Some auctioneers routinely disclose the minimum bid (reserve) of property they are putting up for auction, and some auctioneers never disclose the minimum bid (reserve.) When should the “least the seller is willing to accept” be disclosed?
The answer to that question is fairly straightforward. If the minimum is good news, it should be disclosed and if it’s bad news (or subject to change) it should not be disclosed. For example, consider a $300,000 property selling with reserve:
- With a true minimum bid of $125,000, that’s great news and the reserve (and the associated estimated value) should be disclosed.
- With a minimum bid of $285,000, that’s terrible news and that reserve should not be disclosed (or the auction should not be conducted.)
- If the seller isn’t sure what he’s willing to accept — or he might change his mind, any reserve should not be disclosed (or the auction should not be conducted.)
It is indeed this simple. Buyers are demanding more disclosure rather than less so anytime we as auctioneers have good news, we should make that available. Auctions with bad news should be carefully conducted or maybe better yet, avoided.
As we recently wrote about here, any published minimum bid, reserve, nominal opening bid, or any other variation should be the actual reserve price: https://mikebrandlyauctioneer.wordpress.com/2019/08/16/is-the-minimum-bid-really-the-minimum-bid/.
We discussed this and more on the August 27, 2019 episode of the Sale Ring podcast: http://thesalering.blubrry.net/episode-23-auction-law-and-best-practices-with-mike-brandly/.
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.