What Buyers Should Know About Auctions
Auctions offer buyers a convenient way to find useful and fun items at good prices. From real estate and vehicles to medical equipment and collectibles, buyers are turning to auctions as an excellent source for things they want and need.
Winning an item can be fun and gratifying but auctions involve legally binding commitments so buyers should have a full understanding of the process before participating. Here are some things a bidder should understand before jumping into an auction.
What is the Auction Method of Sale?
An auction is a type of public sale involving a seller and more than one potential buyer. Prospective buyers engage in competitive bidding for real estate, personal property, and business property.
In an absolute auction, the highest bidder wins the item. There is no minimum price (reserve) and the seller is not permitted to bid. In contrast, the seller in a reserve auction sets a minimum price (the reserve). The final bid wins the auction if it meets or exceeds the reserve price.
Auction companies seek to sell items for as high a price as possible. They’re in business to make money. But auctioneers also represent sellers and owe them certain legal obligations. The auction company also must protect bidders with fair competition for the property being auctioned.
Most auctioneers are professional and honest. They stay abreast of best practices and the law through various channels including National Auctioneers Association (NAA) training, reading articles and blogs on auction law, and conferring with other auctioneers through the NAA or various networks. They conduct fair auctions. But sometimes an auctioneer engages in practices that violate these standards. By researching the auction business and reading blogs like this, bidders can learn to recognize and differentiate between dishonest auction practices and honest practices that work to their disadvantage or, at least on the surface, seem questionable.
A bidder who has concerns about the bidding process should discuss them with the auctioneer either before or after an auction. Most auctioneers are familiar with applicable laws and are well versed in ethics and suggested business practices. Most are willing to explain general bidding procedures or why a particular bid is handled a certain way. If an auctioneer avoids questions or dodges those who seek them out, the bidder should exercise extra caution about doing business with that auction company.
Auction companies want their bidders to return for other auctions and will work to earn that loyalty. Even so, bidders are ultimately held responsible for their commitments to buy, so they should familiarize themselves with essential auction basics. A good place to start is learning basic auction terminology so they can participate knowledgeably and avoid potential pitfalls.
Who is the Seller?
Buyers often think the auctioneer owns the items being sold but generally, the auctioneer is acting as an agent for a seller. Sellers hire auction companies to auction off everything from real estate to collectibles and they continue to own the items until the bidding on each item closes with a successful sale. The seller generally pays the auctioneer a commission on the sale of the property.
Sellers can come from any situation, but fairly common sellers include:
- Businesses closing shop and liquidating their assets;
- Businesses downsizing or selling off assets so they can update their inventory or supplies;
- Businesses carrying out court-ordered bankruptcy sales;
- Estates; and
- Families downsizing.
How Does the Auction Company Offer the Items for Sale?
At Carolina Auction & Realty, the auction process takes about thirty days, though real estate auctions may go a little faster. The company sets a date for the sale and advertises the auction online and puts out signage. Some companies may advertise in newspapers and multiple social media outlets.
The auction company organizes the items for sale and prepares a listing or catalog of the items with descriptions. Item descriptions can range from general to highly specific. The more detailed descriptions can include things like make, model, dimensions, age, origin, and representations of working order or authenticity. Some include photographs of the item from different angles. Real estate auctions will include video.
If the auctioneer makes no representation regarding an item’s condition or authenticity, that item is being offered as is where is or in its present condition. These terms mean the property is offered for sale without any warranties regarding condition, fitness for a particular use, or authenticity. For all property selling as is where is, it is the buyer’s responsibility to inspect and assess each item before bidding on it.
Can Bidders Inspect the Sale Items Before the Auction?
Potential bidders usually have the opportunity–and are encouraged–to inspect the items before the actual sale begins. This inspection is where the buyer does much of his or her due diligence. A thorough physical inspection helps the potential buyer determine the condition of each item and its authenticity. Unless the auctioneer makes specific representations about a particular item, it is up to the bidder—not the auctioneer or seller—to ascertain these things.
How Do Bidders Get to Bid at an Auction?
Only bidders who have bidding numbers will be permitted to bid on an item during an auction. To obtain this number, a bidder must register with the auction company and agree to applicable terms and conditions. The bidder uses this number for each bid. The auction company uses the bidder’s number to track purchases and prepare a bill for that bidder at the end of the auction.
What Kinds of Things are Included in a User Agreement?
This user agreement is a legally binding contract. It contains the terms and conditions covering the spectrum of the buyer/auction company relationship including such things as:
- Definitions of key terms;
- Whether the seller/auctioneer can set a reserve price for particular items so that the bid must reach at least that price before it will be sold;
- Whether the seller or auctioneer can withdraw offered items and, if so, under what conditions;
- The buyer’s agreement to pay the amount of any winning bid plus all applicable charges and taxes;
- A description of applicable charges including any buyer’s premium—the buyer’s premium is a stated percentage of a high bid or a flat fee that is added to the winning bidder’s total contract price;
- Manner and timing of payment;
- Acknowledgment that failure to pay all sums owed results in a breach of the agreement;
- Absentee bidding procedures and obligations;
- The buyer’s due diligence obligations;
- Escrow services;
- Fee schedules and payment due dates/times;
- Authorization to use the buyer’s credit card to pay for outstanding amounts due;
- Refunds that will or will not be permitted;
- Consequences of failing to remove items in accordance with the specified auction removal terms; and
- Which state’s law controls any disputes.
