What exactly does selling at absolute auction mean?
The word “absolute” in regard to auctions legally means the subject property is selling without reserve. Without reserve means several things including no minimum bid, no seller confirmation, no right of withdrawal after a bid is placed …, no seller bidding, no “canvassing bidders” to see if we’re going to open the auction, and the like.
On the contrary, selling without reserve means the seller has the genuine intent to transfer to the highest bidder regardless of price as we discuss everywhere we travel, including the National Auctioneers Association’s Accredited Auctioneer of Real Estate designation class.
Therefore an advertisement that something is selling absolute with a minimum bid of $1,100 per acre is intentional misrepresentation at minimum, and unquestionably false advertising.
This advertisement and their auctioneers — and all others like them — want the power of the word “absolute” to attract bidders with the safety of a minimum bid to protect the seller. Such advertisements indeed protect the auctioneer and seller, except against lawsuits, regulatory investigations and less-than-true-maximum price discovery.
While this marketing piece isn’t even a bit creative, we did give partial credit (but were still critical) in 2010 when we looked at an “Absolute auction over $90,000.” You can read our thoughts on that here:https://mikebrandlyauctioneer.wordpress.com/2010/05/15/auction-absolute-over-90000-opening-bid/
When auctioneers argue that the word “absolute” is so misused that it has lost its meaning in the public’s eye, here’s a great example which supports their theory. To stop such misrepresentation, one could submit that auctioneer licensing has merit.
A licensing regulatory agency could take issue with this and go so far as to obtain a court injunction and/or suspend or revoke licenses to keep it from happening again. Yet, there are laws in every state in the United States which prohibit this above advertisement with or without auctioneer licensing.
Here we previously discussed the merits and related issues with statewide auctioneer licensing:https://mikebrandlyauctioneer.wordpress.com/2009/12/25/auctioneer-licensing-good-or-bad/
We also note this is a “Private auction?” and bids are only received by “Telephone?” Assuming there would be sufficient demand for over 1,120 acres in Kansas, this would appear to be less than savvy way to maximize price; in fact, we suspect this method would/will/did produce less than market value.
Relatedly, it is sometimes prudent to conduct a “sealed bid-type” auction when there is likely insufficient interest in the property. We discuss this as well at the National Auctioneers Association’s Accredited Auctioneer of Real Estate designation class:https://mikebrandlyauctioneer.wordpress.com/2017/03/07/is-accepting-sealed-bids-an-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, RES Auction Services and Goodwill Columbus Car Auction. He serves as Distinguished Faculty at Hondros College of Business, Executive Director of The Ohio Auction School, an Instructor at the National Auctioneers Association’s Designation Academy and Faculty at the Certified Auctioneers Institute held at Indiana University.
The original article and image can be found here.
This article has been published with permission from the author.