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There are upwards of 2,400 auctions a day in the United States (where the seller is choosing to sell) — as we discussed in Where are the auctions?
There are also other forced sale auctions including foreclosures, repossessions and court-ordered actions (lacking the seller’s consent).
Adding forced events might up this number to well over 5,000 auctions a day in the United States.
Of these 5,000 auctions per day, how many qualify as great auctions? What do we mean by the word, “great” in regard to an auction?
If we were to ask the general public what they considered the important characteristics of a “great auction,” I think they might say some of the following:
Buyers typically look for an auction that is:
- Properly advertised and with sufficient detail including what’s selling, how to register, terms and conditions, etc.
- Accepting a variety of payment options, including cash, checks, credit cards.
- Free from reserves, minimums and seller withdrawals.
- Open for unimpeded inspection of the property selling, and reasonable preview opportunities.
- Complete with disclosure of all known material facts about what is selling.
- Absent auctioneer schemes such as running the bid, taking bids that aren’t there, and other misrepresentations.
- Easy pickup (and/or alternative arrangements) of items purchased and/or possession.
- Providing clear — or at minimum marketable — title.
Sellers typically want an auction that is:
- Resulting in the highest sale prices.
- Accommodating to their deadlines in terms of closure.
- Free from post-auction issues such as returns, non-payments and other breaches of contract.
I am going to submit here that there is a causality relationship, generally, with what buyers are looking for and what sellers receive.
If buyers are treated honestly, fairly, openly and offered the chance to buy at their price, sellers are most likely to receive the highest sale prices with less extraneous issues.
How many of the 5,000 or so auctions every day in the United States are great? My guess is less than 10%. In other words, 90% or more may violate the delicate balance of a great auction.
As a result, it may be reasonable to conclude that over 90% of items offered for sale at auction every day in the United States do not sell for the highest sale price — or don’t sell at all — and therefore these are not great auctions.
It seems clear that if an auction lacks one or more of the important issues for buyers, less buyers will participate. As such, less bidding means less money for the seller, which then causes a detrimental effect on the seller’s position; even if the buyer side is altered only slightly, the seller’s position is adjusted accordingly.
What does all this mean? It means that auctioneers must be judicious to attract as many buyers as they can to an auction, to therefore satisfy their seller’s goals. It also means that auctioneers must be conscious of the delicate balance of a great auction, as even a slight tweaking of the buyers/seller relationship will have material consequences.
Lastly, it’s certain that perception is at least as important as reality. For instance, buyers with the perception of a lack of disclosure or honesty are just as likely not to participate as buyers with actual knowledge of such. This further reinforces our premise here that this great auction balance is indeed delicate.
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.