These agreements cover many other issues as well and the buyer should carefully review all terms and conditions before participating in bidding.
How Does the Bidding Work?
Carolina Auction & Realty offers online auctions for personal property and realty. Online auctions grew out of the traditional auction industry and understanding general bidding practices helps potential buyers appreciate the simplicity of online bidding.
Generally, auctions can be held in person, by telephone, online, even on television. For auctions run live by an auctioneer, an item will be offered for sale and the bidding commences. Once the first bid is acknowledged, the auctioneer will suggest the next bid. It is possible that only that first bid will come in and, if so, the auctioneer can sell the item after giving other bidders the chance to bid.
Auctioneers suggest bids in increments. Some auction companies have predetermined incremental increases depending on how high the current bid has gone. For example, an auctioneer might use $5 increments for items bid at $50 or less ($30, $35, $40, $45, $50) then raise the incremental bid to $10 after the item reaches $50 ($60, $70, $80, $90, $100). The bids increments could rise to $25 once the bid reaches $100 ($125, $150, $175, $200) and keep climbing as the bid price reaches the predetermined levels.
Some items will be listed and auctioned individually. But some might be offered in different ways. It is up to the buyer to recognize these differences and bid accordingly.
Some might be bundled into a group that will be sold as one lot, e.g., six chairs sold as one lot might reach a final bid of $400 and the buyer must pay that amount plus taxes and other charges.
Another way those chairs might be sold is by bid price times the number of pieces. In this situation, the buyer bids by the piece but is obligated to pay six times that bid. A final bid of $70, for example, would obligate the buyer to pay $70 x 6 or $420 plus taxes and other charges.
Yet another way to offer such things is the ‘choice’ auction. Two or more items are offered to the bidders and the highest bidder gets to choose which one item in the group he or she wants. Once that buyer has selected that item, the auctioneer will reoffer the other items for sale.
Where bidders are present, assistants called “ringers” help the auctioneer locate those attempting to bid. It is not unusual for an auctioneer to focus on the first two bidders to give them a chance at the item. When one drops out, additional bidders will be given the chance to join the bidding action.
In some in-person auctions, telephone and online bidders compete directly with bidders sitting in the audience. Some bids come in, live, during the bidding and the auction assistant handling the phone calls or online bids will bid for those bidders. Other bids have been placed in advance and the auction company acts as a proxy for these bidders, raising the bid in the designated increments based on what a bidder has submitted.
When it looks as though there are no more bids, the auctioneer will ask if anyone else wants to bid. When no further bids are forthcoming, the auctioneer will sell the item to the bidder with the last bid unless the item is being sold subject to a reserve price and the bid has not reached that amount. The high bidder will be given the opportunity to meet the reserve. Alternatively, the seller, if present, might decide to let the item go for the high bid, effectively removing the reserve.
The fall of the gavel or designating the item as SOLD means the high bidder now owns the item and is obligated to pay the bid price, charges, and fees. Just as this bidder cannot withdraw the bid at this point, the seller no longer has the right to accept further bids, even if they are higher.
In some auctions, the seller or members of his/her family may bid on many of the items. This can confuse some bidders who may suspect fraudulent or collusive practices are at work rather than honest absentee bidding. Many of these bidding practices are perfectly legal and appropriate, however.
A reputable auctioneer won’t engage in dishonest practices and works hard to maintain that strong reputation. Those who allow themselves to be lured into dishonest practices usually don’t stay in business very long. Bidders should research auction companies before getting involved with a particular auction to ensure they are dealing with a reputable company.
Buyers are often surprised to learn that they, too, have certain bidding obligations. They are not permitted to collude among themselves to keep prices down. It is not unusual for certain buyers to bid against each other on similar items. With active bidding by highly motivated buyers, the prices often rise quickly. Occasionally, such bidders have entered into an agreement to avoid competing for particular items. Bidders need to be aware that this is collusion and can constitute criminal fraud.
Online Auctions at Carolina Auction & Realty: All the Rewards of an Auction Plus Convenience
Carolina Auction & Realty conducts online auctions. An online auction is simply an auction held on the internet with all bids entered remotely. Specialized software processes the bids in a fair and systematic manner similar to how a typical auction works.
Before one can participate, a bidder must register, providing his or her name, address, phone number, email address, username, password, and credit card number. Once the auction company posts an auction catalog online, bidders can sit at home and bid on their computers or even bid on their smart phones while they’re out and about. They can enter a maximum bid and leave it to the software to continue bidding on their behalf in predetermined increments in response to other bidders submitting bids. When another bidder enters a higher maximum bid, that person becomes the winning bidder unless another bid, higher than that person’s maximum bid, is entered before the close of the auction.
