In January, 2010 we wrote about auctioneers selling “High bidder gets choice …” In this auction format, the high bidder may choose one or more of the items offered for choice, each at the high bid price.
For instance, if an auctioneer is selling choice of twelve flower arrangements, and the high bid is $12.50, the high bidder may take one, two, or however many (of his choice) up to 12 at $12.50 each.
Our question today is “And then what?” Let’s say that our high bidder takes nine of the twelve flower arrangements. Now there are three left. What should the auctioneer do now?
Assuming that the auctioneer desires to sell the remaining three flower arrangements, the choices at this point are:
- Sell choice again
- Sell a particular arrangement by itself
- Sell the remaining three as “3 times the money”
- Offer the backup bidder choice at $12.50
- Sell the three remaining as one lot
Given these choices, here is our view on their merits:
- Selling choice again will require more time, sacrificing long-term profit, and send a message to bidders that choice will be offered numerous times, so they may not have to be the high bidder at the first choice to get a particular arrangement.
- Selling a particular arrangement by itself is largely the same as selling choice, and the previous $12.50 bid will likely be seen as a cap for pricing.
- Selling the remaining three as “3 times the money” will likely result in a bid less than $12.50 each, and will probably not maximize price.
- Offering the backup bidder choice at $12.50 is a subject we discussed at length prior. We view this as terribly detrimental to maximizing price, and likely outside of the authority of the auctioneer’s legal duties.
- Selling the remaining three as one lot is the best choice. As the supply of flower arrangements has gone from twelve to three, and with the better arrangements likely already sold, pitting any remaining bidders against each other for a final offering will likely maximize price. Additionally, the $12.50 doesn’t act as a pricing cap, and bidding often exceeds $37.50 in this supply/demand scenario.
Would our answer be different if the high bidder only took one flower arrangement? Probably. In a case such as this, maybe choice should be offered again — however, with the caveat that this sends a message that being the high bidder isn’t as material as follow-up choices will be offered.
I have said before that, “I think selling by choice has merits, if used sparingly and properly,” and careful consideration must be given to what follows selling items by choice.
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 serves as Adjunct Faculty at Columbus State Community College and is Executive Director of The Ohio Auction School.