In reports provided by very reliable sources, some specific cars, farm equipment, industrial equipment and even firearms are being sold at auction over and over and over again. Why would that be?
It’s likely that the seller (owner) and/or auctioneer is trying to “make a market.” What’s making a market? For example, a seller/auctioneer sells a 1958 Mercedes Benz 300 SL Gullwing for $900,000 on June 1 and sells it again for $1,200,500 on June 26 and then sells it again for $1,500,000 on July 18.
Actually, it’s all a ruse. This Gullwing didn’t in fact sell on June 1 and again didn’t in fact sell on June 26 and didn’t in fact sell again on July 18. It didn’t sell at all, and rather was put through an auction so as to make [deceive] the market.
Other owners of Mercedes Benz 300 SL Gullwings wrongly conclude that the prices of their same 1958 Gullwings are going up this summer and their cars may now be worth as much as $1,500,000. Maybe this auctioneer can convince them to sell their Gullwings? Maybe this auctioneer can secure other consignments given the apparent success with his past sales?
Such behavior is nothing short of intentional misrepresentation — and could be considered fraud if subsequent sellers were falsely induced to sell and suffered harm. This is exactly what these sellers/auctioneers are attempting: to falsely induce future sellers to become clients of the auctioneer.
Consumers are advised to check that past sales data is reliable — that the sales were actual “arms length” sales — before consigning any property to any auctioneer. If that can’t be assured, it’s probably best to avoid that auctioneer. If you’re seeing the same item sell over and over and over again, that’s not reliable nor arms-length.
Imagine if I have a 1958 Mercedes Benz 300 SL Gullwing and am looking to sell … and see one auctioneer’s [fraudulent] past sale at $1,500,000 and another auctioneer’s [genuine] past sale at $975,000. Who am I likely to consign with? What will my Gullwing demand?
We were involved as an expert witness in a case where an auctioneer took this scam even farther. He portrayed high sale prices reflecting on past sales that didn’t take place at all. In other words, “We sold this 1958 Mercedes Benz 300 SL Gullwing for $2,000,000” when he hadn’t sold any Gullwings at auction, fraudulently or not.
We as auctioneers often use the phrase “Buyer beware” (Caveat emptor.) I would suggest another prudent rule to remember is “Seller beware” (Caveat venditor) in this age of a few sellers/auctioneers unfortunately falsifying auction results.
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, an Instructor at the National Auctioneers Association’s Designation Academy and America’s 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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