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Pulling an Item Before or During the Auction: The Why’s and Wherefore’s

Pulling an Item Before or During the Auction: The Why’s and Wherefore’s

In my last blog, we talked about whether or not someone could purchase something from an auction before the auction begins.  We decided the correct answer was no.

In this blog, we’re going to investigate whether or not an auctioneer can pull an item from an auction. The short answer is yes. The longer answer gets a big more complicated.

First, we need to clarify that we are talking about completely pulling an item from the auction (and not selling it to anyone) rather than selling an advertised item before the auction. When we talk about pulling an item, it means the auctioneer makes a very conscious decision to not sell a particular item, whether it was itemized or not. Notice the key words: NOT SELL.

But why, and when, would this happen? Let’s look.

Acacia (age 13) with her Farmall Cub

The first reason an item might be pulled from the auction (or not sold) is that it did not meet the minimum reserve price. Most items at an auction will be sold for whatever it can bring, even if it is just a couple dollars. However, some items might have a minimum reserve price, which is an undisclosed price that the seller has communicated with the auctioneer before the auction. The item is identified to the crowd as having a reserve price. If this minimum price has not been reached, the item will not be sold.  For example, say Acacia was going to sell her Farmall Cub tractor. She’s not going to, but imagine she decided to. She works it out with the auctioneer that she wants a minimum of $2500 for the tractor. The day of the auction arrives. People getting ready to bid on the Cub know there is a reserve price, but after a couple minutes of bidding, the high bid is only $1250. At this point, the auctioneer would state that the Cub didn’t reach it’s reserve price and it would be set aside.

Another reason that an item might be pulled or not sold at an auction is because it is in an auction with reserve. This simply means that the seller has reserved specific outlined and contracted rights, one of which is the right to not sell an item. The biggest catch is that seller (or the auctioneer acting on the part of his client) must pull the item before the auctioneer brings down the hammer. Once the hammer comes down, the item is sold and cannot be pulled from the auction. While this might make a buyer upset (especially if they are bidding on it), and while it might make the auctioneer look, well, not so good, it does offer the seller some protection from a way too low of a bid.

Going along with this, some auction houses will reserve the right to withdraw an item if it only receives nominal bids (bids by people who think they can buy something for $5 when it’s worth $100) or when an item doesn’t receive bids that reflect what the item is actually worth. This is something that is more common in larger auction houses, or when the seller and auctioneer put it in their contract.  This is also usually stated somewhere on the auction house’s Terms & Conditions for all to see.

A fourth reason an item might be pulled, or withdrawn, from an auction is because the item is defective.  Perhaps an item was listed for sale, like perhaps an oak infant crib. A day before the auction, the seller or the auction house is made aware of a recall on the crib due to a defect in which the side rail would not stay up and children’s arms and legs were getting hurt. The auction house will pull this item as it could not in good faith sell a defective item to another individual. Similarly, if it is noticed that there is a defect that was not otherwise noted and cataloged, the auctioneer may choose to withdraw the item, or set it aside without penalty. Again, this provision is usually noted in the auction houses Terms and Conditions.

A fifth reason an item might be withdrawn could happen if the auctioneer suspects that there is something fishy going on that is influencing the sale of the item. This could be collusion between buyers or someone purposefully bidding the item up to get a higher sale price. Both of these scenarios are unsavory, distasteful, and unacceptable by those who love to attend auctions to get a good deal or purchase a treasure.

Well, there you have it. Five (5) big reasons that something you thought was going to be sold, didn’t get sold. Happy Auctioning!

 

Reserve, Absolute, Minimum? What’s that?

Reserve, Absolute, Minimum? What’s that?

Hey! I’m back! Hopefully you’ve gotten over being confused about the main types of auctions, because now I’ve got a few more auction types for you.  Today, we’ll discuss reserve auctions, absolute auctions, and minimum bid auctions. Ready?  Good!

 

Reserve Auction:  Have you ever had a reservation over something you had to decide? Or booked a reservation at a hotel?  Perhaps reserved a place for your friend next to you in the lunch room?  Well, then you have a sense of what a reserve auction is. When something is reserved, it is held in place until certain conditions are met.

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At a reserve auction, the item up for bid has a reserve price: a hidden price that must be met before the item is allowed to be sold. It’s the minimum amount that a seller is willing a accept for his item that’s up for auction.  The seller is under no obligation to sell unless the reserve has been met.  When bidding on-line, you will see an obvious icon showing either “Reserve not yet met” or “Reserve met”.  Just like any on-line auction, you should probably place your maximum bid, otherwise you risk being outbid by another bidder. If your maximum bid exceeds the reserve (which you don’t know), the program will find the bid increment closest to the reserve price and bid that for you. Confused yet? I’m sure that was clear as mud. SO…let’s look at it this way.

 

Bob goes to Hueckman Auction’s website and sees a trilobite (that’s Wisconsin’s state fossil!) that he would like to add to his collection.  He sees that he has almost 1 day left to bid, that the next bid increment is $10. Bob also sees the words “Reserve Not Met” in bold blue print next to the bidding box.
blog pic reserve

Bob doesn’t know that Luanne is selling the trilobite and that she has decided that she needs to get at least $10 for this specimen and so has set a reserve price of $10. If the bidding doesn’t reach this amount, she doesn’t want to sell the trilobite, and is under no obligation to sell it.

 

 

Bob decides that he really likes the trilobite and wants it, no matter what. (What? That could happen…). So he places a maximum bid of $100 on the trilobite.  Remember, this doesn’t mean that Bob will HAVE to pay that much, just that he’s willing to pay that much.  The computer sees that Bob has a maximum bid higher than the reserve, so it will make Bob bid $10 (or slightly more depending on the program–some go to the next higher bid increment). Then the words “Reserve not met” change to “reserve met”. At that point, Luanne HAS to sell it to Bob, unless he gets outbid by some other adventure seeing-trilobite hunter.  Which could also happen…maybe…

barry-baker-quote-when-you-sell-at-an-absolute-auction-in-its-purest

 

Absolute Auction: I’m absolutely positive that you want to hear about this one.  (Hee hee.) At an absolute auction, the item is sold,  or awarded to the highest bidder, regardless of the final price. While this sounds absolutely obvious, not all auctions run this way. But an absolute auction does. Absolutely. (Ok…I’m absolutely running away with that word…mostly because it’s fun to say.  Try it: Ab-so-LUTE-ly. See it’s fun to say. I digress…)  In this type of auction, there is no reserve; there is no minimum bid amount that must be reached in order to sell an item. This usually creates a happy & healthy selling/buying medium (the seller is happy with what he gets for his item, and the buyer is  happy with the price he pays).  But this means that you might be able to buy a $140,000 house for only $55,000 because there was no reserve price set. Wasn’t that a great deal? Absolutely! (I couldn’t resist saying it one more time!)

 

 

Minimum Bid Auctions:  In a minimum bid auction, the auctioneer will set a minimum amount that must be bid in order for the item to be sold at auction.  For instance, an auctioneer might insist that he will not take a bid lower than $5 for a box of toy trains. That’s the minimum bid. He won’t take a bid of $1, like some folk like to do.  If he can’t get someone to start the bidding at $5, he’ll set the trains aside and move on to the next item.

sfotrain1

Did this help you?  I absolutely hope that you hold no reservations, no matter how minimal, about types of auctions.  (Clever, eh?) If you do have questions, send us a note and we’ll try to answer it the best we can.

 

Happy Auctioning!