Some auctioneers refer to seller bidding (in a with reserve or forced sale auction) as counterbidding (counter-bidding.) Despite bids being offers, is this a counteroffer? It isn’t.
If this was a counteroffer, the bidder could accept the offer, and a contract would be formed. In counterbidding, the seller is bidding as if an offer is being made to the same, and other bidders must outbid (offer more) to have a chance to buy.
Typically, once the reserve is met, the counterbidding ceases, and a non-seller buyer is awarded the property, or further non-seller bidding continues until eventually a non-seller buyer is deemed as such.
Here’s an example: A lot the seller believes is worth $775,000 is up for auction. B is a genuine non-seller bidder and S is the seller. B bids $375,000 and S counterbids $400,000. B bids $425,000 and S counterbids $450,000 … until finally, B bids $725,000, S counterbids $750,000, and B bids $775,000.
While the word(s) “counterbidding” or counter-bidding describes seller bidding, is it used to suggest this isn’t seller bidding at all, and rather a counteroffer of sorts, akin to any contract offer/rejection/counteroffer sequence?
The thing is, the counterbid can’t be accepted by another bidder, and therefore this other bidder must instead outbid the counterbid for a chance to be the buyer; if the reserve isn’t met, yet another counterbid (seller bid) can be expected.
Auctioneers who conduct with reserve auctions (because sellers and/or auctioneers aren’t convinced the auction will work or think “something could happen,”) then sometimes [need to] bid for the seller because there aren’t sufficient bidders otherwise.
Of course, with reserve auctions often attract less attention, and therefore seller bidding is often required. It’s not that auctions can’t work, but with reserve auctions should be because the bidder pool will typically be smaller.
In summary, beware of counterbids as “counter offers” as they are not. Auction counterbids are seller bids and not an offer to accept, but rather to outbid if desired, and if an offer in any sense, they constitute an offer back to the person making this offer: the seller, who does immediately accept in a way.
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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