The situation was exactly this — an online bidder placed (submitted) a maximum bid of $750 for an item up for auction. The high bidder is this same online bidder at $725, when a live bidder bids $750. The item is sold to the high live bidder [not the online bidder] for $750.
The online bidder is (understandably) upset, “How did I not get this item for my maximum $750 bid? How did someone else get this item for $750?” The real question here is, was this online bid of $750 placed before the live bid of $750? It appears to us it was not placed prior, but appears to the online bidder that it was.
In most online auctions, bidders place their maximum bids to be executed during the live auction. In other words, “Bid on this item as if I’m standing there, up to $750 if necessary.” The online bidder hopes he can pay less, but no more than $750.
This is almost the same as a live bidder attending the auction thinking, “I’d like to have that item, and I would bid as much as $750 to get it,” except the online $750 maximum bid has been disclosed and the live bidder’s thought that he will pay as much as $750 if necessary isn’t.
Did our online bidder here place a bid of $750? Did our online bidder here submit a bid of $750? Did he offer $750? What the online bidder feels is an offer of $750 is actually a (disclosed) limit of his future offers, to be executed during the live auction. In our example here, he offered $725 and that offer was accepted.
This would be similar to our live bidder if he was the high bidder at $725 and the online bidder bid $750. Could the live bidder ask, “Hey, why am I not the high bidder at my limit of $750?” The answer is the same for either of our bidders here … another bidder offered $750 before you did.
Basically, the problem here is the online bidder feels like he’s offered … as much as … $750 when he hasn’t. The highest bid he’s actually offered is $725. As soon as the live bidder bids $750, the online bidder can’t offer any more because he would have to offer more than $750 and he’s unwilling to do that.
It is complete fallacy that this situation constitutes a “tie bid” for two reasons. First of all there are no tie bids and secondly, the online bidder was the high bidder at $725 until the live bidder offered $750 which was accepted. At that point, only the live bidder was in contract — and to upset that contract — someone would have to bid more than $750.
Bid calling is a series of contracts between the high bidder (the high offeror) and the seller/auctioneer. More on how those contracts work here: https://mikebrandlyauctioneer.wordpress.com/2014/08/11/bid-calling-is-just-numbers/
Relatedly, it is important for auctioneers, bidders, sellers and others to realize that property sells at auction to the highest bidder which is actually one bid more that the most the second-highest bidder is willing to pay — and has actually offered. If in our scenario here, the live bidder bid $700 and the online bidder bid $725 with no more bids, the property would sell for $725, not the $750 the online bidder was prepared to pay.
In our picture above, these girls are running a race. The winner of the competition doesn’t have to run any certain time nor as fast as she can — only run faster than any other girl, and in particular run faster than the second-fastest girl. The winning girl might have been able to run faster, but she didn’t need to …
For those interested in more about the placement, submission and acceptance of bids, we have written about that several times including here: https://mikebrandlyauctioneer.wordpress.com/2017/01/26/missed-or-misplaced-bids/ If you still believe in “tie bids” then we suggest this reading: https://mikebrandlyauctioneer.wordpress.com/2016/07/28/terms-which-say-there-are-tie-bids/
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, RES Auction Services and Goodwill Columbus Car Auction. He serves as Distinguished Faculty at Hondros College, Executive Director of The Ohio Auction School, an Instructor at the National Auctioneers Association’s Designation Academy and America’s Auction Academy. He is faculty at the Certified Auctioneers Institute held at Indiana University and is approved by the The Supreme Court of Ohio for attorney education.
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