before the actual auction — better protects the seller than a required deposit after the auction from the high bidder. Yet, could the seller benefit from more bidding by allowing bidders to bid without submitting a deposit?
Say the subject deposit is $10,000. If the auctioneer requires a bidder to submit $10,000 to register, then everyone bidding has $10,000. If only the high bidder is to submit $10,000, then that bidder could be bidding against (potentially more) other bidders lacking $10,000.
Relatedly, your terms and conditions regarding registration should provide for “equal footing” for all bidders, as ruled by the Supreme Court of Appeals of West Virginia. https://mikebrandlyauctioneer.wordpress.com/2021/12/13/lyon-leach-lerch-fair-dealing/.
For example, auctioneers can have auctions that require bidders to have a driver’s license and $10,000, or auctions that require a driver’s license or $10,000. In either case, that’s “equal footing.” Importantly, it’s highly recommended your registration criteria be objective rather than subjective.
Regardless, with a deposit from every bidder and/or only the high bidder, there are no guarantees. Buyers can refuse to perform no matter the deposit. What you are instead doing with a deposit is encouraging the buyer to perform, and minimizing risk for the seller.
Required fixed deposits to bid or be the high bidder require a “with reserve” auction where this constitutes a minimum bid. Absolute auctions can have percentage deposits where they do not constitute a minimum bid. https://mikebrandlyauctioneer.wordpress.com/2015/07/20/an-absolute-auction-with-a-minimum-qualifying-deposit/.
It’s always important to discuss all these details with clients (sellers/owners) including if the auction will be absolute (without reserve) or with reserve, the required deposit amounts to bid or buy, the other specific terms to satisfy for bidders to register for the auction, along with the associated risks and benefits.
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.
Comentários