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cornfieldDr. Mary Dewalt is retiring from her medical practice. She is 83 years old and is moving permanently to her condominium in Florida.

Mary’s family has owned 2,540 acres of farmland in southern Indiana for 135 years. The land includes four homes, nine large barns, and two 300,000 bushel grain handling systems.

Mary has contacted a local auctioneer to sell her farm at auction. The auctioneer has suggested that the land be sold by “open combination bidding” or as some call it, a “multipar,” “multi-parcel” or “multiple parcel” auction.

We wrote about a particular aspect of a multiple parcel auction (selling absolute) and a bit more on the history of these types of auctions here: https://mikebrandlyauctioneer.wordpress.com/2012/10/16/an-absolute-multiple-parcel-auction/

Today, we explore another aspect of the multiple parcel auction: The number of combinations the various parcels can be grouped. For instance, let’s say Mary and her auctioneer decide it’s best to divide the 2,540 acres into three parcels: Parcel #1 = 1,020 acres, Parcel #2 = 540 acres and Parcel #3 = 980 acres.

Given that bidders may purchase these parcels in any combination, they could be sold five different ways:

      1: (1+2+3)

        (All 2,540 acres to one buyer)

      2: (1) (2+3)

        (1,020 acres to one buyer, and 1,520 acres to another buyer)

      3: (2) (1+3)

        (540 acres to one buyer and 2,000 acres to another buyer)

      4: (3) (1+2)

        (980 acres to one buyer and 1,560 acres to another buyer)

      5: (1) (2) (3)

        (All three parcels to three different buyers)

For those interested in the mathematical background, the F(3) = 5 is defined as a Bell Number which is the sum of Stirling numbers of the second kind:bell

The table below shows the Bell numbers for any number of parcels from 1 to 25. Clearly, some sort of computer/software is required for any auctioneer selling over four parcels in an open combination bidding format.

Number of parcels Number of combinations
1 1
2 2
3 5
4 15
5 52
6 203
7 877
8 4,140
9 21,147
10 115,975
11 678,570
12 4,213,597
13 27,644,437
14 190,899,322
15 1,382,958.545
16 10,480,142,147
17 82,864,869,804
18 682,076,806,159
19 5,832,742,205,057
20 51,724,158,235,372
21 474,869,816,156,751
22 4,506,715,738,447,323
23 44,152,005,855,084,346
24 445,958,869,294,805,289
25 4,638,590,332,229,999,353

Fortunately for auctioneers, there exists computer software which can handle virtually any number of parcels in order to offer all bidders their precise choice of parcels, and maximize the seller’s position.

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. He serves as Adjunct Faculty at Columbus State Community College, Executive Director of The Ohio Auction School and Faculty at the Certified Auctioneers Institute held at Indiana University.