A bidder should be aware of a couple of things that can affect the timing of an online bid. First, when a bidder attempts to enter a bid for the first time in a particular auction, the software will present the terms and conditions for the bidder to acknowledge. Usually, this is a list of terms and the bidder must check each box then check the final box indicating agreement with the terms. This takes some time, so bidders will want to bid early enough in the process to get that out of the way. Some bidders have missed the chance to bid because they tried to bid at the last minute and were delayed by this process.
Second, unlike some auction websites that permit sniping—those bids placed at the last second of the auction to prevent others from bidding further—auction company software typically eliminates this trick. Most auction company software includes a feature that automatically extends the auction for any item that receives a bid within three to five minutes of the scheduled closing time for that item’s sale. This gives others a chance to offer a higher bid. This mimics the traditional auction where the auctioneer continues to call for bids until there are no more forthcoming.
An online auction typically lasts for one to three weeks. At Carolina Auction & Realty, an online auction lasts two weeks, beginning at 8:00 a.m. on Tuesday morning and ending at the same time two weeks later on Tuesday night at 8:00 p.m.
Each item to be sold is given an identifying number and photographed. The photos are then placed in an online catalog of the items offered for sale. The auction company will include one or more photographs of the item in the catalog and may include a brief description.
At Carolina Auction & Realty, if the auctioneer is certain that an item is in good working order, that representation will be included in the description. Similarly, if he specifically knows a part is missing or that a collectible has a flaw, he will include that in the description. The descriptions for office equipment and refrigerators will include dimensions.
At least five photographs of industrial equipment, including the tag plate, will accompany that item’s auction description. Some may have video that demonstrates they are in working order. Collectibles will have several photographs including multiple angles, markings, and any flaws. Real estate will have at least fifteen photographs plus video.
If the description contains no representations regarding the item’s condition, that item is being sold as is where is. Any representations about condition or authenticity are limited to what is actually stated in the description.
Though the auction is conducted online, bidders still have the opportunity to inspect the items. Carolina Auction & Realty offers the opportunity to inspect personal property on the Saturday before the auction closes. For industrial or business offerings, the inspection is held on a weekday close to the end of the auction period, during business hours. Residential houses are open for inspection on the Sunday before the auction.
What if a Bidder Makes a Mistake?
A bidder who mistakenly enters the wrong bid or bids on the wrong item should contact the auction company know right away. Most auctioneers understand that this happens and will undo that bid and give you the opportunity to rebid.
When Does the Buyer Have to Remove the Auction Items?
Terms of removal are stated either in the terms and conditions, user agreements, or auction catalog or accompanying information. Buyers are expected to remove the items on time.
Because transactions are handled automatically in many auctions, the buyer’s credit card will have been charged already. A buyer who fails to remove the items may forfeit the item and could even be liable for additional costs that the seller or auction company incurs to remove the item. Some auction companies may bar the buyer from future auctions after two or more such occurrences.
Tom Jordan, Auctioneer, CAI, AARE, AMM, CES, MPPA, has been an auctioneer for almost twenty years. He is licensed as an auctioneer in North Carolina, Virginia, and South Carolina and as a real estate broker in North Carolina and South Carolina. He is the owner of Carolina Auction and Realty, a Raleigh, NC company offering online real estate, commercial equipment, estate, business liquidation, and benefit auctions. He holds a Bachelor of Science in Business Administration and is a graduate of the Certified Auctioneers Institute at Indiana University. He serves as the Vice Chair and Trustee of the NAA Education Institute and as Chairman of the Conference and Show Education Committee
Auction companies offer items for sale ranging from personal property to real estate. Whether the auction takes place at a physical location or on the internet, these companies connect buyers and sellers locally, nationally, and even internationally. But how does a seller choose the right auction company? Here are ten key characteristics a seller should look for in an auction firm.
- Auctioneer Empathy
Empathy is critically important in the auction business. Whether selling the assets of a commercial client, the real estate of a business, or the entire contents of an estate, a reputable auctioneer never forgets that an auction is far more than selling things. Focusing on why a seller is considering an auction can help the auctioneer plan the best course of action for the client and, in doing so, enhance the auction’s results.
Sellers often consult an auctioneer because they find themselves in the heartbreaking position of having to sell off assets that were essential to their daily lives not that long before. Some have failing businesses and liquidation is the only avenue left to them. Others are family members who have recently lost a loved one and are faced with selling treasured items or even the family home in an estate auction. Yet others are faced with forced liquidation in a bankruptcy auction. These are some of the most stressful circumstances a person will ever encounter.
An auctioneer should be able to step into a client’s shoes and view the situation from that person’s perspective. Every seller should be treated with dignity and respect and an auctioneer who understands the issues facing the seller can tailor an auction to meet his or her special needs and concerns. Whether suggesting a particular day on which to hold the auction or offering ways that the seller can save on expenses, the auctioneer who puts the client’s needs ahead of those of the auction company clearly has the client’s best interests at heart.
