Previously, we suggested if you as an auctioneer keep selling to the same people all the time, you might not be maximizing your seller’s position. That previous writing is here where we proposed your database of prior bidders and buyers might have limited value: https://mikebrandlyauctioneer.wordpress.com/2021/01/05/you-have-a-database-of-what/.
Here in 2021, people who buy repeatedly are typically dealers and resellers. Dealers and resellers don’t pay “market values” as they have to sell for “market values” and if they do that, they make no (lose) money. If you as an auctioneer are seeing the same bidders all the time, it’s likely they are not paying true market value for their purchases.
Sarah owns and operates an auction house and regularly sells antiques, collectibles, furniture, jewelry, etc. She has been handing estates and guardianship property for over 5 years and it seems every week she has anywhere from 1 to sometimes a dozen Coca-Cola bottle crates in her auction house which sell for about $15 each week-to-week.
As Sarah readies her next week’s auction, she sees she has three large estates assembled, and sure enough four Coca-Cola crates. The auction beings right on time at 3:30 p.m. and about an hour later, these crates come up for sale — and this week they sell for $40 each. The high bidder takes all four and Sarah moves to the balance of the auction …
After the auction concludes, Sarah approaches Billy who has attended Sarah’s auction every week for 3 years, and remarks, “Boy, tonight those Coke crates sold well … over market value I’d say, Billy.” (In fact, there wasn’t a bidder ‘in the house’ who didn’t think they sold high tonight …) Billy replies, “Well, you got more than you usually get … your buyer tonight is who I’ve been selling them to the past two weeks.” Billy had been buying them for about $15 each every week and selling them to this buyer for about $40 per piece.
Here we see that Sarah wasn’t necessarily getting market value week-to-week selling Coca-Cola crates to Billy, and actually, Billy was getting “market value” for his Coca-Cola crates he was reselling. This latest auction resulted in Sarah finally getting market value for her Coca-Cola crates as she sold them directly to “Billy’s” buyer. Incidentally, Billy is in Sarah’s bidder/buyer database, and this new buyer tonight isn’t — yet.
Sarah had found herself for weeks thinking anything over $15 for a Coca-Cola crate was in excess of market value when actually $15 was around $25 less than market value. She was depending upon her fairly static database of bidders who were (as she found out) largely dealers and resellers. Only when she found a new couple of bidders did her prices increase materially.
After the auction, Sarah approached this new Coca-Cola crate buyer — Tina — who was visibly happy with her purchases. Sarah said to Tina, “So glad you got those, they’re very nice. We have them almost every week so I look forward to seeing you again …” Tina replied, “Oh, thank you, but I have all I need now. We’re decorating for our son’s 7th birthday party — he’s a Coca-Cola fan …”
Now Sarah can continue to market to her database of bidders — even including Tina — but what are those next Coca-Cola crates going to demand? Probably about $15. Sarah can’t rely on her database in order to get true “market value” and has to find that next consumer, collector, or other non-dealer, who’s not in her database. That can be done a minimum of two ways: (1) an online auction platform which is a marketplace or (2) social media marketing; there are other ways.
We wrote two (and maybe more) related articles concerning these issues including an article on auctioneers (unfortunately) making a market: https://mikebrandlyauctioneer.wordpress.com/2020/01/15/could-an-auctioneer-make-a-market/ and how well auctioneers are actually marketing their auctions: https://mikebrandlyauctioneer.wordpress.com/2020/10/05/youre-not-marketing-your-auction/.
In summary, it seems to me auctioneers need to keep finding that next bidder — that consumer, collector, end-user who will pay far more than any dealer or reseller. However, the inherent problem with this group of consumers, end-users (and even some collectors) is they buy and then quit buying. Then, auctioneers have to find the next consumer, collector, and/or end-user, then the next and the next, and the next …
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, and an Instructor at the National Auctioneers Association’s Designation Academy and Western College of Auctioneering. He is faculty at the Certified Auctioneers Institute held at Indiana University and is approved by The Supreme Court of Ohio for attorney education.