Many say, “With online auction software, we have thousands of bidders from all over the world …” and maybe that does differentiate online auctions from non-online auctions in one respect, from a purely number-of-possible-bidders perspective.
However, somewhat interestingly, such easily allows lessening the number of bidders as well.
For instance, an online auction platform can allow the operator to select only certain bidders and/or restrict certain bidders. Such selection might include limits, and such restriction could also include parameters or complete denial of participation.
Let’s say an online auction platform allows the operator to White-list a select group of bidders, allowing only that group of people to register or Black-list a select group of bidders, denying those people from registering.
Additionally, for those bidders allowed to register, the operator could, for instance, set bid limits, for certain bidders or groups of bidders, restrict to certain payment methods, for certain bidders or groups of bidders, or restrict certain items or real property to certain bidders or groups of bidders.
Our question today is then, do we want only, “certain bidders?”
- A seller might want or need to restrict bidding to only certain bidders because of a legal requirement or other circumstance (for example, a father selling a life interest, but wanting to sell only to one of five remainder(man) interests.)
- A seller might say, “I don’t want Dale to bid at my auction — Dale and I don’t get along and I don’t want him purchasing any of my items … his money’s not good here.”
- An online auction operator might suggest, “I recommend not allowing William to bid … we’ve had a problem with him not paying for purchases in past auctions.”
- Maybe the auctioneer is good friends of a mid-century porcelain collector who hopes the other mid-century porcelain collector of these same types of items doesn’t bid? Maybe the auctioneer accepts one such bidder, and denies the other?
- Possibly the seller and/or auctioneer decide that given the various neighbor’s preferences for an only-Caucasian neighborhood, they should restrict bidding for a certain real estate auction to only whites (not tied to our previous note about white-listing?)
First, it is imperative for the auctioneer (live, online or whatever) to be mindful that the auctioneer is the agent for the seller. The seller is the principal. The principal gives legal directions to his agent, and the agent is to be loyal — and follow those directions. The agent doesn’t give directions to the principal, other than to remain in legal compliance. Otherwise, such recommendations are just that — recommendations.
If the auctioneer — online or not — is going to allow only certain bidders, or deny other bidders, or limit bidders to certain parameters, the paramount foundation for such involves five steps:
- Knowledge. The auctioneer must inform the seller of all allowances, restrictions or denials. These must be expressly disclosed to the seller so the seller has knowledge of them, presumably understanding the impact of such.
- Consent. The auctioneer must receive the seller’s consent or permission to deny or limit bidder activity. The property is the seller’s and therefore any limit to full, open access to the property must have the seller’s consent.
- Reasonable. The auctioneer and/or seller allowing, denying or limiting bidding activity must have a good reason for such. Having a good reason helps defend a potential bidder’s claim of unreasonable restrictions of denials — a common claim basis.
- Legal. If the auction involves real property, federal fair housing laws forbid discrimination based upon race, color, religion, sex, national origin, familial status and disability — at minimum. For personal property, no specific federal protections exist, but the standard remains in public perception and in the courts.
- Document. In preparation for any possible litigation or governmental inquiry, having such denials or limitations expressly documented — recorded — helps save the auctioneer and seller from liability.
Only certain bidders? Lacking the seller’s knowledge and consent, a good reason, legal standing and documentation, it’s a bad idea.
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.