- Auctioneer Market Knowledge
The auctioneer who maintains and understands how to use market knowledge stands the best chance of being available to serve both buyers and sellers over the long run. Without sellers to offer property for sale and buyers to bid on that property, an auction company cannot keep its doors open.
An auctioneer must be able to advise prospective clients on what they can reasonably expect to receive at auction for the items they want to sell. Honesty is essential and the auctioneer has to be careful to ensure that the client maintains realistic expectations. An auctioneer can provide the best information possible to a client by:
- Staying abreast of local, state, national, and even global markets and market trends;
- Developing a deep understanding of the factors that motivate buyers and sellers;
- Staying abreast of productive avenues for advertising various types of property;
- Building and regularly updating a current list of prospective buyers for particular types of property;
- Incorporating strategies that have worked for other auctioneers;
- Avoiding strategies that have caused problems for clients of other auctioneers;
- Staying abreast of best auction practices;
- Being innovative—being on the leading edge of auctioneering; and
- Understanding what he or she does best and publishing that information to maximize the number of buyers and sellers the auction company can bring together.
How does the auctioneer do this?
Auctioneers should continuously train and enhance their knowledge, particularly in their specialty areas. They might even add new licenses and certifications as they grow their specialties. Some real estate auctioneers may become real estate brokers, for example. Others might become personal property appraisers.
Auctioneers should network with others in the industry on a regular basis, sharing experiences and information. They should read trade journals and blogs and take advantage of the various National Auctioneers Association (NAA) materials available. The NAA provides a monthly magazine, e-news, webinars, an annual conference, an annual show, and a full educational platform that not only teaches but certifies auctioneers in the range of disciplines covered by the auction industry.
Facebook has an auctioneering group that provides an outstanding platform for sharing knowledge. This group offers auctioneers a forum for identifying unusual items, sharing ideas and procedures, comparing notes on auctioneering equipment, and discussing other aspects of the auction industry.
A devoted auctioneer is always learning and adding to the auction company’s market knowledge. This knowledge is essential in evaluating the personal property or real estate a client wants to offer for sale. The well informed auctioneer can prepare the client for the auction, advertise in the best places, attract the most potential buyers for those particular items, and run an ethical and professional sale.
- Auctioneer and Seller Personal Compatibility
Sellers must rely on an auctioneer to do what is best for the overall outcome of an auction. By establishing a comfortable environment and good relationship with the seller, an auctioneer sets the stage for a full exchange of information that can lead to a successful sale. Clients must feel comfortable disclosing personal and financial information and should expect the auctioneer to provide sound advice.
Some experts advocate using a formula to calculate how much time to spend with each client in the business setting. A good auctioneer, however, understands that auctions are about people and one-on-one interactions lead to the best sale outcome. Some clients might require very little personal interaction while others need more. The experienced auctioneer provides the right amount of personal service to each client, earning client trust one auction at a time.
- The Auctioneer’s Education and Specialties
Auctioneers often hold college degrees, diverse licensing, and multiple certifications that demonstrate their specific interests and commitment to developing expertise. A real estate auctioneer, for example, may also hold a real estate broker’s license. But all auctioneers should engage in continuous training on many aspects of the auction business.
Part of a client’s due diligence is determining whether an auctioneer is sufficiently educated about the property being sold. An auctioneer who is knowledgeable about—or even specializes in—that type of property will be able to answer the seller’s specific questions intelligently and accurately and will be able to describe, promote, and sell the property at the best possible price. Other things being equal, well-educated bidders will bid higher if the auctioneer is also well educated and knowledgeable.
Auctioneers who expand their knowledge through rigorous training and testing develop the essential knowledge base that best serves clients who need their help. The NAA offers a broad education for auctioneers covering not only how to sell real estate and personal property but other issues as well such as applicable laws, accounting, personnel, and how to work with people in a decent and trustworthy manner.
Your auctioneer should participate in NAA training and certification, demonstrating a commitment to continuous training and specialized knowledge. A seller should never hesitate to ask an auctioneer about the training he or she pursues on an annual basis. How that auctioneer responds could speak volumes.
- The Auctioneer’s Reputation
A good reputation relies on one’s ability to develop and maintain client trust. Forbes describes reputation as “your actions [plus] what others say about you.” Here are the ten points that Forbes believes contribute to a good reputation:
- Do what you say you’ll do;
- Go out of your way to help others reach their goals;
- Make other people look good;
- Go a step beyond what is expected;
- Look the part;
- Consider your body language;
- Be consistent;
- Act with integrity;
- Get engaged with your community; and
- Be likeable.
Forbes, 10 Simple Ways to Improve Your Reputation, January 28, 2014.
These characteristics are just as relevant in the auction industry as in any other sector of the economy. Business reputation is essential to anyone’s ability to perform in the business world.
A reputable auctioneer satisfies both buyers and sellers. Sellers, with their due diligence, can find an auctioneer who is known for honesty and fair dealing. Bidders similarly can research auction companies online and patronize those that offer clear and equitable terms, clear conditions of sale, and auctioneers who are known to keep their word.
