One of the first auctions I worked in Columbus, Ohio was a personal property auction conducted by Jack B. Smith, Auctioneer. It was a fairly large onsite auction in Clintonville. The auction total was about $12,000 — fairly impressive at the time.
Following the auction, Jack gathered all the checks and cash and found the seller, and proceeded to meet in the kitchen. Jack laid out all the checks, counted the cash, and settled the auction with the seller right there — about 15 minutes after the last item had sold.
Jack used 3-part clerk sheets and tore off one copy for the seller, and had the seller sign a settlement sheet of sorts, indicating acceptance of these proceeds as the final settlement of the auction. Jack and I packed up the tables and supplies; we were at his home maybe an hour later.
As we noted in a recent article, we recommend auctioneers escrow all auction proceeds into a trust account, and disburse thereafter, allowing for later payments, canceled payments, refunds, and the like. https://mikebrandlyauctioneer.wordpress.com/2022/05/25/auctioneer-escrow-accounts/. It’s difficult to imagine any auction these days being as simple as “here’s your money, here’s my money” minutes after the auction is over.
The other issue might regard auctioneer expenses. What if the bill for the sign, newspaper ad, mailer, or other isn’t known yet? How does the auctioneer know exactly all his expenses at that moment? It could be the auctioneer and seller have agreed to fixed costs?
Yes, it may seem this simple, but besides subsequent credits or debits, what about clerking errors, counterfeit bills, credit card processing, and checks that are returned for nonsufficient funds … with settlement right after the auction, how do auctioneers and sellers resolve any subsequent issues?
Some states that license auctioneers mandate the use of a trust/escrow account. Others allow immediate settlement or their use, and still, others say it’s a contractual matter between the auctioneer and seller. No matter, it seems there is no downside to escrowing funds, distributing seller proceeds, and auctioneer’s portions thereafter.
There are also auctioneers who settle their auctions with a letter, card, or other “thank you” type presentation along with a professionally prepared settlement sheet and check. Even some auctioneers and sellers have funds wired directly to sellers, and/or hold for weeks or longer for tax or legal reasons.
Further, for one auction Jack and I worked together, there was the typical “your money” and “my money” type settlement right after, only to have several checks returned for insufficient funds. Jack had to contact those buyers, but quickly drive over to the seller’s home to replace those bad checks with cash.
Credit and debit cards take time to settle, and we’ve argued that any auctioneer not accepting credit and debit cards is not adequately maximizing price, with so many buyers only able (or desirous) to use credit/debit cards: https://mikebrandlyauctioneer.wordpress.com/2020/02/05/auctioneers-and-payment-methods/.
Court-ordered, government and business auctions have sellers/owners who expect one single payment for the net proceeds — rather than a stack of checks along with bills, coins, etc. These same clients don’t expect payment the same day and appreciate a more professional settlement at a subsequent date, time, and place.
Lastly, speaking of the seller/client being in attendance, 30-40-50 years ago, oftentimes the executor, administrator, guardian, or other responsible person was in attendance at the auction. These days, especially with kids and grandchildren all over (and outside) the country, many auctioneers are forced to escrow (protect) the gross proceeds since the client is not present at the auction.
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 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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