Buyers at auction want to know lots of things such as the number of bedrooms, annual taxes, the horsepower of the tractor, the width of the trailer, the caliber of the firearm, the mint mark on a coin … and for the most part auctioneers should disclose these material facts about property they are putting up for auction.
However, some information which buyers might feel is material is also by default confidential. Such is the reserve price which twice in two weeks I’ve been privy to litigation where bidders want to know, “What is the least the property will sell for?” In other words, “What is the reserve?”
In one such case, an interested bidder in regard to an upcoming real estate auction was traveling from some distance and inquired: “What’s the reserve?” The auctioneer told this bidder he couldn’t disclose that to him. The bidder replied, “But that’s a material fact to which I’m entitled.”
“You expect me to come all that way, and bid without that information?” Yes, many auctioneers expect bidders to participate in the auction without knowing the seller’s minimum price and/or without knowing the seller has the genuine intent to transfer to the highest bidder regardless of price.
This is actually longstanding history with auctions in 49 of 50 states being “with reserve” by default. However, I would argue here in 2018, buyers have choices … and have grown accustomed to (and want) more disclosure counter to many auctions which reserve (hide) the minimum price acceptable by the seller.
Auctioneers can disclose the minimum the seller is willing to accept, or sell without reserve (absolute) which in turn attracts more bidders — because for one, there is more disclosure. Of course, disclosing an unrealistic reserve or otherwise a minimum bid which doesn’t represent the prospect of a deal is ill advised; we discussed in more detail here: https://mikebrandlyauctioneer.wordpress.com/2009/12/11/auctions-and-an-iowa-corn-field/
As my good friend Manson Slik and I have discussed numerous times in the National Auctioneers Association‘s Accredited Auctioneer of Real Estate Designation Class, aggressive published minimum bids or absolute auctions demand more attention and typically higher prices, especially here in the 21st century.
As an auctioneer don’t be surprised if you hear from a bidder inquiring about the minimum bid or reserve price; we’re actually one of the few industries left that hides the price when asked … and consumers are increasingly noticing.
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, an Instructor at the National Auctioneers Association’s Designation Academy and Texas 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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