- Auctioneer Experience
Top auctioneers know how to run a business. They understand what buyers and sellers need, stay up to date on market trends and factors that can affect economies worldwide, and train continuously. But ultimately, auctioneers learn by doing.
An auctioneer can spend years reviewing trends and learning from others. But it is the day-to-day experience–conducting real estate auctions, personal property auctions, using specific software packages, answering questions, doing research, taking bids, and dropping that gavel–that reinforces the training and information from other sources to create a well-rounded auctioneer who knows what is best for each client.
An auctioneer who has operated an auction company for a decade or more has streamlined the auction process. That auctioneer has seen shifts in trends and can probably detect the beginning of a trend change faster than the one who hasn’t been in the business very long. This is so important for sellers.
An auctioneer’s experience can make the difference between a good sale and a great sale. The experienced auctioneer knows how to save money for a seller while protecting buyers from unfair practices. Whether suggesting the best day for holding a real estate auction or recognizing and heading off a potential problem, experience makes a difference.
- Auctioneer and Auction Company References
A seller looking for a reputable auction company wants to find one that has satisfied similarly situated clients. Some companies offer client references or testimonials. Sellers should also look for client comments and reviews online.
Whether someone has shared a comment on a Facebook page, has taken the time to write a lengthy review, has provided a glowing letter of recommendation for the auction company’s use, or has been listed by the auction firm as a reference, reviewing these is part of the due diligence any prospective client should do before engaging an auction company. This client feedback should confirm that a particular auctioneer can deliver a successful auction time and time again.
Sellers should also contact several of the auctioneer’s references. They should ask questions designed to determine whether the auctioneer is the right person to handle the property being sold. A former client who says he or she would hire the auctioneer again, without reservations, makes a powerful endorsement.
- The Auctioneer and Auction Company Should be Properly Certified and Licensed
In the United States, twenty one state governments regulate auctioneers, issuing auction firm and auctioneer licenses to those who meet established requirements.
These criteria ensure that the auctioneer’s personal and professional history demonstrates integrity, honesty, and professionalism.
In addition to licensing, an auctioneer can become certified in specific areas of auctioneering. The NAA offers training and certification in many specialties. The NAA guidelines include a Code of Ethics and suggested business practices that give the auctioneer a clear roadmap for successfully running the business professionally, fairly, and ethically. NAA certifications attest to the auctioneer’s knowledge, skills, and ethical standards.
By undergoing NAA training and certification, an auctioneer demonstrates a commitment to ensuring a client’s reliance is not misplaced. An auctioneer who specializes in estates might train to become a Certified Estate Specialist (CES) or even a Master Personal Property Appraiser (MPPA). One who focuses on real estate auctions can obtain the NAA’s Accredited Auctioneer Real Estate (AARE) certification. An auctioneer who offers online auctions should obtain training in technology-based auctions and might even obtain the NAA’s Auction Marketing Management (AMM) certification.
A seller should ensure that an auction company has the appropriate licensing within a particular state and inquire into any additional certifications the auctioneer has. These qualifications, as a whole, demonstrate the specific knowledge of the auctioneer(s) and the auction company’s cultural commitment to continuously expanding industry knowledge.
- The Auctioneer and Auction Company Should be Bonded and Insured
When an auction company says it is ‘bonded and insured,’ what kind of bond does it mean? Auction Companies may hold Surety Bonds and/or Fidelity Bonds.
A potential seller should specifically inquire as to whether the auction company holds a Surety Bond or insurance. An auction company can obtain insurance to cover losses or may elect to obtain a Surety Bond to protect clients. For a Surety Bond, the state holds the bond secure. If the business fails to meet its contractual obligations or experiences employee theft or damage, the bond money would cover the client’s loss. Insurance, which represents the other part of a client’s protection, would cover lawsuit expenses and/or claims for things like theft or injury on the auction site premises.
In contrast, a Fidelity Bond protects the auction company from certain losses such as embezzlement. This type of bond does not protect the auction company’s clients.
- Auctioneer’s Memberships in Professional Associations
Professionals generally associate with others in their industries. Associations provide networking, education, certification, and other benefits for their members. Auctioneers are professionals and potential clients should ask them about their memberships.
The NAA represents thousands of auctioneers worldwide and an auction professional should belong to this organization. By hiring a member auctioneer, a seller leverages the powerful alliances and knowledge interchange that improve the likelihood of a more successful auction. An auctioneer should also belong to the Facebook auctioneering group which provides a forum for day-to-day sharing of information. Many states also have professional auctioneer organizations. International organizations such as the International Society of Appraisers can also enhance an auctioneer’s skills and knowledge.
Sellers should inquire into all memberships. An auctioneer who is also a real estate broker will belong to the National Association of Realtors, the state association of realtors, and even a local realtors association. An auctioneer who serves bankruptcy clients will belong to the American Bankruptcy Institute.
