absoute, auction, Auction Law, auctioneer, auctioneers, auctions, contract, expert witness, minimum bid, seller bidding, with reserve, without reserve
I know it happens, particularly in the online auction world, but the public (other bidders) detest the practice. You consign your grandfather’s Elgin pocket watch to an auction, but don’t want to sell it unless it demands $150.
You as a seller have choices — sell it absolute or with reserve. If “with reserve” you can place a published minimum bid or maintain a secret reserve, sell with seller confirmation of the high bid, or bid on the watch yourself ensuring your $150 is obtained, or it remains unsold.
Many choose to just (register to) bid on the watch as the seller and bid until the desired minimum price is obtained. Your bid as the seller likely appears to be a bid from another genuinely (dis) interested bidder, and thus these other bidders possibly think your bid indicates a basis for them to bid again.
A seller can in fact bid in a with reserve auction, and if this right to bid is reserved (disclosed) then it’s perfectly acceptable. Yet, many times it’s not disclosed, as as such, the high bidder could void the sale altogether or take the lot (watch) at the last good faith bid.
This undisclosed seller bidding is typically shrouded in the online environment (and to some extent otherwise) and as such, many times the high bidder doesn’t know the seller is bidding. As such, there’s no claim for recourse, as there’s no knowledge of the infraction.
“Buy back” (or buyback) is an interesting term, as when a seller consigns a lot to an auction and then buys it, they’re not “buying” anything, as title remained with the seller the entire time. Auctioneers often charge a fee for the seller to retain title, and as such, many auctioneers don’t mind if the seller bids on his own property.
It seems to me (and many others) that auctioneers and sellers can do better. For instance, consignments where the seller agrees to sell absolute to the highest bidder, or alternatively, sell with a published (known/disclosed) reasonable minimum bid which the seller is prepared to accept.
Sellers who cannot do either (absolute nor minimum bid) are probably better served by not selling at auction at all. There are many other ways sellers can sell property other than at auction. Said another way, if you are bidding on your own property at auction, you likely don’t believe in auction marketing and lack an understanding of market value.
Auctioneers like me preach that if you are considering an auction, you must understand your property is only worth, “What someone [else] is willing to pay for it.” As such, it doesn’t require you as the seller to bid to ensure market value if the auction is adequately marketed.
If you don’t believe in the marketplace and there is some other issue that gives you (practically) no choice but to sell at auction, a published minimum bid is much better for our industry than seller bidding. Further, to ensure your auction is adequately marketed, secure an auctioneer who knows how to do just that and you’ll not have the need to bid on your own property.
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, Brandly Real Estate & Auction, 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.