Larry A. McCool, CAI of Madison, Mississippi was an well-known auctioneer, serving the National Auctioneers Association for many years and as President in 2003-04.
I recall Larry telling me and many others on several occasions that while people attend auctions for the chance to get a deal, that “Auctions are an illusion.”
The thought was that while the attraction to an auction was “to get a deal,” the buyers always paid the highest prices, and more than anyone else.
Many view auctions as good for buyers, but Larry’s thought was, “that’s exactly the illusion,” and it’s actually better for the sellers.
Technically speaking, an illusion is a distortion of the senses, revealing how the brain normally organizes and interprets sensory stimulation. It seems this may be applicable here if what Larry was suggesting is the brain normally thinks of an auction as one way, when it it actually another way.
Can a buyer “get a deal” at an auction? If we were to ask auction buyers, it would be likely that many would say that they indeed got deals at auction. For example, could a buyer buy a pair of sterling silver candlesticks for $750 at auction, and resell them a week later for $1,000? Sure … happens all the time.
However, if an auction is well-advertised and well-attended are there deals to be had? Possibly, but more-so the result might likely be that the seller got all he or she could get on that day, at that time, and the buyers paid the most anyone was willing to pay; in other words, no deals?
Buyers do buy for lots of reasons. Some buy to resell, while others buy to use, cherish, display or maybe even give away to someone else. In other words, while it may be fair to say that bidders are attracted to auctions for the prospect of a deal, getting a deal isn’t mandatory, and maybe sometimes not even expected.
Frank collects coins and has every Lincoln cent from 1909 to 1958 with one exception: He lacks the 1914-D Lincoln cent. Frank attends a coin auction which has two 1914-D Lincoln cents, because he thinks he might get a deal on one. Yet, Frank concedes he will pay upwards of $440 for the coin (Frank notes an XF40 condition 1914-D is about $438 at the local coin store — last time he checked.)
Frank buys the second of two 1914-D XF40 cents for $442.50.
Here is the classic case of a buyer being drawn to an auction on the prospect of a deal, but paying top dollar for his purchase.
Frank is happy with his purchase however, as he now has his complete collection and he doesn’t have to expend any further time nor effort to find this 1914-D coin. Frank even tells his neighbor he, “got a deal on an important coin today at the auction.”
As Larry would have said, that’s the illusion.
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 adjunct faculty at Columbus State Community College and is Executive Director of The Ohio Auction School.