This was no doubt in regard to a live auction where an auctioneer can assume nobody bids just once. In other words, if he bids $5,000, he’ll certainly bid $5,500.
But bidders cannot bid against themselves without their consent. So other than suggesting, “You’re on at $5,000, would you like to raise your own bid to $5,500?” an auctioneer could say, “I’ve got you at $5,000, $5,250, now you can bid $5,500.
This $5,000, $5,250, now $5,500 technique suggests to the $5,000 bidder that someone else has bid $5,250, so he must bid $5,500 to be in contract again. Yet, there is no $5,250 bidder.
This “Nobody bids just once …” theory is that nobody would bid $5,000 and not bid $5,500 subsequent. Makes me wonder if there is a like theory that nobody bids just twice? Just three times?
We discussed running the bid several years ago here: https://mikebrandlyauctioneer.wordpress.com/2010/02/07/unethical-bid-calling-4-run-run-run/
Seemingly intrinsic to this aforementioned theory is the accompanying “I’ve got $5,000, $5,250, now you can bid $5,500 … oh wait, I have you at $5,000,” when this bidder does indeed bid just once.
This $5,250 bidder in our example: Is it a bid on behalf of the auctioneer? Is it a bid on behalf of the seller? Does it constitute a fictitious bid? Not surprisingly, it’s really not defined that well.
Bidding for the seller requires a “with reserve” auction and sufficient disclosure or a forced sale. Bidding for the auctioneer typically requires disclosure. On the other hand, bidding in a fictitious manner is already defined as illegal by the Supreme Court of the United States per Veazie v. Williams, 49 U.S. 8 How. 134 134 (1850).
Nobody bids just once? “Nobody” might be a bit of an overreach, but there is evidence that rarely do bidders only bid once and then necessarily not bid again. If the bid subsequent to their initial bid is genuine, that second bid of theirs is acceptable — and certainly preferred by the seller/auctioneer.
However, if that bid subsequent turns out to be fictitious, it constitutes a bid in bad faith, and in the United States, the buyer has recourse including voiding the sale or taking the property at the last good faith bid. And for auctioneers who don’t believe a buyer would take such action, litigation has been successfully pursued numerous times.
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 Distinguished Adjunct Faculty at Hondros College of Business, Executive Director of The Ohio Auction School and Faculty at the Certified Auctioneers Institute held at Indiana University.