By performing this due diligence, the seller can develop a full picture of each auction company and compare them fairly before deciding which one to hire.
The more thorough the research, the more confidence the seller will have in the ultimate decision.
Tom Jordan, Auctioneer, CAI, AARE, AMM, CES, MPPA, has been an auctioneer for almost twenty years. He is licensed as an auctioneer in North Carolina, Virginia, and South Carolina and as a real estate broker in North Carolina and South Carolina. He is the owner of Carolina Auction and Realty, a Raleigh, NC company offering online real estate, commercial equipment, estate, business liquidation, and benefit auctions. He holds a Bachelor of Science in Business Administration and is a graduate of the Certified Auctioneers Institute at Indiana University. He serves as the Vice Chair and Trustee of the NAA Education Institute and as Chairman of the Conference and Show Education Committee.
Looking for a gas station convenience store at auction? Well we have one. Online Bidding Auction. Located in Sanford, North Carolina right off of I-95 Interstate. Ends August 15, 2017.
The following list of good auction house bidding practices will prepare you for an auction. This list of things to do before biding will give you the knowledge to help you protect yourself from making big mistakes at an auction and in turn will save you money.
1. View the catalogue
Auction houses will usually have their auction catalogues available one week prior to the auction date. Most auction houses offer their auction catalogues on the internet or a hard copy that is mailed out or picked up at the auction house. Hard copies usually have to be purchased. The average cost for a catalogue is $10.00 to $25.00. This fee is to cover the cost of printing the auction catalogue.
2. Figure out what lots you are interested in bidding on
While you are looking through the auction catalogues, mark the lots you wish to bid on. I usually make a mark or highlight the lot in the catalogue, doing this will help you find the lots that you are interested in easily at the preview and while the auction is taking place.
3. Pre preview research
After you have finished looking through the auction catalogue, research the lots you are interested in bidding on. The auction house will provide a description and sometimes a picture of the lots being auctioned. Use this information to research the lots before going to the preview. This way you will have an idea of what to look for during the preview.
4. The Preview
It is important to attend the preview and give yourself plenty of time to preview all the items you are thinking of bidding on. Even though you previewed the catalogue, do not forget to ask if there is an addendum to the catalogue. Most of the time the auction house will add lots after the catalogue has been published. While at the preview, you should inspect the items you want to bid on. Make sure to inspect the item for any damage, things that don’t look original, maker marks or signatures, quality, and that the lot number is correct. While viewing the items at the preview, decide which items you want to bid on and which ones you don’t. You should do these prior to the start of the auction. There won’t be enough time to do these after the auction starts. Most lots will sell in 30 seconds during the auction.
Do you have any questions about the items you are interested in? If you do, then this is the time to ask them. Auction houses will have their specialists and staff ready for you at the preview so that you can have all your questions answered prior to the auction. Remember no question is a stupid question; do not be afraid to ask questions.
6. Do your homework
Now that you have narrowed down the items you want to bid on, you should spend some time researching them properly. Here is a list of some things to consider while researching:
- Maker marks or signatures
- Condition: What effects it has on the value of the item.
- Is the item original?
- Is the lot complete?
7. How much should you pay?
This is a very important question to ask yourself. Setting your maximum bid is essential. I mentioned before each lot of an auction sells in about 30 seconds. In this time you do not have the time to determine what you want to pay for an item. You are guaranteed to over pay for an item if you do not set your limits for each item prior to auction start. It is very easy to get caught up in the fast pace of the auctioneers chant or bid calling. You should take into account the following things when determining your maximum price:
- Any condition issues.
- Buyer’s premium that will be added to the hammer price.
- Any tax.
- Shipping or transportation fees.
If you like more information on how to set your maximum bid price read my article on how to bid at an auction.
8. Buyer’s Premium
Make sure you find out if there is a buyer’s premium and how much the premium is. The average buyer’s premium is 10 to 25 %. If you plan on leaving absentee bids, bidding on the internet, or paying by credit card you should ask if there is an addition buyer’s premium or any charges that applies.
9. That’s not going to fit in the trunk; do I have to take it with me?
An auction house expects you to take your items with you. Most auction houses require you to pay for the item(s) and remove them on the same day. If you are buying small items this should not be a problem. If you are buying large items such as furniture or artwork you should make shipping and transportation arrangements prior to the auction. I know exactly what you are thinking… “I don’t even know if I am going to win the lot! Why should I make transportation arrangements?” This is true but you need to be prepared if you do win the item. You don’t want to incur storage fees from the auction house. I know the next question that you have in your mind… “How do I arrange shipping for an item that I don’t own”. The answer is simple; most auctions houses have shipping and delivery departments or a list of local shippers that knows the shipping needs of the buyers. To get a shipping estimate, all you have to do is tell them the lot number and give them a few details about where it is going to go and you are done.
10. Pre Register
Most auction houses will allow you to pre register. This is usually done at the preview of the auction. You might be asking yourself, “why should I pre register?” the main reasons you should pre register are:
- So you don’t have to stand in line on the day of the auction especially if you are running late and about to miss your lot.
