Put your auction on our platform as, “We have a big mailing list and a large database of bidders …” or put your auction on another platform and essentially find your own bidders. This appears to be the choice auctioneers currently face when hosting an online or simulcast auction.
However, today we focus on that “big mailing list and large database of bidders” in that what difference does that make? In other words, should a seller necessarily hire an auctioneer with a bunch of accumulated past bidder information over one without?
Our question stems from an attorney inquiry where essentially a client hired an auctioneer boasting of a large (50,000) person mailing list over another more well-known auctioneer with no such database. The attorney reported to me:
The auction took place and the results were dismal and the client discovered none of the people on the auctioneer’s so-called extensive mailing list attended nor placed any bids.
Let’s start with this well-established premise: The more bidders the more likely alpha (the highest bidder) and beta (the second highest bidder) participate as we wrote more than once about including here: https://mikebrandlyauctioneer.wordpress.com/2019/04/01/auctioneers-alpha-and-beta-and-more/.
Auctioneers should endeavor to maximize the number of bidders … to the extent it is financially prudent. No sense paying $5 for one more bidder resulting in $4.99 in proceeds — so long as there is a sufficient crowd bidding for psychological reasons: https://mikebrandlyauctioneer.wordpress.com/2016/05/31/large-auction-crowds-busy-restaurants-and-relevance/.
Let’s look at one item and a sampling of the number of bidders corresponding to the chance of alpha and beta:
- 50 bidders, 92.3% chance of having alpha and beta
- 100 bidders, 96.1% chance of having alpha and beta
- 250 bidders, 98.4% chance of having alpha and beta
- 500 bidders, 99.2% chance of having alpha and beta
- 1,000 bidders, 99.6% chance of having alpha and beta
- 2,500 bidders, 99.8% chance of having alpha and beta
- 5,000 bidders, 99.9% chance of having alpha and beta
Further, our second question: Are you selling the exact same [type of] property over and over again? For instance, Saturday, you’re selling 1,000 acres in Wyoming and next Saturday you’re selling collector cars in Utah. Yet, you have this “list” of past bidders — whom all (or even most) want both 1,000 acres and a collector car?
Certainly auctioneers who specialize in certain asset groups benefit to a degree from past bidder lists. However, if your inventory changes week-to-week or auction-to-auction, what good is a list of past bidders who have purchased “A” with you now selling “B?”
Or does your past bidder list have partitions, where some have indicated land, others cars? Nevertheless, telling a seller, “We have a list of 50,000 past bidders” may be disingenuous it only 127 of those bidders may have any interest in what your current seller has put up for auction.
In my time as an auctioneer, we’ve gone from having to find the bidders to the bidders finding us to now back to finding the bidders and the bidders finding us. We wrote about push and pull marketing back in 2015: https://mikebrandlyauctioneer.wordpress.com/2015/04/27/auction-marketing-push-or-pull/.
With a list of past bidders, how many of them are future bidders? While certainly there are collectors who are looking for whatever, wherever … it seems there are less of these collectors out there today. A couple who came to your auction to buy their first home years ago might not need another one for a while, and otherwise the younger generation isn’t looking for property and rather various life experiences?
Lastly, who are these people/entities who repeatedly buy? It would seem generally here in 2019 they are resellers … who tend to pay less than market value in order to sustain their dealer status. Maybe — instead — you should be saying, “We have a list of 50,000 [past] wholesalers …?” if you indeed have anyone worthy on your list at all.
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.