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We recently wrote twice about auctioneers setting the bid in:
One auctioneer in our discussion stated: “I had a farm with a minimum bid of $500,000 so I stood up and said ‘I have $500,000 who will bid …'” I told him that in such a situation, the minimum bid was maybe $510,000, and not $500,000.
He remarked, “No, the minimum bid was $500,000 …” but I would submit as he bid $500,000 to “start the bid” nobody else (no genuine bidder) can bid $500,000, so the minimum bid had been altered. Minimum bids are minimum bids — particularly if court-ordered and/or seller directed.
A related situation several years ago got a probate court’s attention when the auction was ordered sold for no less than 2/3 of the $69,500 appraised value. The auctioneer rounded the minimum bid to $46,500 and received no bid. Upon reporting to the court, the judge said, “Did anyone offer the minimum bid? — I’m curious since you never apparently asked that question.”
A court-ordered 2/3 (two-thirds) minimum bid is not uncommon in the United States; I’ve reminded auction school students for decades that 2/3 is not 66% nor 67% — but 66.67 (rounded to two decimal places.) As such, it’s much better to keep this factor as a fraction. Two-thirds of $69,500 is precisely $69,500 times 2 divided by 3, or $46,333.33.
If you consider my treatise here peculiar, I do get my appreciation for mathematics honestly as I was always proficient in mathematics in school, majored in Mathematics at The Ohio State University, and have published some mathematical works concerning “Whist Tournament Arrangements” (the field of “Combinatorics”) and the like post-college.
Nonetheless, obviously, some minimum bids are immaterial or academic. If an auctioneer is selling $100 bills with a minimum bid of $45, it’s quite likely a given someone will bid $50 — in other words, “it’s not where you start …” that matters. However not following a court-order or a legal seller direction is always material.
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.