We’ve said it. Many auctioneers have said it. We need (or secure) the “right” bidders for your auction. But, who are they? Do they all wear certain shirts? Hats? Live in a certain town? Certain age? Mostly, no auctioneer knows positively who these “right” bidders are.
First, the “right” two bidders would be the person (entity) most interested and the second most interested (previously referred to as “alpha and beta.”) It also helps to have other bidders there as well, to make these two most interested feel better. https://mikebrandlyauctioneer.wordpress.com/2016/05/31/large-auction-crowds-busy-restaurants-and-relevance/.
For instance, an auctioneer is selling a 1-acre lot improved with a 4-bedroom home. While technology allows auctioneers to target certain demographic information, is this auctioneer assured that type of marketing will find the “right” bidders? What if that marketing doesn’t touch those two?
Let’s say this auctioneer places a big sign on the property and sends out postcards to the local area, uploads pictures and other details onto various digital platforms, and does some social media target marketing. Did all this result in the auctioneer finding the “right” bidders?
Demographics can help increase the odds of finding the “right” bidders if the right bidders fit those profiles. Direct mail can increase the odds of finding the “right” bidders if they live in that perimeter or meet certain criteria. The big sign can increase the odds of finding the “right” bidders … but despite all these increased odds, did we find them?
Let me be this blunt: No auctioneer knows positively who these two (or more) “right” bidders are, and therefore can only increase their chances of finding them. Quite frankly, if these two most and second most interested buyers are just that … wouldn’t they likely be looking for this property as much as the auctioneer would be trying to find them?
Another obvious advertising goal is to attract the most bidders — therefore increasing the odds of finding the right bidders. 100 bidders have more chance of the most and second most interested being registered than 20 bidders … and 20 bidders have more chance of the most and second most interested being registered than < 20 bidders.
Here’s how it works generally: More bidders = greater chance of the “right” bidders = better for the seller. However, when it costs more to find one more bidder than the benefit that the bidder will provide, it does no good to have any more bidders. In other words, it may make more financial sense to have 25 registered bidders than 1,025 given the cost to “find” these additional 1,000 bidders.
Do you want a 100% chance (a guarantee) that the “right” bidders are present at your auction? For a guarantee, you’ll have to actually notice (and possibly constructively notice) every person and entity in the universe. That type of assurance is unquestionably more expensive than beneficial. It’s simply a prudent cost-benefit exercise.
Auctioneers proclaiming they know who the high bidder will be — and the second-highest bidder will be (suggesting they will notify them of the auction) — that’s a lie. Will the auctioneer and seller end up with a highest bidder and a second-highest bidder? Sure, we all do that. It’s the auctioneer’s job to maximize the chances of getting those two bidders, not guarantee that these particular bidders are found.
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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