A farmer wanted his farm “back” and attended an auction of such farm … bid once, and everyone else stood in silence, allowing him to buy the farm. Certainly good news for this farmer, but not such good news for the auctioneer’s client — the seller — nor the auctioneer.
The entire story is here: https://www.holidaysincornwall.com/farmers-stand-in-silence-at-auction-so-a-young-man-can-buy-back-his-family-farmhouse/ Comments I’ve seen generally range from “such a good thing …” to “wow, you rarely see this type of humanity …”
Our question today is how “good” is this for the seller of this farm? It’s probably not good. Sellers generally hire auctioneers to maximize proceeds from the sale of property — and necessarily not sell anything for less than market value. With other bidders openly choosing not to bid, there seems little evidence this farm sold for true market value.
It is conceivable that the seller had prior knowledge and consented to this auction with a good chance of only one bid … and if so, then it’s absolutely fine. Yet, if that was the understanding, when why didn’t the seller merely sell it himself to this buyer?
Further, it’s possible this story is just that … a story; fake news. My good friend Jason Smith wrote about this as well with his similar perspective: https://blog.dreamdirt.com/farmland-auctions/our-response-to-the-viral-story-farmers-stay-silent-during-auctions-so-young-man-can-win-the-bid-on-his-long-lost-family-farm
Most auctioneers work on a commission basis and therefore this “only one bid” would likely result in not only less net proceeds to the seller, but less profit to the auctioneer. Plus, what message does this send to other prospective sellers? I can imagine another potential auction seller saying, “What if I sold my farm at auction … could this happen to me?”
I’m as sympathetic as anyone else but my sympathy in this case extends to the buyer, seller and auctioneer — and the auction industry generally. For all the good to this particular buyer, the possible costs to the seller, auctioneer and the auction industry undoubtedly countered this isolated possible benefit.
Lastly, this is a clear “per se” violation of the Sherman Antitrust Act which prohibits (among other things) collusive practices regarded as restraint of trade — although possibly in this particular case the Federal Trade Commission may choose to not become involved. We wrote about collusion at auction here: https://mikebrandlyauctioneer.wordpress.com/2010/05/14/what-is-collusion-at-an-auction/
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.