Yes, this was the claim. For any auction — once a bid is placed — that constitutes a minimum bid that the next bid must exceed. As such, any and all auctions are “with reserve.”
This would mean even an absolute auction becomes a “with reserve” auction once a bid is placed. This would be despite an absolute auction being “the genuine intent to transfer to the highest bidder regardless of price:” https://mikebrandlyauctioneer.wordpress.com/2015/11/27/genuine-intent-to-transfer-to-the-highest-bidder-regardless-of-price/
More frightening than this claim being made in a self-proclaimed expert witness report in litigation — is that anyone would even consider this true. On the contrary, absolute auctions are absolute (without reserve) and generally commit to selling to the highest bidder, whereas “with reserve” auctions do not make that same commitment.
Further, let’s not forget that bidders may retract their bids prior to the fall of the hammer. As such, that initial bid (or any bid) isn’t firm. Therefore, there is the possibility this initial bid doesn’t have to be exceeded.
In particular, in this case, this assertion was that by an auctioneer soliciting bids prior, those bids constituted minimum bids. Aren’t auctioneers bound to solicit bids once the contract is signed? Aren’t auctioneers bound to endeavor to find bids that are either submitted prior to the property being put up for sale and subsequent bids?
It’s dismaying that I had to counter this silliness, where this claim was put in place to support a pre-determined goal of holding certain auctions as “with reserve” when in fact they were without reserve. However, even more concerning, this nonsense would suggest no auction whatsoever — with any bidding — could be considered anything but with reserve.
Relatedly, can a with reserve auction be changed to a without reserve auction? Can a without reserve auction be changed to a with reserve auction? Our analysis suggests neither can be changed: https://mikebrandlyauctioneer.wordpress.com/2015/06/03/changing-the-type-of-auction/.
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.