I was emailed a real property auction flyer the other day. Presumably to see what a great job of marketing the auctioneer did.
In bold print, near the top of the flyer, the following statement caught my attention (I’ve changed the numbers only slightly so to not identify the auctioneer):
Offered with published reserve of only $750,000
Seller directs bidding to commence at $280,000!
What does this mean?
It says to me that the seller isn’t willing to take any less than $750,000 but the bidders can offer as little as $280,000 and bid against each other … up to either a number less than $750,000, where the property will not sell — or a number equal to or in excess of $750,000, where the property will sell?
We have a really well-educated auction bidder (buyer) community in the United States. Most all prefer and appreciate auction advertising that is straightforward, even if not favorable to their position.
Bidders interested in this property would respond better if either statement was used, but not both, such as:
Offered with published reserve of only $750,000
or
Seller directs bidding to commence at $280,000; reserves right to accept or reject the high bid!
The first statement says clearly the bidding will start at $750,000. If a bid is made for that amount, the auctioneer will ask for more, and the property will sell. If no bid is made for $750,000 or more, the seller retains title.
The latter statement says clearly the the auctioneer will require an opening bid of $280,000 will ask for more until a high bid is obtained, with no further bidding. Then, the seller will have the option to accept or reject that high bid. If the seller declines the high bid or nobody opens the bid for $280,000, the seller retains title.
Advertisements such as this one emailed to me attempt to attract bidders to an auction assuming a general naiveté on the part of the potential bidders — and this is no less than condescending and insulting. Bidders respond much better when they are respected and treated with honesty and integrity.
Further, such advertising impairs the ability for other auctioneers to be perceived as honest in their advertising and otherwise — if another auctioneer advertises his real property auction with a minimum bid of $100,000, does a bid of $100,000 buy the property if there are no other bids?
Normally, yes, that’s what a minimum bid auction denotes — however, with other auctioneer advertisements suggesting an opening bid, starting bid or bidding commencement which is below the minimum bid the seller is willing to accept, this complicates the ability for auctioneers as a whole to gain creditability.
Incidentally, the fact that the “Seller directs” the bidding to start below what he is willing to accept further portrays the advertisement as contemptuous. As the seller’s agent, the auctioneer involved in such “seller legal directions” would owe his client the insight that this is ill-advised.
I would guess — more likely — the auctioneer here told his client this low commencement bid would attract bidders thinking they might buy the property for $280,000 that he would work to get them up to the required minimum.
What this auctioneer probably didn’t tell his client is these bidders will not likely allow for that, and that the mere suggestion that the property can be bought for $280,000 will make them feel mislead — and highly uninterested in paying $750,000.
My conclusion? Such advertising is bad for the seller, bad for the bidders, bad for us fellow auctioneers and bad for the auction industry as a whole.
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, Keller Williams Greater Columbus Auctions and Goodwill Columbus Car Auction and. His Facebook page is: www.facebook.com/mbauctioneer. He serves as Adjunct Faculty at Columbus State Community College and is Executive Director of The Ohio Auction School.
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