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A painting is selling at auction on Friday, and Wednesday Mr. Georges Wyatt visits the auction house to preview. The painting is exactly what he’s been looking for — for almost 10 years — and he’s anxious to own it and house it in his art gallery in Spain.
Friday finally arrives, and the subject painting comes up for auction. Mr. Wyatt opens the bid at $100,000 and bidding moves swiftly just past one-half million to $525,000. Mr. Wyatt bids $550,000 and there are no other bids. Mr. Wyatt purchases his long-desired painting for $550,000.
The painting is shipped to Spain and Mr. Wyatt’s family and friends come by to admire the work. Several ask Mr. Wyatt what he paid for the painting, to which he replies,
- “That’s between me and ‘her’ and not something that is public information.”
A few weeks pass, and Mr. Wyatt’s neighbor, Miss Darrett comes over to visit with Mr. Wyatt. Miss Darrett has noted on the painting’s auctioneer’s website that it sold for $550,000 to a collector in Spain and she is impatient to inform Georges that despite his wishes, his purchase is public information and she’s quite informed as to the facts.
Upon hearing Miss Darrett’s revelation, Mr. Wyatt is appalled that his purchase is noted on the auctioneer’s website, and that his whereabouts are noted, in part, as being in Spain. He understood, or had at least assumed, that his purchase price and identity would be completely confidential.
This brings us to our question here:
- What are the issues if the “buyer wants his identity and sales price kept confidential at auction?”
There are two parties to a sale at auction — the buyer and the seller. Additionally, the seller has hired an auctioneer to represent his interests, and the auctioneer would be privy to almost all information the seller would have concerning the painting.
In our example, it appears we have two sides to this story. The auctioneer, with the permission of the seller, has publicized both the painting’s final sale price, and a hint as to who the buyer was. While the auctioneer is anxious to publicize the results to garner future business, the buyer is equally anxious to keep that information away from the public.
The argument from the auctioneer (and seller’s) side is basically that the auction is an open event, where besides the auctioneer, news outlets, reporters, spectators and anyone else could take information and publish it later. For that matter, the auction was held live, and the auctioneer used a microphone to broadcast the bidding — people across the street from the auction house heard, “Sold for $550,000.”
The argument from the buyer’s perspective is that this is a purchase he made between just the seller (via the auctioneer) and he did not authorized his name, or the sales price to be distributed other than what was necessary at the auction. Mr. Wyatt didn’t sign away rights to allow his name, home country or other information to be telecast.
Why might the buyer want the sales price and his identity to be kept confidential? For one, if Mr. Wyatt wishes to resell this painting, he would likely not want prospective buyers to know his investment amount. Secondly, with a painting of this value, he doesn’t want people knowing he has it, for fear of criminal activity.
Why might the auctioneer and even the seller want the sales price broadcast? As we mentioned, the auctioneer is hoping by telecasting the results, others with similar paintings will contact him for auction services. Too, generally the auctioneer is proud of his accomplishment, and just wants to tell others of his good fortune.
Lacking any agreement between the auctioneer, seller and buyer prior to the auction, the results do appear to be public by their very nature — auctions are generally public events, with prices and bidders being identified out in the open — certainly not typically behind closed doors.
However, if a bidder (buyer) wanted his purchase price and/or identity kept confidential, there are provisions that can be put in place prior to the auction.
For instance, our buyer here, Mr. Wyatt, can ask that the sales price and his identity be kept confidential as a contingency for him participating. It could be because he intents to sell the painting, or only because he doesn’t want nosy Miss Darrett in his business. Regardless, in that case, the seller would have to decide if the desire to disclose this information outweighs the bidders participation.
In other scenarios, sellers may sense that many bidders will be interested in keeping purchase prices and/or their identities confidential, other than for the announcements at the auction. In cases such as this, a seller might extent to all bidders that he, nor the auctioneer, will publicize results or post on websites realized prices or buyer information.
Finally, could a buyer unilaterally disguise his identity at an auction? Certainly so, as he could send someone else to bid for him by proxy, bid by phone, or otherwise by absentee in order to help conceal his identity.
We would suggest sale prices and buyer identities are quite public information unless the parties to the auction agree in advance to limit the distribution or broadcasting of those details, or the buyer takes steps unilaterally to conceal his identity.
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.