We’ve all seen this type of property up for “absolute auction.” All too often, the property doesn’t sell and my phone begins to ring. Such inquires come from other auctioneers, the general public and sometimes attorneys with pending litigation.
“How did this absolute auction property not sell?” — or the like — is the type of question I get. Due to an absolute auction being “The genuine intent to transfer to the highest bidder regardless of price,” there are essentially five (5) scenarios:
- No bidders show up
- Not enough bidders register to bid
- No bidders bid (within a reasonable time)
If no bidders show up — however unlikely — the auction can be withdrawn and not sold. It could possibly be the weather, Internet outage or the property is fully depreciated and deemed by the public as worthless.
Not enough bidders attend and/or register for the auction. We have held that if only 1, 2 or even 3 bidders are ready and able, that bidder pool (crowd size) is likely insufficient to open the bid.
At any absolute auction, after the auctioneer calls for bids on any particular lot (property,) the property can be withdrawn if no bid is made within a reasonable time.
- The registered bidders don’t offer the auctioneer assurance of a certain bid
- The auctioneer had no real intention to sell absolute (misrepresentation)
This is a problem. Too many auctioneers canvas the crowd prior (or require an opening bid commitment) at an absolute auction. Then, this information is used to decide if the absolute auction is to be held, or not.
This is an even bigger problem. Too many auctioneers advertise an absolute auction without the intention to conduct or hold one. Rather, they use the word, “absolute” to induce participation and then essentially switch to a “with reserve” auction.
As you can see above, #1, #2 and #3 scenarios are acceptable situations where an absolute property doesn’t sell. However, #4 and #5 constitute clear misrepresentation; it appears to us that a bidder would have a valid claim against any auctioneer/seller in #4 or #5 for at minimum false advertising
We wrote about the foundations of absolute auctions here in 2015: https://mikebrandlyauctioneer.wordpress.com/2015/11/27/genuine-intent-to-transfer-to-the-highest-bidder-regardless-of-price/. Essentially, absolute auctions can’t have limiting conditions which counter “the genuine intent to transfer to the highest bidder regardless of price.”
Those auctioneers merely pretending to hold absolute auctions do significant damage to those bidders, the seller, and the auction industry. For those auctioneers who legitimately conduct absolute auctions — keep up the good work.
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.