In the case of Kline v. Fineberg, 481 So. 2d 108, 109 n.1 (Fla. Dist. Ct. App. 1985) the court analyzed what happened at the auction. This is the kind of discussion that one doesn’t find for auctioneers who say, “Sold!” and mean it.
Specifically, at the hearing, the testimony was in dispute as to whether Mr. Kline’s bid was timely made so as to prevent the conclusion of the sale of the property to Mr. Fineberg for $4,100,000 and the Court considered this:
Joseph M. Fineberg testified that E.B. Kline’s bid was made after Vivian Clark said, “sold.” Mr. Kline testified that he made the bid either before or simultaneous to the time Ms. Clark said, “sold.” Counsel representing another bidder at the auction testified that Mr. Kline’s bid was made after Ms. Clark said, “sold.”Kline v. Fineberg, 481 So. 2d 108, 109 n.1 (Fla. Dist. Ct. App. 1985)
The UCC § 2-328 gives auctioneers the discretion to reopen the bid or not, and when this discretion is then considered, it’s not unusual for some people to say the bid was “after” “Sold!” while others will say the bid was “before or simultaneous” to “Sold!”
On the other hand, when auctioneers say, “Sold!” and mean it, none of these considerations are analyzed. The property is sold, and it’s on to the next lot. In other words, you can go to court to attempt to figure it all out, or just simply stay out of court.
Let’s say you’re selling a $4,100,000 property and you say, “Sold!” Would you expect this $4,100,000 bidder to feel he’s the winning bidder? If someone claims they bid $4,200,000 would you expect him to believe he is now the high bidder?
So you want to have this discussion in court?
If you do, here’s the strategy … say, “Sold!” and then indicated you’re reopening the bid, and then don’t. Now the $4,100,000 bidder (Fineberg) thinks he’s the winning bidder and the $4,200,000 bidder (Kline) thinks he’s the winning bidder.
Wonderful — since that went so well, let’s spend even more time in court.
On the next lot, don’t reopen, then reopen the bid three lots later, then don’t. It’s not only that your reopening was considered for this first auction, but now those “next” bidders will expect the same deference on subsequent lots.
But it’s not that easy — as this very case demonstrated — some bidders will claim the next bid came in after “Sold!” (giving you the auctioneer no discretion) and others will claim that bid was made prior to or simultaneously (giving you the auctioneer discretion.)
On the other hand, would a policy that “Sold!” means “Sold!” reduce confusion? Would a policy that “Sold!” means “Sold!” clarify expectations? Would a policy that “Sold!” means “Sold!” reduce the chance of litigation? It seems clear it would.
We remind you we’re not the only person to hold this view:
… the integrity of the process and respect for bidders’ reasonable expectations is generally consistent with the goal of asset maximization, as most courts have found that the risk of an upset bid stifles aggressive bidding and ultimately results in lost value to the estate.James M. Peck
You note that Judge Peck says “most courts” and the risk of an upset bid actually “results in lost value” to the estate? Yet, you’re told you should be reopening the bid (the exact opposite) to improve the owner’s return?
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.