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Seated with the niece and nephew of an elderly woman, I was asked yesterday concerning her remaining personal property, “Where do you start the bid on these items?” I was not surprised at the question, as auctioneers get this question frequently, but both this niece and nephew had experience attending auctions, and still wondered where I, as the auctioneer, would be starting the bid.

Auctioneers generally don’t start the bid.

What happens at a typical auction is the auctioneer suggests a price to the audience (legally, inviting a bidder to make that offer) and then a bidder bids (makes an offer) and the auctioneer accepts the offer (I have $500), and invites a higher offer (and I’d like $525).

The issue with an auctioneer actually starting the bid is that then the invitation to bid is instead an actual bid. If an auctioneer says, “I’d like $500” that is much different than “I have $500.” Although almost all states allow the auctioneer to bid (except Pennsylvania, for one), if the auctioneer actually started the bid, as in “I have $500,” and then didn’t receive any more bids, the items would be sold to the auctioneer.

We previously discussed Unethical bid calling #3, He loves me; he loves me not where auctioneers do actually start the bid, but bid for the most part disingenuously, with the intention to retract their bid if nobody bids higher.

What auctioneers do in regard to suggesting a price is really no different than what millions of people do when they list their real property for sale with a real estate broker. The list price is not actually an offer, but an invitation for potential buyers to offer that price. We know the list price is not an offer in itself because then a buyer could simply accept the offer (accept the list price), and a contract would be created.

It is important for auctioneers to suggest a reasonably accurate price when bid calling. If a stack tool box is generally worth $150 and the auctioneer starts out by asking, “Who’ll give me $10 for it” the audience may conclude something is wrong with the tool box. As well, if the auctioneer starts out by asking, “Who’ll give me $500 for it,” then auctioneer runs the risk of being unreliable –if he asks $50 on the next item, is it really worth only $15?

The niece and nephew also asked me, “When would you be determining the starting bids?” meaning, “When would I be deciding what I would ask for the 100’s of items in their aunt’s home?” While most auctioneers do some homework, and especially regarding unusual or peculiar items, for the most part the “opening suggestion” is done on the fly. In other words, auctioneers don’t know much ahead of time what they will suggest as an opening bid, and that calculation is done only seconds before it is announced.

Of course, if an auctioneer only had experience selling cars, and then was asked to conduct a gun auction, then he would be advised to become familiar with the gun values so he could suggest reasonable opening bids. Some auctioneers use a catalog with notes for their use on what to suggest as opening bids.

The opening suggested bid is very important for a successful auction, but it is no more than a suggestion. By suggesting, the auctioneer plants a seed in the minds of the bidders that this item up for auction is worth about that amount. Bidders will learn to rely on the auctioneer’s opening suggestion and sometimes bid accordingly for the benefit of the seller.

Lastly, a reasonable opening suggested bid saves time. If that tool box is worth about $150, then asking for $1,000, $500, $200 … (or asking $10) just wastes time as well as teaches the bidders that the opening suggestions are undependable.

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.