absolute, auction, auctioneer, auctioneers, auctions, creditability, disappointment, disenfranchised, expertise, insights, market value, minimum bid, no-sale, right to accept or reject, seller expectations, what it is worth, Will McLemore, with reserve, without reserve
Will McLemore wrote on his blog about how to erode the credibility of real estate auctioneers with no-sales. You can read his blog here: http://www.onebrickatatime.net/?p=78
I could not agree more. Want the public to distance themselves from auctions — just no-sale enough items, real property or personal property, and they will find other ways to purchase what they desire.
Why wouldn’t they remain auction advocates in light of no-sale, after no-sale, after no-sale? Let’s try an analogy; you go to a certain restaurant, and get bad service. Well, we all get bad service once in a while, so you give this restaurant another chance, and you get bad service a second time. A third trip results in the same bad service, and you are very likely to never visit that restaurant again, right?
In order for anyone to attend and participate in a real property auction, there are several steps: Preview the property, check on financing, inspections, title work, discuss with family and friends, secure needed deposit and/or needed financial documents in order to bid, attend the auction, find a place to park, calm your nerves, and ultimately raise your bid card … but ultimately, the seller is not willing to accept your high bid and therefore we have a no-sale. How likely is someone put through these arduous steps to repeat them again, and again, and again?
As Will McLemore alludes in his blog, it may be the fault of the auctioneer as much or more than the seller for the no-sale at auction. Auctioneers owe their clients insights and expertise, and that includes advising their client that all the client can expect is market value on that day — no more, no less. Sellers with inflated expectations are not really good candidates for auction marketing, and probably not good candidates to sell under any method, auction or otherwise.
Auctioneers who take on real property auctions, or personal property auctions, with reserve amounts the property must attain (and particularly amounts in excess of market value) jeopardize the reputation of all auctioneers and the auction industry. Bidders at any auction expect to buy for their price, and when their bids don’t meet or exceed seller’s reserves or minimums, bidders are understandably disappointed, and disenfranchised. As Will notes, bidders don’t think of an auction disappointment in terms of that auctioneer, but more so a disappointment in the entire auction process.
I’m a strong advocate for absolute (without reserve) auctions, because I believe those auctions attract far larger bidder interest, and therefore higher prices. Yet, an absolute auction is not the only way bidder interest can swell. I’ve wrote about absolute auctions twice before:
In a with reserve auction, a seller’s minimum bid can be conservative in nature, just to protect against selling below a lien amount, or other obligation, and yet attract interest because it is below what most consider market value. Or, a seller could maintain their right to accept or reject the highest bid, but understand well that if a large crowd is in attendance, and bidding is open, fair, and unimpeded, that the final high bid is likely what the property is worth, and should be accepted.
Every time a restaurant provides good service, they can rightly expect return business. But, provide bad service, and return business will suffer. No different in the auction business … when items sell, auctioneers can expect both buyers and sellers to return; when it doesn’t sell at auction, auctioneers are right to expect those buyers and sellers to shop elsewhere next time. And, that next time, they may avoid auctions altogether.
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.facebook.com/mbauctioneer. He is Executive Director of The Ohio Auction School.