- The car sells?
- The bidding finally reaches the seller’s reserve?
- The seller has acquiesced and realizes this might be all he’s going to get?
- The seller thinks by saying this, it might excite more bidding?
Yes, maybe even all of the above.
We start with this premise: All auctions in the United States (except in Louisiana) are with reserve by default. In other words, a property is put up for bid and may or may not sell depending upon the seller’s wishes.
In these 49 states, only if the auction is in explicit terms noted as “without reserve” is the property intended to sell to the highest bidder, regardless. Therefore, this sign would only be used in a “with reserve” auction.
Besides this sign meaning just what it says, that the “reserve is off,” it tends to say that the current bid (or any higher bid) will result in the property selling to the highest bidder. The fact there’s a sign also suggests that the auctioneer/seller’s hope is that such notice induces further bidding.
It’s abundantly clear that emotions are heightened when a bidder knows something is going to sell versus maybe going to sell. That same emotion drives bidders to “without reserve” (absolute) auctions over “with reserve” auctions.
And for the non-believers, I’m still waiting for that auction advertisement of an absolute auction promoted as a “with reserve” auction in order to entice participation; you don’t have to waste your time looking for it, as it doesn’t exist.
We’ve written about the power of absolute auctions several times, including here: https://mikebrandlyauctioneer.wordpress.com/2016/08/25/the-power-of-the-word-absolute/ and here: https://mikebrandlyauctioneer.wordpress.com/2017/11/27/what-exactly-does-selling-at-absolute-auction-mean/.
Lastly, could a vehicle (or other property) reach a certain price with the auctioneer/seller noting the “reserve is off” and then not sell the car? Such would likely constitute misrepresentation, as that’s essentially, “We are going to sell this car to the highest bidder … and now we aren’t.”
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.