Further, not only our own auctions, but those by many auctioneers around this country have proved time and time again that the word “absolute” invokes emotions unlike any other.
What are these emotions? Curious — hopeful — happy — that a desired real or personal property can be “mine” if I’m the high bidder. No seller bidding … no reserves … nothing stopping “me” from becoming the owner other than possibly another bidder.
So yes, a bidder is not guaranteed to become the buyer, but someone is going to be the buyer and the seller is genuinely going to sell, accepting the high bid as the sale price.
Barrett-Jackson sells most of their cars in the absolute (no reserve) format. This is what they say about that:
Barrett-Jackson’s No Reserve format is the purest form of auction and the most productive. No Reserve attracts highly motivated bidders from around the world. The level of bidding excitement is heightened by competitive bidders going toe-to-toe knowing that the vehicle is for sale. Values established over the block represent a snapshot of a “real” transparent marketplace. Barrett-Jackson’s No reserve auctions attract a large percentage of new bidders entering the collector car hobby.
Ritchie Brothers sells equipment unreserved. This is what they say about that:
Strictly unreserved auctions: no minimum bids or reserve prices. Every item is sold to the highest bidder on auction day. Sellers are forbidden by contract from bidding on their own items. That means there’s no artificial price manipulation, so you can confidently buy at fair market value.
Of course, valid questions include, “Is every seller well suited for an absolute auction?” and “Does every bidder react more positively to an absolute auction?” The answers to those questions are: “No,” and “No.” Some sellers don’t genuinely want to (and/or can’t) sell to the highest bidder, and some bidders are attracted to certain property regardless of the auction’s format.
However, I suppose it goes without saying that bidders [buyers] attend auctions to buy? While at any auction, another bidder can get in the way of that goal, bidders genuinely detest (distinguish) when the seller is the goalkeeper. The emotion following, “I was outbid” is distinctly different than the emotion after, “They didn’t sell it; it didn’t reach the reserve.”
I would submit as fact that the absolute auction format benefits sellers because when bidders [buyers] have choices, they choose auctions where the seller “is selling” over auctions where the seller is “maybe selling.” Further — for the most part — bidders have choices.
Have auctioneers/sellers abused the absolute auction format? For instance, advertising absolute but allowed the seller to bid, or with some sort of reserve? They sure have; and why would auctioneers and/or sellers do this? Because the word “absolute” attracts attention.
No, wait … that’s right … the terms “with reserve” and/or “subject to seller’s confirmation” are so seductive and attract greater attention; that’s why auctioneers/sellers routinely false-advertise absolute auctions as “with reserve” …
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, RES Auction Services and Goodwill Columbus Car Auction. He serves as Distinguished Faculty at Hondros College of Business, Executive Director of The Ohio Auction School and Faculty at the Certified Auctioneers Institute held at Indiana University.