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refsFirst, let’s define the term “customer.”

It is not the same as “client” as the client has hired us to perform duties on their behalf.

Customers, on the other hand, are typically considered buyers, who attend our auctions to purchase from our clients.

Customers are owed basically three things:

    1. Honesty
    2. Integrity
    3. Fair Dealing

Let’s look at these three in a bit of detail, with a short example:

Honesty is being honest. In other words, not lying to them, but rather telling them the truth. For example, “Does this car run?” would be a fair question a buyer (customer) may have. If the car doen’t run, then an honest answer would have to be “No, the car doesn’t run.”

Integrity is more or less taking honesty a step further, and necessitating that the auctioneer act in an ethical fashion with the customer. For example, if another customer noted that the aforementioned car, “Would be a perfect car for her daughter,” and the car did not run, nor had sound brakes, it would be the auctioneer’s responsibility to tell this customer of the problems in order to maintain integrity.

Fair dealing takes honesty and integrity a step further, and requires the auctioneer to disclose known material facts about property being sold, and other information that would be prudently considered material for a typical buyer. For example, this same aforementioned car at auction that didn’t run, and with bad brakes, would require the auctioneer to announce to all customers that, “This car doesn’t run, and the brakes are bad.”

Many times auctioneers fail to perform their duties to customers, and figuratively “hide” behind the well-known axiom of “as-is and where-is, with no guarantees or warranties.” This brings up two important legal precedents:

  1. If an auctioneer sells property “as-is” but also notes that it “is walnut,” or “has 4 bedrooms” or “is a good running car,” then that particular property isn’t selling “as-is” anymore, but rather with an expressed warranty. This can lead to breach of contract lawsuits filed against the seller and/or auctioneer if indeed the expressed warranty is inaccurate.
  2. If the auctioneer sells property “as-is” and is found to have avoided reasonable steps to investigate the condition of the property selling, courts have ruled that this is legal harm to the customer, as customers have the right to depend upon reasonable inspection by the seller’s agent.

Lastly, does an auctioneer have to disclose information regarding all facets of property he is selling? Does he have to say, for example, “this car has 4 tires,” or “this chair is blue?” The answer is — not necessarily — because these are “patent issues,” which are open and obvious to customers. Different from “latent” issues which are not open nor obvious to customers.

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.