I’ve decided to start a series of posts on what I would characterize as creative, unethical, and probably illegal bid calling techniques I’ve witnessed over the years. While I believe most all auctioneers act in an ethical, moral and legal manner, there are some auctioneers acting the opposite, while bid calling, and it is quite concerning.
Standard bid calling in the United States involves the auctioneer suggesting a price a bidder might bid, the bidder bidding that amount, and then the auctioneer asking for a higher bid. Commonly, these two numbers (what is bid, and what is desired) are called the “have” and the “want.”
For example, an auctioneer might say, “I would like $100 for this item,” and as a bidder raises his card, the auctioneer would continue, “I have $100, and I’d like $125 …” and so forth.
However, way too many auctioneers (even if that was only 1) bid call in creative, unethical and probably illegal fashions. Here’s the one we’re discussing today:
Run, Run, Run
February 7, 1964, Motown released a song titled, “Run, Run, Run” by The Supremes. Auctioneers have sung this song for decades, well before this song, and continue to sing it today.
Run, Run, Run is played by many auctioneers when a bidder puts their card up in the air, and leaves it up in the air. Or, just as well, a bidder might have indicated that he or she is willing to pay a certain amount, so the auctioneer ensures they pay at or near that amount.
This technique is fairly simple. The auctioneer asks for a bid of $100 and a bidder’s card is raised, indicating he is willing to offer the $100. The auctioneer then takes the $100, and quickly takes that same bidder at $125, $150, $175, $200, $250, $300, $350 … This continues even when only one bidder is bidding.
Or, if a bidder tells the auctioneer, “I’m willing to pay $400 for that item coming up in your auction,” the auctioneer might accept that bidder’s bid at $100 and then take a fictitious bid at $125, going back to the original bidder for $150, and so forth. The scheme here is that there actually doesn’t have to be any other bidder (similar to our shadow bidder: http://mikebrandlyauctioneer.wordpress.com/2010/02/01/unethical-bid-calling-1-the-shadow-bidder/) since there is a reasonable chance the other, one bidder, will continue to bid.
As it is called, “Running the bid” is all too common in many auction markets. If this running the bid is done under the pretenses of bidding on behalf of the seller, and the auction is indeed a reserve auction with this right of seller bidding clearly reserved, then it’s probably not unethical nor illegal. However, many times no such disclosure is made or the auction is without reserve, and in either case, the seller cannot bid (outside of forced sales).
The contractual issue here is that the contract with our aforementioned bidder at $100 can only be voided by a higher bid or a bidder retraction. The longstanding presumption in the courts has been that a higher bid must be an offer from a different bidder than is currently in contract. Therefore, an auctioneer taking a bidder’s offer of $100 and then putting them in for $125, $150, $175 … doesn’t stand the test of contract law precedent.
The United States Supreme Court ruled in 1850 in Veazie v. Williams, 49 U.S. 8 How. 134 134 (1850) that this type of running the bid entitled the high bidder to take the subject item at the last “good faith bid” or void the sale altogether.
Unethical bid calling? Yes. Creative? Yes. Illegal? Most likely yes, although possibly more applicable in a civil action than criminal.
Mike Brandly, Auctioneer, CAI, AARE has been an auctioneer and certified appraiser for over 30 years. His company’s auctions are located at: Mike Brandly, Auctioneer, Keller Williams Auctions and Goodwill Columbus Car Auction. His Facebook page is: www.face book.com/mbauctioneer. He is Executive Director of The Ohio Auction School.
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