I remember countless auctioneers telling me two things about the auction business when I first took an interest in it:
Property is only worth what someone is willing to pay for it.
Auction prices result in market value.
Now that I’m in the auction business, many auctioneers are telling me they don’t believe any of it. How do I know that? Because many auctioneers now tell me:
Property is often worth more than what someone is willing to pay.
Auction prices often result in less than market value.
It seems to me that selling “absolute to the highest bidder” would suit a seller/auctioneer who believes property is only worth what someone is willing to pay for it and auction prices result in market value.
It also seems to me that auctioneers who swear by “with reserve” auctions believe that property is often worth more than what someone is willing to pay and auction prices often result in less than market value.
Is it our sellers? Are we working with sellers who don’t believe so we can’t believe it either? Are we accepting work where an auction really isn’t the best solution?
Certainly, before the Internet, it was conceivable that auction marketing might not have reached the ideal bidders/buyers. With the Internet, is it really possible that the ideal bidders/buyers don’t know about your auction?
Are you sufficiently marketing your seller’s auction? If so, why isn’t the highest bid indicative of what the property is worth on that [effective] date? Can your seller accept market value? If not, why not?
Is that the reason you have to reserve the right to not accept reality? You’re not adequately marketing the auction? As we’ve suggested, your secret reserve and/or seller confirmation auctions tend to deter bidders. https://mikebrandlyauctioneer.wordpress.com/2020/10/05/youre-not-marketing-your-auction/.
You don’t believe that? So, two Nobel Prize winners conclude that more disclosure increases participation in auctions, but you know more than they do? https://mikebrandlyauctioneer.wordpress.com/2023/11/24/auctioneers-cant-wont-believe-it/.
I would offer sellers this advice:
If you are looking for an auctioneer, find one who believes in the process — and has confidence his or her marketing will result in market value.
If you — on the other hand — are told you have to protect your property with “seller confirmation” or a “secret reserve” then maybe your auctioneer doesn’t believe it … and you shouldn’t either.
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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