Auctions involve bidders. One bidder bids $500,000 and another bids $525,000 and so forth until a high bidder is deemed as such and the property is, “Sold!”
Occasionally, a bidder may want to know who the “other” bidder is … in other words, “Who is bidding against me?” One question we take a look at today involves if any bidder is entitled to know the identity of any other bidder?
Generally, no bidder is entitled to know the identity of any other bidder. However, that really isn’t the heart of this matter. Maybe a better question involves why a bidder would demand to know who any of the other bidders are?
Other than not wanting to (or wanting to) bid against someone specifically, the answer to this question may involve distrust in the auction process — it’s equally likely a bidder wanting to know who is bidding against him is wondering if anyone is bidding against him. And why would a bidder wonder that?
Unfortunately, sometimes there isn’t anyone else bidding against him which leads to distrust in the auction process. It’s not difficult to find an auctioneer any day in the United States proclaiming, for example, he has $5,000 and wants $6,000 but moments later has $2,500 and wants $3,000. So who was this original $5,000 bidder?
And I’ve seen auctioneers suggest they have $5,000 and a bidder bids $6,000 and then the auctioneer says he has $7,000 and wants $8,000 … only to “back up” and say that this [only] legitimate bidder is again [still] “in” at $6,000 largely because he wouldn’t bid $8,000.
I’ve been involved as an expert witness numerous times where a dismayed buyer is seeking compensation because he feels his high bid was inflated with fictitious bids, and even one time by a bidder who claimed he lost out on property when fictitious bids were placed allowing the seller to retain title.
Live auctions provide an opportunity for bidders to see each other … while online auctions can easily obscure bidder identities. As such, it does appear fictitious bidding is more prevalent online than live.
Bidders do sometimes want to know who is bidding against them — but they are not entitled to such information. If there was less fictitious bidding, bidder confidence would increase where the only reason to ask, “Who is the other bidder?” would be because a bidder wants (or doesn’t want) to bid against certain other bidders.
Lastly, a bidder consciously and intentionally not bidding against certain other bidders is likely violating the Sherman Antitrust Act as such is bid suppression causing injury to sellers and the overall auction market. We discussed that issue here: https://mikebrandlyauctioneer.wordpress.com/2011/07/03/bid-suppression-at-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.