Sometimes a particular writing really gets my attention; thanks to my friend Yvette VanDerBrink for saying it.
Indeed, shouldn’t an auction be representative of the market, rather than used to test the market?
What do we mean by that? There are only two types of auctions in the United States: With reserve and without reserve. In the with reserve, the message is, “We might sell it,” while the message in a without reserve auction is, “We will sell it.”
As Yvette noted above, all her auctions are without reserve. As such, no minimum bids, no seller confirming — or not — the high bid, no right of withdrawal after a bid is received (within a reasonable time,) generally no bidding without the genuine intent to purchase …
We previously wrote about the two types of auctions here: https://mikebrandlyauctioneer.wordpress.com/2009/11/15/different-types-of-auctions/
We previously wrote about the impact of the seller confirmation auctions: https://mikebrandlyauctioneer.wordpress.com/2011/10/30/has-the-reserve-confirmation-system-decreased-the-buyer-pool/
Why would an auctioneer only conduct without reserve auctions? Why would sellers want their property sold without reserve? Because without those reserves, there is heightened bidder participation, and thus higher prices — seller receives more in net proceeds, and the auctioneer makes more commission — a win-win.
As well, in without reserve auctions, bidders and buyers acquire respect for the auction process. They participate in the auction, bid on property, and if they are the high bidder, they become the new owner. Not, participate in the auction, bid on property, and then if the high bidder, maybe become the new owner.
Seemingly, many think with reserve auctions are better for the seller. The misconception seems to be that with seller protections such as a reserve amount, the better it is for the seller. In fact, reserves tend to dampen bidding and only protect the seller from higher prices.
Ask about any auctioneer who conducts both with reserve and without reserve auctions — and ask which one he believes improves the seller’s position more. I can tell you of the auctioneers I’ve talked with who do both, they all say without reserve auctions better serve the seller’s bottom line.
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.