- If there are tying bids, auction house will use the lowest bidder number to break them. Pre registering usually gives you a lower bidder number.
- You won’t have to stand in the line. The time you save can be used to do some last minute checking on the items you are interested in or find something to add to your bidding list.
What should you look for when finding an Auctioneer?
Actually, when anyone is hiring an auctioneer, the criterion is fairly uniform. Here are our ten most important things to consider when hiring an auctioneer:
- Market knowledge
- Personal compatibility
- Properly licensed
- Properly bonded & insured
Let’s look at these in more detail:
Empathy may well be the #1 auctioneer trait to evaluate. Does the auctioneer you are talking with seem interested in your situation and circumstances? Until an auctioneer knows about your story — why are you looking to have an auction and/or why are you hiring an auctioneer — no auctioneer can prescribe what services you require. Secondly, does that auctioneer genuinely appear concerned for your welfare — more-so than his own? Does the auctioneer suggest the best day for your auction per his schedule, or yours? Does the auctioneer suggest ways to save you expense, or just ways to enhance his profit? In other words, does the auctioneer seem “loyal” to you, or himself?
Market knowledge is essential. Is the auctioneer knowledgeable about the property you wish to sell? Does he know how and where to advertise your auction? Does the auctioneer know how prospective buyers are looking for property such as yours? The more your auctioneer knows about your property and knows how to attract ready, willing and able bidders to your auction, the more your property will demand, and the smoother the entire auction will be.
Feeling comfortable with your auctioneer is paramount. If you are not comfortable with an auctioneer you interview, your instincts are probably right, and you should hire someone else. Your choice of auctioneer must be someone you can talk with — as well as listens to you. You will be sharing details about your own financial and/or personal life; you have to trust your auctioneer to give you sound advice based upon your situation. Said another way … do you seem to “click” and share some common perspective? You’ll be spending time with your auctioneer, so getting along is important.
Simply put, does your choice of auctioneer have a sufficient education about the property you wish to sell at auction? Even better, is your auctioneer a specialist in the type of property you wish to sell? Potential buyers will have questions — and if those questions are answered accurately and in an intelligent manner, the more confidence they will have in the auction, and the more likely they will be to participate. Too, auctioneers must be educated enough to properly describe, promote and sell your property. Lastly, does your choice of auctioneer have an education commensurate with the likely bidder pool? Bidders’ education and specialties will be better served with an auctioneer with similar achievement.
Bidders participate in auctions to the degree they can trust the auctioneer. From the simplest notion of trust — that when the auctioneer says, “I have $500 here” he really does — to fair, equitable, honest terms and conditions with a lack of small print and adhesionary tactics … bidders respond with more, higher bids when they have faith and confidence in the auctioneer. And sellers need to be able to trust their auctioneer as well, from assurances the auction will be conducted as promised — to payment will be made per the agreed method and timeline. To the extent your auctioneer has a good reputation; the better your odds are of a successful auction.
It is reasonable to assume that an auctioneer with ten years experience selling cars probably can service your car auction needs better than an auctioneer with only two years experience. The more auctions an auctioneer completes — the more expertise is acquired and the more likely an “unusual” situation is less unusual to a more experienced auctioneer. The fewer times your auctioneer thinks, “I’ve never had that happen before …” the more likely your auction will go according to plan.
Don’t hire any auctioneer without at least being provided references … and better yet, contact at least three of those references to inquire about their experiences. There may be no better measure than a prior client’s opinion of an auctioneer — and while the willingness to provide some references is certainly encouraging, their opinions and evaluation can help you decide if this auctioneer is likely to meet your needs. Imagine the difference between, “I was completely satisfied, and I’d hire her again without reservation,” to “I really wasn’t happy with him. There were several things he had promised to do that he didn’t.”
It is absolutely imperative that the auctioneer you hire is properly licensed in the jurisdiction of your auction. While about one-half of the states in the United States license auctioneers more or less statewide, the other half have little or no licensing requirements. Nevertheless, an auctioneer who acts without the required licenses is, by default, being dishonest with you and the public at large. Further, an auctioneer lacking a license in a jurisdiction where one is required suggests even more concerning issues — “Why isn’t he licensed?” or “Was he licensed, but isn’t anymore?” Insist your auctioneer holds all required licenses.
Properly bonded & insured
Even the best of auctioneers can have things happen which are out of their control — the money is stolen, someone trips over an extension cord, or the caterer’s food causes an illness. Bonding provides sellers a form of guarantee in cases where the proceeds of your auction are not provided to you per your agreement; a bond pays you those monies. Similarly, insurance helps to pay for expenses related to lawsuits and/or other claims against you and/or your auctioneer. It is reasonable to expect your auctioneer to provide both some type of bonding and insurance.
Sellers should inquire if their auctioneer is a member of their state auctioneer association, and the National Auctioneers Association. With all that’s going on in the auction industry, there is little other way for any auctioneer to stay, “up-to-date,” than being a member. Too, meeting with, networking with, and learning from other members allows auctioneers to offer the most current and profitable services to their clients. By hiring a member auctioneer, sellers can leverage powerful alliances which can only make their auction a bigger success.
