The so-called “hammer” falls at an auction, and the property (car, firearm, airplane, truck, tractor, artwork …) is sold to … who? Sometimes the auctioneer doesn’t say, and rather says that the buyer “prefers to remain anonymous.” Who is anonymous? Why remain anonymous?
Auctions have a long history of shrouding the seller’s identity and nearly as long a history shrouding the buyer’s identity. Notable auction houses Sotheby’s (1744) and Christie’s (1766) have long allowed both sellers and buyers to remain unnamed.
Yet, lack of transparency causes some to question if there really is any such person. For the anonymous buyer, the query is often, “Was there a buyer at all?” The inference is that maybe the property didn’t sell at all, but the auction house or auctioneer wants the public to think otherwise.
I’m not convinced the practice of saying there’s a buyer — when there’s not — is rampant in the auction business. Auctioneers can sell “with reserve” and no-sale property and almost nobody gives it a second thought. For auctioneers, publically announcing a “no-sale” isn’t necessarily good for their reputations, and thus some rather say “sale” when in fact it’s not.
We wrote in 2015 about auctioneers saying, “Sold!” and not meaning it: https://mikebrandlyauctioneer.wordpress.com/2015/04/29/can-an-auctioneer-say-sold-and-not-mean-it/. Outside of clear dishonesty, it seems to us that the damage to the public with this misrepresentation only really materializes when the reported sale price is far in excess of the last good faith bid.
These days with the Internet allowing a constant flow of information (and misinformation,) it would not be difficult at all to note the same property that “sold” coming up for sale again … as if it really didn’t sell the first time. Of course, maybe the real buyer decided to sell right away?
No doubt on high-value assets, some buyers desire to remain anonymous to avoid publicity and the associated risk of theft or possible public criticism. For example, if a Million-dollar painting is taken from the public domain and housed in a private collection, some may despise their lack of access to that art.
Auctions suffer to some extent with the lack of disclosure — who’s the seller — who’s the other bidder — does it work — what’s the reserve — is the property really what you say it is …? If we add that we don’t know who the ultimate buyer is either, it adds to a lack of transparency which drives potential buyers to transactions with more clarity.
As we’ve noted several times, the recent Nobel Prize winners Paul Milgrom and Robert Wilson concluded generally that bidders bid more commensurate with more disclosure. https://mikebrandlyauctioneer.wordpress.com/2020/10/16/providing-as-much-information-as-possible/. Yet, most auctioneers seem disinterested.
Maybe it’s “We’ve always done it this way …” so “We’re going to continue to do it this way …” although we’ve noted many auctioneers make changes once they realize personal experience with the issue at hand: https://mikebrandlyauctioneer.wordpress.com/2020/12/28/until-an-auctioneer-personally-experiences/.
Can the public find out if something really sold or not and/or who the current owner is? For real property, most states have publicly available data concerning current and past owners; ownership of personal property is much less available — if not completely hidden.
Lastly, we’ve always been able to hide the identity of the buyer with absentee bids, proxy bids, phone bidding, and the like. Now, with online auctions, yet another option to remain anonymous is available to buyers. Thus, it seems we’ll likely have less buyer disclosure for a while before if ever we have more …
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.