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man-1405712_1920Most all auctioneers know how to bid call — talk fast — communicating with an auction crowd the bid that is present, and the next bid that is desired.

However, it seems some auctioneers don’t know much of what legally is going on when they bid call.

Here, we present the legal mechanics of sort, that goes on when an auctioneer is bid calling at an auction, dispelling the notion that bid calling is just numbers rolling through the air … https://mikebrandlyauctioneer.wordpress.com/2014/08/11/bid-calling-is-just-numbers/

    1. Auctions are by default with reserve (except in Louisiana where they are by default absolute) and are as such unless explicitly noted as without reserve (absolute.)
    2. When the auctioneer opens an absolute auction, he contracts with the registered bidders that he promises to sell the subject property to the highest bidder via a collateral contract.
    3. When the auctioneer opens a with reserve auction, the only assurance to the registered bidders is that the subject property might — or might not — sell to the highest bidder.
    4. Auctioneers invite bidders to make offers. Bidders make offers to the seller via the auctioneer.
    5. Once a bid (offer) from a bidder is accepted by an auctioneer, there is a contract formed between that bidder and the seller.
    6. In an absolute auction, this contract (referenced in #5 above) can be voided by a higher bid or the bidder retracting his bid.
    7. In a with reserve auction, this contract (referenced in #5 above) can be voided by a higher bid, the bidder retracting his bid or the seller withdrawing the property.
    8. If the contract (referenced in #5 above) remains without a higher bid, bidder retraction and seller withdrawal, it is firmed (Sold!) without these contingencies in a sales (purchase) contract between the buyer and seller.

Other material issues accompany this aforementioned “typical” flow. For instance:

    1. In an absolute auction, the auctioneer/seller can withdraw the property before it is “put up” for bid, and also if no bid is received within a reasonable time after being put up for bid.
    2. In a with reserve auction, the auctioneer/seller can withdraw the property anytime before the formation of the sales (purchase) contract between the buyer and seller.
    3. In any auction, if a bidder retracts his bid before the formation of the sales (purchase) contract, there are no prior bids revived. Essentially, upon retraction, the auction for that particular property starts over.
    4. In any auction, if a bid comes in “while the hammer is falling in acceptance of a prior bid” the auctioneer may (or may not) reopen the bidding and continue to take further bids.
    5. In an absolute auction, the seller can only place a bid if the auction is a forced sale — where the property is selling without the consent/direction of the seller.
    6. In a with reserve auction, the seller may place a bid, but if that right to bid is not reserved (disclosed to the other bidders,) buyers have recourse including taking property at the “last good faith bid” or voiding their purchase.
    7. In any auction, the auctioneer may place a bid with the genuine intent to purchase if authorized by the seller and state/federal law. Further in a with reserve auction (referenced in #14 above) the auctioneer may bid for the seller.

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.