absentee bid, auction, auctioneer, auctioneers, auctions, bidding, ethical, expert witness, knowledge and consent, legal, maximize
Auctioneers often take absentee bids or allow bidders to bid online where they are privy to the bidder’s maximum bid. Our question today is “Should auctioneers see your maximum bid?” Quite frankly, it’s sometimes necessary for the auctioneer to know your maximum bid so it can be appropriately executed.
However, it’s not that simple. Any single online bidding platform can bid for the bidder with the maximum bid concealed from the auctioneer. Absentee bids could be managed through another staff member so those could also be kept secret from the auctioneer.
For that matter an online bidder could bid in real-time, not revealing his maximum bid unless necessary. Live bidders could bid live keeping their maximum bid confidential. As a result, bidders have ways to bid without disclosing their maximum bids to the auctioneer.
The issue for some bidders is this: Once the auctioneer knows your maximum bid, he may bid against you with fictitious bids to maximize your bid. We wrote about Lauren’s unfortunate bidding experience here: https://mikebrandlyauctioneer.wordpress.com/2020/05/06/did-you-win-every-item-for-exactly-your-maximum-bid/.
I want to think most auctioneers are honest — and they aren’t confused with their fiduciary duty to maximize the bidding on every item with their obligation to treat all parties within legal and ethical bounds. The problem is, not all auctioneers behave in this fashion, and knowledge of your maximum bid could very well guarantee you’ll pay that highest amount.
There is another situation that needs some clarity. An item has a reserve of $10,000 and a bidder places a maximum bid of $12,000 to be bid [as is normal] competitively. The bidding reaches $8,500 with no more bids. Can the auctioneer place bids up to $10,500 to sell this item to this aforementioned bidder?
We would hold only with knowledge and consent can the auctioneer bid against this bidder to force his bid up to $10,500 — ideally in a “with reserve” auction. Of course, otherwise, if the bidder desired to bid up past the reserve, he could do that himself or authorize such a bid. Lacking knowledge and consent, in this example, this property remains unsold.
The issue remains that when an ethical auctioneer knows your maximum bid the auctioneer will manage that bidding properly and an unethical auctioneer will most likely ensure you pay full price. All auctioneers should know bidders do pay attention to this, and if you want that bidder to participate in the future, treat him in a manner that makes him willing.
When it comes to seeing the forest for the trees, we, unfortunately, have personal experience working with another auctioneer who maximized an absentee bid while that long-time frequent bidder/buyer watched, and that auctioneer lost this bidder for the balance of his professional career: https://mikebrandlyauctioneer.wordpress.com/2020/07/10/forests-trees-and-policies/.
Auctioneers have choices to make and so do bidders, buyers, and even sellers.
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 has served as faculty at the Certified Auctioneers Institute held at Indiana University and is approved by The Supreme Court of Ohio for attorney education.
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