Welcome to the MAA’s Winter 2015 eGavel!

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Genuine intent to transfer to the highest bidder regardless of price
by Mike Brandly, The Ohio Auction School

What is a without reserve auction? In other words: What is an absolute auction?

While there is some consensus, there is not complete agreement.

We discussed this disquisition in some detail — once again — at the National Auctioneers Association‘s Accredited Auctioneer of Real Estate (AARE) class held in Ohio, November 22-24, 2015.

In conversations about absolute auctions, there are typically questions which begin, “Mike, in an absolute auction, can I …” and the answer is usually, “No, you can’t.”

For instance, in an absolute auction, there can’t be any:

• Minimum bids
• Minimum bid increments
• Required approval of the final bid
• Published or confidential reserve amounts
• Seller bidding [outside of a forced sale]
• Auctioneer bidding for the seller [outside of a forced sale]
• Anyone else bidding for the seller [outside of a forced sale]
• Canvassing bidders to determine if the auction will be held, or not
• Withdrawal after a bid is made within a reasonable time
• Intent to avoid closing if the final bid is insufficient
• Secured interests dependent upon the amount of the high bid
• Other reservation which is counter to the genuine intent to transfer to the highest bidder regardless of price

Yes, without reserve — absolute — auctions are pure, without any reservations. The only conditions which even resemble reservations are two-fold:

• Before the lot or property is put up for bid, it can be withdrawn.
• Once the lot or property is up for bid, it can be withdrawn if no bid is made within a reasonable time.

However, there are qualifications on these two aforementioned conditions:

Withdrawing prior to being put up can’t be based upon the bidders present not expressing or committing to bid any particular amount.
 
Withdrawing after being put up after no bid must allow for sufficient time (a reasonable time) for bids to be placed.

There is little question that without reserve auctions attract more bidder participation, and therefore higher prices; reserve auctions allow the auctioneer/seller to reserve any number of rights. This is why so many auctioneers attempt to mix absolute auction marketing with some sort of reserve auction.

Auctioneers unsure if they can engage a seller in a purely without reserve auction should opt for a with reserve auction.

Mike Brandly, Auctioneer, CAI, AARE has been an auctioneer and certified appraiser for over 30 years. His company’s auctions are located at: Mike Brandly, Auctioneer, Keller Williams Auctions and Goodwill Columbus Car Auction. His Facebook page is: www.facebook.com/mbauctioneer. He is Executive Director of The Ohio Auction School.