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Auctioneers regularly visit sellers with property to sell. It may be a house, warehouse, retail establishment, storeroom, or any other area where the personal (or real) property is located. Our question today involves the auctioneer or his/her staff buying any of that property in lieu of selling it at auction.

While some sellers want a complete buyout, could (or should) an auctioneer or staff buy select items and then sell the balance at auction? It would seem if the seller/client requests this type of “one in the hand versus the possibility of two in the bush” then such would be fine.

However, for one finding oneself in a fiduciary role with a seller client, it would be required that the auctioneer (and possibly staff) be loyal to the client — in that the agent would have to act in the best interest of the client. So, if there’s really “two in the bush” then the advice should be to sell it at auction.

We have seen where sellers often acquiesce to the auctioneer’s preference to buy a certain item or items, thinking that the auctioneer will return the favor of good service otherwise. Yet, good service is to be expected — and is required regardless.

Importantly such a “tie-in (tying) arrangement” might be a violation of the Sherman Antitrust Act, if the one service (we’ll do your auction) depends upon [requires?] the other (sell me something.) Penalties can be substantial for any such violations.

As well, this such behavior likely also violates agency duties including loyalty. We have written about agency duties several times including here: https://mikebrandlyauctioneer.wordpress.com/2009/11/18/what-do-auctioneers-owe-their-clients/.

Further, when an auctioneer and/or staff regularly buy for themselves, this tends to send the message the auctioneer and staff are more worried about their own profits than they are worried about their clients. As that news travels, it could result in less business.

Auctioneers should have firm policies regarding anyone in the company buying ahead of the auction, including when the seller requests such purchasing. As well, any staff should be working to maximize the client’s and auctioneer’s profits and not working to maximize their own bank accounts, nor their personal collections to either of those entities’ detriment.

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.