absolute, advertising, auction, Auction Law, auctioneer, auctioneers, auctions, client, disclosure, genuine intent, intent, knowledge, market value, marketing, promotion, stunt, with reserve, without reserve
As we’ve often noted all over the United States, legally there are [only] two types of auctions: “With reserve” and “Without reserve” also known as “absolute.” We’ve also noted that perception is far more important than reality in the auction business.
Recently, an auction of the Lincoln Park Plaza (Michigan) apparently did not result in a completed sale. Adam Miller, Lincoln Park’s city management coordinator, called the auction a “stunt,” instead of referring to its legal name of “with reserve.” In his opinion auctions are either absolute or stunts? Maybe … but maybe not.
With reserve auctions should have realistic expectations. A seller could put up for auction a $1,000,000 property with a reserve of $700,000 and that might be deemed reasonable. However, if this same seller put up a $1,000,000 property with a reserve of $2,500,000, that’s really not sensible — and might be viewed solely as an event just to attract attention — a promotion — maybe a stunt?
Here’s the complete article from the News-Herald in Southgate, Michigan: http://www.thenewsherald.com/news/city-officials-upset-that-lincoln-park-plaza-auction-apparently-was/article_2be8f4f2-4b65-5fc5-b015-dbd650673c58.html
The final bid in this particular auction was $2.175 million noting that the reserve wasn’t met. Yet, apparently other listing information noted this offer was sufficient. Further, the city has been told there is a pending sale despite the auction website noting the final bid was insufficient … a messy, confusing, less-than-transparent auction at best.
Auctioneers are understandably disturbed by this headline — that any auction could be deemed a “stunt.” The headline is problematic, but the bigger issue here is some auctions are used as stunts (to attract attention) without the genuine intent to sell and/or reasonable expectations. Are such auctions stunts? In a strict sense of the word, they are … as they are merely used for other purposes than transfering title.
We would submit that auctions should be either absolute (with the genuine intent to transfer to the highest bidder regardless of price) or with reserve coupled with reasonable expectations. With reserve auctions coupled with unreasonable expectations are likely viewed as stunts — and that’s not a headline we as auctioneers are seeking.
What’s our final evaluation here? The problem isn’t that Adam Miller called this auction a “stunt.” The problem is this auction caused Adam Miller to view it as a “stunt” and thanks to Dave Herndon for reporting it. The better job we as auctioneers do in qualifying sellers and conducting straightforward, forthright, no-nonsense auctions, the less we as auctioneers will see headlines we don’t like.
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, an Instructor at the National Auctioneers Association’s Designation Academy and Faculty at the Certified Auctioneers Institute held at Indiana University.