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A recent auction attendee (we’ll call him James) is also an attorney. He called me once he arrived to an auction, asking me about what he deemed, “contrary terms and conditions.”

This auction James was attending was advertised as “absolute” meaning that all property would sell to the highest bidder, with no minimum bids, nor other reserves.

Yet, this same auction noted that there would be “minimum increments” the auctioneer would accept, dependent upon the bid amount, and per a published document, made available to all bidders.

    Range Minimum Range Maximum Increment

    $1,000.00 $2,000.00 $50.00
    $2,000.00 $5,000.00 $100.00
    $5,000.00 $10,000.00 $250.00
    $10,000.00 $50,000.00 $500.00
    $50,000.00 $100,000.00 $1,000.00
    $100,000.00 $250,000.00 $2,500.00
    $250,000.00 $500,000.00 $5,000.00
    $500,000.00 $1,500,000.00 $25,000.00
    $1,500,000.00 $1,500,000.00+ $10,000.00

boatauctionSeveral of the items James was interested in were in the $50,000 – $150,000 range, so it appeared to him that he would have to bid somewhere between $1,000 and $2,500 more than the current bidder to become the high bidder.

While James was disappointed about how much more he would have to bid, he did remark, “Well, at least those other guys will have to bid $1,000 or $2,500 more to outbid me!”

Yet, James’ central question on the phone with me involved if an absolute auction could have minimum increments. I told James it could not.

A minimum increment is a limiting condition which in essence dictates a minimum bid (other than merely higher than the previous bid) — something an absolute auction cannot have.

If the high bid on a particular boat was $75,000, James would be forced to bid at least $76,000 in order to become the high bidder. If James wished to bid $75,500, that bid would be rejected, even though it was higher than the current bid.

Absolute auctions involve selling to the highest bid, without such limiting conditions as a minimum increase of $1,000.

James’ legal training, coupled with our conversation, led him to question the auctioneer. The auctioneer said due to online bidding, and the software involved, the increments had to be set in this fashion.

In response, James pointed to the fact this was an absolute auction. “Why advertise an auction as absolute when it isn’t?” he pressed the auctioneer.

“This is an absolute auction,” the auctioneer responded and turned and walked away. James wasn’t satisfied, and the next day notified the auctioneer in writing from his office.

The letter James sent detailed the definition of “absolute” and the fact the bid increment table was in conflict with the definition of selling all property, “to the highest bidder, without reserve.” James further noted that he did not personally suffer damages in this particular auction, but he had been contacted by a bidder wishing representation.

For those in the auction business, and especially auctioneers, mixing minimum increments (with reserve auction) with an absolute (without reserve) auction is asking for problems. These problems can result in, at minimum, unhappy customers, to as serious as lawsuits, legal complaints, license discipline and monetary damages.

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.