“The opening bid today is … “ or “The minimum bid is …” or “The published reserve is …” or “The nominal opening bid is …” and what does all this mean? Far too often, this means we’re just “starting the bid” with no assurance whatsoever the seller will actually sell if that bid is made or exceeded.
The vast majority of the public sees any of these statements and would assume that if he or she placed a bid at or above this stated number, the seller will commit to selling. Yet, it’s far too often not the case, where the stated number and the actual reserve are completely different numbers.
For instance, here’s the bait: “The minimum bid today is $359,000.” Here’s the switch: “The high bid is $512,000 and the seller is not selling the property.” We ask today why the “minimum bid” is $359,000 if even a bid of $512,000 won’t buy the property? The answer is, “It’s clear misrepresentation.”
It’s not what the auctioneer/seller thinks nearly as much as what the public perceives. The language that this is the least bid acceptable tells almost every potential bidder that the seller will accept that bid if that’s all that’s offered. Yet, some auctioneers use it to falsely induce bidders …
I certainly understand “momentum” and that auction marketing relies on this emotion. Yet, while momentum is good it’s not worth the cost of a misleading representation with an intent to deceive the bidder. Who else on earth (besides an auctioneer) says, “The minimum price (offer) is … but it’s not?”
Indeed auctioneers can bid for the seller (or the seller can bid) with no recourse by bidders (buyers) if such right is “reserved” (disclosed.) Yet, no certain “opening bid” or the like is needed to bid for the seller after a genuine bid is placed. The “lower than the reserve” published minimum bid is solely there to deceive.
Auctioneers can use an opening bid, minimum bid, or similar language to truthfully project the prospect of a deal; this technique encourages bidders to engage and participate. However, auctioneers should not suggest the prospect of a deal where there isn’t one.
Of course, some auctioneers will continue to say the minimum bid is $359,000 and not sell the property for $512,000 because it didn’t meet the reserve and/or even bid for the seller. Then guess what? No bidder will ever believe your opening bids mean anything but a bait and switch, and you’ll have lost the most profound way to consistently attract bidders.
Do bidders judge your prior auctions in order to decide if they’ll participate in your next one? They sure do — and your future sellers depend upon you acting reasonably regarding your current auction to maximize their positions: https://mikebrandlyauctioneer.wordpress.com/2023/10/20/reasonable-auction-practice/.
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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