We had been in the auction business only a few months when we received a telephone call from Larry who said he owned an antique store and wanted to have an auction. We were anxious to take a closer look and made an appointment to meet there the next day.
We arrived at a commercial building full from floor to ceiling with antiques and collectibles. As we walked, climbed, and otherwise gazed at this inventory, Larry noted he owned all the inventory except that he and his two brothers (all three … 1/2, 1/4, 1/4) owned the large circus poster on the far wall.
He said he and his brothers paid $10,000 for the poster, and he hoped it would demand at least that at auction. After settling on the terms and date of the auction, Larry signed a contract agreeing to have the auction June 15. However, I informed him we would need him and his two brothers to sign a contract to sell the circus poster.
For this large circus poster, we had 3 owners with an ownership interest in one lot. In other words, one lot and multiple owners at auction. What is paramount here is that all three brothers (in this case) agreed to the same terms and conditions of the auction, the terms of the auction contract as well as the ownership fractional shares.
In other words, Larry’s brother Al can’t require a reserve if Larry wants to sell absolute. Likewise, if Larry’s other brother Bill wants to sell with seller confirmation, Larry & Al can’t sell absolute. Al nor Bill can argue they each get 1/3 of the proceeds if they are only due 1/4 each. It’s one item — one lot — so we need one set of terms and conditions.
There’s an old phrase in real estate practice that, “It only takes one to list but two to sell.” These days, most real estate professionals insist on both signatures to list if there are two people involved. The complexity with Larry being the only signatore is if the poster sold, Larry would be bound to convey title and may have to “buy out” his two brothers in order to make that happen.
The poster did indeed sell absolute for $11,000. Larry, Al, and Bill were pleased with the auction including the sale of the poster. The buyer for the poster was also pleased as we were with the auction total. In other words, with everyone (Auctioneer, Larry, Al, Bill) on the “same page,” this auction worked well.
As our owners agreed, Larry received 50% of the net proceeds and Al and Bill split the remaining net proceeds, 25% each. Of course, there is any number of ways Larry, Al, and Bill can divide those proceeds but they decided to allocate monies based upon percentage ownership.
As we’ll be discussing later on this platform, in an open combination auction (multiple lots, selling individually or any combination including all for one) it’s best to have the same terms and conditions for all lots, and ensure that all sellers (if more than one seller) agree to those terms and sign a contract with the auctioneer.
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.