auction, auctioneer, auctioneers, auctions, distorted, Holston v Pennington, illegal, Jamie Bussio, Kurt Kiefer, Lawrence E. Sherman, misleading, National Auctioneers Association, Supreme Court of Virginia, UCC 2-328, unethical, with reserve, without reserve
Quite simply, auctioneers use the word “Absolute” to attract maximum buyer interest.
Yet, it is nothing less than misrepresentation when the word, “Absolute” is used in combination with some sort of minimum bid or reserve.
In the United States, there are two types of auctions per state law in 49 of the 50 states. We wrote about this here: Different Types of Auctions where we noted auctions are either “with reserve” or “without reserve.”
Some have argued that since neither type is defined as an “Absolute” auction, auctioneers are free to use the word as they please. Yet, this isn’t true. The prevailing case law on this subject comes from the Supreme Court of Virginia in the case of Holston v Pennington 225 Va. 551, 304 S.E. 2d 287 (1983):
- “The term ‘absolute auction’ is equivalent to the term ‘auction without reserve,’ a well-recognized term of art in the law of sales. It means that the property will actually be sold to the highest bidder at that time and place, that no minimum price will limit the bids, that the owner may not withdraw the property from sale after the first bid has been received, that the owner may not reject any bid or all bids, and that the owner may not nullify the sale by bidding himself or through an agent.”
Advertising an auction as the above picture denotes says to the public:
- “We’re selling this property to the highest bidder, without any minimum bid nor reserve of any kind — so long as the final bid is $90,000 or more.”
Further, some have argued that there are more than two types of auctions. We noted such an argument in a paper titled Real estate auctions: The new method to sell real estate where the authors, Lawrence E. Sherman and Jamie Bussio stated that there was a type of auction as such:
- Stated Minimum Bid Auction (also called Absolute With a Minimum Bid). Properties at this auction will be sold only if the prices bid are higher than the minimum bid specified by the owner. It is not necessary for the owner to notify the bidders of the required minimum. If bidding fails to reach the minimum, sellers often approach the highest bidder and offer the property at the minimum bid price.
Yet, the National Auctioneers Association has stated publically:
- An Absolute Auction is an auction where the property is sold to the highest qualified bidder with no limiting conditions or amount. The seller may not bid personally or through an agent. Also known as an auction without reserve.
It appears that there may never be an end to this type of misrepresentation until the auctioneering community and/or the general public stand up to this type of distorted, unethical, misleading (and in many states, illegal) advertising. For those auctioneers using the word, “Absolute” properly, that time cannot come soon enough.
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.