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auction, Auction Law, auctioneer, auctioneers, auctions, bid calling, court, fictitious bids, lawsuit, litigation, running the bid, testify
I testify in many auction-related cases across the United States — including in Ohio, Indiana, West Virginia, Illinois, Tennessee, Louisiana, New York, Texas, Oklahoma, Pennsylvania, California, Virginia, Florida and Georgia … thus far.
If there is one single consistent theme running through the minds of plaintiffs in these cases, it might be: Auctioneers “running the bids” (taking fictitious bids) makes people both distrust and detest the auction method of marketing.
Further, you might imagine that such anger causes these people to pursue damages in court, especially when the subject assets are of substantial value.
We use the term “fictitious” because in the United States, the Supreme Court of the United States has stated that auctioneers cannot take fictitious bids and bidders/buyers have recourse when they do.
Relatedly, even legal and ethical disclosed bidding for the seller in a with reserve auction is seen as abhorrent — mostly because such bidding rights are typically disclosed in the smallest of typefaces on page 39 of 42 pages of terms and conditions.
One such (former) auction bidder of considerable net worth (over 1 billion) confided in me in regard to her lawsuit that she was upset about our subject auctioneer running the bid against her, but …
Mike, I thought maybe this was the exception to the rule, so I attended another auction last week. I suspected the auctioneers there were doing the same thing, so I asked one of the women I knew working the ring if she could enlighten me.
She told me that indeed not only was the auctioneer running the bid, but that the ring persons had hand signals to alert the other ring persons to ‘yep’ to simulate a real bid if the other ring person knew their bidder would bid again … I decided then, this would be my last auction.
Of course, certainly not all auctioneers run the bid, but too many do and bidders are understandably disturbed by this practice. For instance, running the bid (taking fictitious bids) was the main cause of action in this aforementioned $20 million lawsuit in which I was asked to testify.
Auctioneers who regularly run the bid seem to hold such proficiency as a badge of honor. As such, other auctioneers are encouraged to run the bid in order to join their club — and if you don’t run the bid then you aren’t quite a professional auctioneer.
During my most recent court testimony, I was asked to demonstrate taking fictitious bids. I called bids in that fashion, and the sitting federal judge asked me, “How prevalent is this practice?” I responded that it was quite prevalent in this subject auction, and all too common otherwise in the United States.
We in the auction business are losing bidders to quicker, easier methods of purchase; we’ve also lost at least one due to her seeking more honesty, transparency and truthfulness — a lesson for all auctioneers in the United States.
Mike Brandly, Auctioneer, CAI, CAS, 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, Executive Director of The Ohio Auction School, an Instructor at the National Auctioneers Association’s Designation Academy and America’s Auction Academy. He is faculty at the Certified Auctioneers Institute held at Indiana University and is approved by the The Supreme Court of Ohio for attorney education.
Mike. I have attended many auctions in the mid west and 80% of the auctioneers say ok got 5 who bib ten ten ten who would give a dollarthen real bidding beggins. What the f___ Mike why does the auction as a put up with it I’ll tell you why because 60 % of there members do it and it’s a members club. Its only out there for the money .
Jon – while there are many who think that the calling of bids are as you say, many of your tag sales price items far exceeding the retail price – and people are happy to pay for it. Then when it is marked 75% off on the last day – do you still get the deal?
This is one of the problems that so many people have with auctions, and it’s our job as auctioneers to disclose it. In many states, the auctioneer has the authority to call a bid up to and including the reserve of the item. Make sure you check to see if your auctioneer is doing that. It is not that he is doing anything wrong under the law, but if it’s not disclosed, you may think he’s not on the level – but he is.
I can tell you that I don’t do it. I won’t go below a five dollar bill before adding stuff to it, and when all said and done – my job as the auctioneer is to be a fiduciary for both of you – the seller and the buyer – Seller wants as much as possible and the buyer wants to pay as little as possible.
Matt. Thanks for your responce. But I don’t get it regarding tag sales? They post a price a buyer desides to purchase or not . it doesn’t matter if the price is higher or lower than the market. If the seller and buyer are in mutual agreement of the price and as long as both are of legal age and agree so what.
The auctioneer saying he has a bid (when in fact he does not )that is misleading unethical and illegal and treating his customers wrong . for a auctioneer to say I have a bid 5. 10. 15 and then go back and start asking for two dollars because no one feel for his scam of I have but really didn’t thats Bad for his clint Bad for his business. And Bad for the industry and any auctioneer that doesn’t see it should get out of the business and start doing tag sales . where they set the price high or low and maybe sell it or not.
Matt I mean no disrespect but truly didn’t understand your tag sale analogy to the auctioneer that pretends to have bids.
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