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Online-only auctions are different that simulcast auctions. In an online-only auction, most keep the “highest maximum bidder” as the high bidder until his maximum bid is exceeded; eBay works this way.

For example, we have Bidder A and Bidder B. Bidder A submits a $750 maximum bid on eBay and his high bid is at $5 … assuming $5 increments for simplicity here’s how this bidding might proceed:

  1. Bidder B bids $10 and the platform puts Bidder B in at $10 and the platform bids for Bidder A to $15 and tells Bidder B he has to bid more (maybe 20)
  2. Bidder B bids $50 and the platform puts Bidder B in at $50 and the platform bids for Bidder A to $55 and tells Bidder B he has to bid more (maybe $60)
  3. Bidder B bids $75 and the platform puts Bidder B in at $75 and the platform bids for Bidder A to $80 and tells Bidder B he has to bid more (maybe $85)
  4. Bidder B bids $100 and the platform puts Bidder B in at $100 and the platform bids for Bidder A to $105 and tells Bidder B he has to bid more (maybe $110)
  5. Bidder B bids $200 and the platform puts Bidder B in at $200 and the platform bids for Bidder A to $205 and tells Bidder B he has to bid more (maybe $210)
  6. Bidder B bids $500 and the platform puts Bidder B in at $500 and the platform bids for Bidder A to $505 and tells Bidder B he has to bid more (maybe $510)
  7. Bidder B bids $750 and platform puts Bidder A in at $750 and the platform tells Bidder B he has to bid more (maybe $755)
  8. Bidder B bids $800 and platform puts Bidder B in at $755 and the platform tells Bidder A he has been outbid …

In other words, the online-only auction platform keeps our Bidder A in as the high bidder (not the owner but rather with “equity”) until he wins or is outbid thus losing his equity.

In a simulcast auction, there are live bidders and online bidders and they bid against each other. This is distinctly different than an online-only auction as it is by definition not “online-only.” In this type of format, the high online bidder bids against the other bidders at the live auction as if he’s standing there bidding.

Let’s go through our above example again, but this time Bidder B is a live bidder with Bidder A submitting a $750 maximum bid and his high bid is at $5:

  1. Bidder B bids $10 and the platform puts Bidder B in at $10 and the platform bids for Bidder A to $15 and tells Bidder B he has to bid more (maybe 20)
  2. Bidder B bids $50 and the platform puts Bidder B in at $50 and the platform bids for Bidder A to $55 and tells Bidder B he has to bid more (maybe $60)
  3. Bidder B bids $75 and the platform puts Bidder B in at $75 and the platform bids for Bidder A to $80 and tells Bidder B he has to bid more (maybe $85)
  4. Bidder B bids $100 and the platform puts Bidder B in at $100 and the platform bids for Bidder A to $105 and tells Bidder B he has to bid more (maybe $110)
  5. Bidder B bids $200 and the platform puts Bidder B in at $200 and the platform bids for Bidder A to $205 and tells Bidder B he has to bid more (maybe $210)
  6. Bidder B bids $500 and the platform puts Bidder B in at $500 and the platform bids for Bidder A to $505 and tells Bidder B he has to bid more (maybe $510)
  7. Bidder B bids $750 and the platform puts Bidder B in at $750 and the platform tells Bidder A he has been outbid …

We have highlighted the material differences in the above two scenarios. As can be seen, Bidder A’s position at $750 is “protected” in the online-only auction. In a simulcast auction, the live Bidder B assumes Bidder A’s position at $750 as his bid has been offered and accepted before Bidder A’s — here Bidder A’s $750 bid is merely a “collateral offer.”

The issue with doing this any other way, for example, keeping the online bidder in as the high bidder up to (and including) $750 against a live bidder is problematic at best and certainly invites live bidders and possibly sellers to take action at worst.

Let’s say the high online bid is $500. Wouldn’t the auctioneer be inviting someone to bid $505 in our example? If a live bidder heard, “I’m at $500 and I want $505 …” and he held his bid card up signaling a $505 bid, the answer can’t be, “No, sorry I have $505 online and I want $510…” can it? Doesn’t the live bidder ask here, “Why were you asking me to bid $505?”

If alternately, an auctioneer wants to maximize the online “maximum” bid and then open the live auction, “I’m at $750 and I want $755 …” then the online bidder probably feels abused since the $750 was not his bid, but rather his maximum offer to be placed at the simulcast auction.

Or, does the auctioneer not get $755 or any further bids and then say, “Oh, okay, since the second highest online bidder was at $200, this online bidder wins at $205?” Can you imagine the reaction in the live crowd, especially from the bidders willing to give more than $205 …? Can you imagine a seller’s reaction?

The intrinsic difference online versus live in this regard is online bidders see the current bid (the “have”) and then sometimes “the want” displayed on the screen and sometimes not. Live bidders see and hear both and they’ve been seeing and hearing both for thousands of years …

Nevertheless, these online bidders know (eBay has taught them — with “automatic” bids and the terms saying “If two people bid the same amount, the first bid has priority.”) that if they bid the same as — or higher than — the current bid, they might immediately be outbid by the same or higher maximum bid from some other online bidder.

Live bidders on the other hand hear “the have” and “the want” and if they bid “the want,” they expect (and deserve) to be the high bidder at that moment. If our industry starts to modify the live auction to accommodate the online bidding platform suggesting we can invite bidders to bid a certain amount, but then won’t accept that bid … we have no business doing a simulcast 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.