I’m sometimes mystified by how some auctioneers view their business model. We’ve held for decades that all auction bidders/buyers are induced to participate in any auction with the “prospect of a deal.” Yet, I’m hearing that’s not necessarily true.
Maybe I should rephrase to help auctioneers understand? Where are all these buyers endeavoring to pay the most possible? Even if the buyer has a once-in-a-lifetime opportunity to buy his boyhood home, does he suddenly say he wants to pay as much as he can?
If your auction is “working” then it likely had the prospect of a deal. If your auction didn’t work, it likely did not. It’s just about that simple. You can claim that the buyer didn’t care about any possible deal because this was the single piece of real property he always wanted …
Yet, did this buyer indicate price didn’t matter? Price always matters, and bidders and therefore buyers are looking for ways to minimize cost — even if the property is this buyer’s boyhood home. In fact, at your auction, it’s likely the high bidder only had to bid one more bid than the second-highest bidder.
Who are all these people looking to maximize out-of-pocket? Even people with billions of dollars can’t spend trillions of dollars if they don’t have it, nor want to spend all their billions if they don’t have to. If your bidders are saying they aren’t looking for a possible deal, what are they looking for?
Of course, even though every auction bidder/buyer is looking for the chance to save money, it doesn’t mean they aren’t willing to spend much more if necessary. In fact, many auction bidders get emotional and bid more than they were planning — but the opportunity for a deal is what originally attracted them.
What else matters to buyers other than the “prospect of a deal?” For one, more disclosure encourages more bidding, and a lower starting price (or -0-) promotes bidder engagement. Property may (or may not) sell, secret reserves and less information deters bidders and lessens engagement.
Further, your “starting bid” should be the least the seller is willing to accept — minimum bids should be just that — and not a different number than the seller’s required minimum. Unfortunately, do auctioneers sometimes do this differently? https://mikebrandlyauctioneer.wordpress.com/2010/06/02/the-nominal-opening-bid/.
Finally, if you state in your advertising that the “minimum bid is …” then you can’t conduct the auction and accept any less … minus a likely lawsuit or related claim and/or administrative license investigation. It’s a clear case of “false advertising” in that the minimum bid can’t be $x and not $x at the same time.
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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