We previously wrote that in an online auction, high bidders have the right (state law) to retract their bids prior to, “Sold!” We also noted that state law says that in the case of high bidder retraction, the prior bidder isn’t revived but … as we wrote here: https://mikebrandlyauctioneer.wordpress.com/2021/04/06/sold-to-the-previous-online-bidder/.
Today, we explore how this (or these) other online bidders are affected by a high bidder retraction. Here we explore two scenarios:
2 bidders — A & B. A bids $200, B bids $300, A bids $400, B bids $500, A bids $600, B bids $700. Then, B retracts his $700 bid. It seems to us now A should (at his option) be the new high bidder at $200.
3 bidders — A, B, & C. A bids $200, B bids $300, C bids $400, A bids $500, B bids $600, C bids 700. Then, C retracts his $700 bid. It seems to us now B should (at his option) be the new high bidder at $600.
We base our view on the premise that with a bidder retraction, all that bidder’s bids are removed, leaving all other bids from other bidders, and nobody should be forced to bid against themselves.
In our first example above, with B retracting his high bid, that leaves only A’s bids and the lowest of those bids is $200. In our second example above, with C retracting his high bid, that leaves only A’s and B’s bids and the highest bids of the remaining two should allow the higher of the remaining two to be the new high bidder for one increment over the second-highest bidder — in this case, $600.
Regarding our second point, if A bid $200, B bid $300, C bid $400, A bid $500, B bid $600 and then A bid $700, and A retracted his bid, that would leave the bids of B’s $300, C’s $400 & B’s $600. The highest valued consecutive pair remaining is C’s $400 and B’s $600 which would put B as the new (optional) high bidder at $500.
In other words, when a bidder retracts his bid, find the next highest bidder and put him in (optionally) as the new high bidder for one bid over the “next highest” remaining bid. Mathematically, if the current high bidder is i(x) and the next highest different bidder is j(x-1) and the next highest different bidder is k(x-2), then in the event of a retraction, J is the new high bidder for (x-2) + one increment.
In respect to our expression “one more increment,” we would hold that pre-determined increments should be set as with virtually any online auction platform, and maintained (without modification) when there is bidder retraction. For instance, having our remaining consecutive pair at $400 and $600 with $100 increments, the increments shouldn’t be changed to $200 so that our new high bidder is at $600, rather than $500.
Are live auctions different? They appear to be as when a high bidder i(x) retracts his bid, the auctioneer typically invites the just-prior bidder j(x-1) to be the high bidder again (for that prior bid) or “just start over.” Further, hopefully, no bidders are bidding against themselves … although that’s not unheard-of including on purpose or done “for them” by the auctioneer.
It is abundantly clear that bidding at auction is highly collaborative as we wrote here: https://mikebrandlyauctioneer.wordpress.com/2017/04/01/but-the-bidders-chose-to-bid-again/. As such, any bidder retraction procedures should be compliant with state law and otherwise comply with reasonable/ethical standards. Too often, we’ve seen (and witnessed in court) troublesome, and even unconscionable bidder retraction procedures.
Lastly, for those who continually argue it’s not “state law” … it is “state law” that cannot be disclaimed nor ignored if your so-called immensely better policy is otherwise “agreed-to” (when only you know of the terms of such, and your bidders/buyers have no idea what it is) plus it’s clearly manifestly unreasonable to have any other policy.
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, and an Instructor at the National Auctioneers Association’s Designation Academy and Western College of Auctioneering. He is 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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