I’ve decided to start a series of posts on what I would characterize as creative, unethical, and probably illegal bid calling techniques I’ve witnessed over the years. While I believe most all auctioneers act in an ethical, moral and legal manner, there are some auctioneers acting the opposite, while bid calling, and it is quite concerning.
Standard bid calling in the United States involves the auctioneer suggesting a price a bidder might bid, the bidder bidding that amount, and then the auctioneer asking for a higher bid. Commonly, these two numbers (what is bid, and what is desired) are called the “have” and the “want.”
For example, an auctioneer might say, “I would like $100 for this item,” and as a bidder raises his card, the auctioneer would continue, “I have $100, and I’d like $125 …” and so forth.
However, way too many auctioneers (even if that was only 1) bid call in creative, unethical and probably illegal fashions. Here’s the one we’re discussing today:
The Drop Off
In The Drop Off technique, the auctioneer most likely has a secret reserve on an item, and doesn’t want to disclose that number to his audience. He will take the bid from a relatively low amount (compared to the reserve) and take fictitious bids all the way to just at the reserve, hoping that one or more bidders sense the related interest in the item, and bid once more (where he hopes to “drop off” the item on this bidder,) exceeding the reserve and making the sale.
For example, let’s say our auctioneer has a 1989 Pontiac Firebird with a secret reserve of $6,000. What our auctioneer will do in The Drop Off is “say” he has a bid of $1,000 and then continue, “I have $1,000 now $2,000, $2,000 thank you, and now $3,000, $3,000, $3,000 and now $4,000, and $5,000 and now $6,000, I have $6,000 … (all fictitious bids — nobody bidding and the auctioneer just making it all up) and now The Drop Off … “somebody give me $7,000, $7,000, well $6,500, $6,500, $6,500 … how about $6,250? $6,250 …
At this point there are two possible outcomes:
- There is a legitimate bid in excess of $6,000 and the car sells
- There aren’t any more bids …
If there are no more bids, the auctioneer will say, “Sold!” for $6,000 and probably announce a house number, or his own number, to give the impression the car sold for $6,000 (when it actually didn’t.)
The problems with The Drop Off include that bidders and onlookers are given the impression that the car sold; they are “told” a 1989 Pontiac Firebird of this type is worth $6,000. Too, it falsely represents that this auctioneer sold this 1989 Pontiac Firebird for $6,000, indicating his competence to provide similar service to other sellers.
As well, if our 1989 Pontiac Firebird does sell for just one more bid over the auctioneer’s false bid, then that bidder bid one more increment over what he thought was actually another bidder’s opinion of value, when in fact, there was no other legitimate bidder.
Can the seller bid? Can the seller bid against the other bidders? Yes, if the auction is a reserve auction, and the seller’s right to bid is clearly reserved (disclosed.) For auctioneers using The Drop Off technique, the disclosure is almost never heard.
Unethical bid calling? Yes. Creative? Yes. Illegal? Most likely yes from the standpoint of misrepresentation, false statements, fraudulent behavior and/or unethical practice.
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.