More and more sellers are choosing the auction method of marketing to sell their real and personal property. As such, more and more sellers are hiring auctioneers. By using this guide, sellers can help themselves maximize their auction experience by choosing a credible and capable auctioneer.
Happy New Year from all of us here at Carolina Auction Realty! With January upon us we are excited to greet a brand new year of sales. Our dedicated team is eager to get working. We want to remind you that if you are making a move and looking to sell your estate, liquidate your business assets, or even put some of your antiques and collectibles on consignment, Carolina Auction Realty offers a great solution. With our expertise in both live and online auctions, we can turn your assets into cash efficiently and at top market price. Visit us at carolinaauctionrealty.com or give us a call to see how we can help you.
Any one need brand new light fixtures at below contractors price? We have thousands of them. From inside to outside lights to Crystal Chandeliers to wall light fixtures. You name it we have it. Light Fixtures auction is online bidding only. Starts August 12th, Starts ending August 26th at 8″00 PM Eastern. For complete catalog, pictures and online bidding visit www.CarolinaAuctionRealty.com. There 700 lots.
NAA Auctioneer Tom Jordan held the largest non-farm auction land sale in the history of New Bern, N.C., over the weekend. The 272-acre residential retail project was appraised at $10 million prior to the auction.
Marla Webb has been in real estate and land auction sales for more than three decades and has learned there are varying results.
She said 60 percent produce day of auction sales, 20 percent bring advance bidding and another 20 percent end with sales after the auction.
Saturday’s auction on the 272-acre Lake Tyler subdivision on Washington Post Road and other commercial properties was touted as the largest non-farm auction land sale in the history of New Bern.
Webb, who is the director of business development said there was not enough competitive bidding at a Saturday morning auction, attended by more than 50 people at the subdivision site.
Webb said earlier in the week that the subdivision, with 400 single family lots, plus five tracts of commercial land, was appraised at about $10 million. There was a reserve bid price total of about $4 million going into the auction.
The auction, which was conducted by Raleigh auctioneer Tom Jordan, was designed to gather competing bids on selected few single-family lots, then various tracts, with multiple lots and parcels.
At the end of the auction, the plan was to ask for a high bidder to purchase all the property.
The early-morning auction only attracted eight card-carrying bidders.
Webb said they all expressed interest in various parts of the sale and individual negotiations would begin on Monday.
She said there were also two interested parties looking at purchasing the entire package, but that they did not send representatives to the Saturday auction.
“It is a fully developed subdivision,” Webb said. “The streets, the underground utilities are in, with a 60-acre fully stocked lake, these are all in place. Millions of dollars was done. There is a $1 million (sewer) lift station and it has all city sewer and water. It is on the very edge of the city of New Bern.”
The subdivision was started in about 2003 and ready for building in late 2007, when the economic bubble burst.
It was developed by Gene Dunn Construction of New Bern.
“His family has been doing business and developing properties around New Bern for two generations,” Webb said.
Webb had marketed the auction extensively, sending color brochures to builders, developers and land investors from Washington, D.C., to Charleston, S.C., and west beyond Charlotte.
The Crying the Auction has existed long before Auctioneers were known as “Knights of the Hammer” “Hustlers” or “Colonels. The term “crying” a sale followed shortly after the time when Roman soldiers thrust spears into the ground to signal the start of Auctions for the dispersal of the spoils of war.
An early term for an Auctioneer was an “Out-Crier.” To understand the origin of the Out Crier, we need to review his predecessor, the “Town Crier.”
It is believed that the first Town Criers were the Spartan Runners in the early Greek Empire. This position evolved as Europe developed.
As England colonized the world, the position of the Town Crier spread with it. Before the general populace could read, Town Criers brought the news to them, and served as spokesmen for the King. Town Criers were protected by law. “Don’t shoot the messenger” was a very real command; anything that was done to a Town Crier was deemed to be done to the King and was therefore a treasonable offense.
In addition to reading Royal proclamations and local bylaws, the Crier prevailed on market days, sometimes involved in the sale of damaged goods. It was Christmas in 1798, when the Chester Canal Co. sold some sugar damaged in their packet boat and this was to be advertised by the “bellman.” (Town Crier)
The similarities of both the Town Crier and the Out Crier are most evident. The bell was a very important tool for both the Town Crier and the Out-Crier to obtain the attention of the people and to gather a crowd. Most early Auctions were conducted in central locations such as the Town Square, central coffee houses and Inns. Posting announcements, broadsides and handbills were the trade mark of both Criers. A powerful voice directed to a primarily illiterate assemblage was an attribute of both.
The primary difference between the two Criers was the fact that the Auctioneer was not an official court or government position. However, it seems to me that the Auctioneers learned to copy much of what the Town Crier did in an effort to add importance and professionalism to their sales events.
The addition of the “Auction Hammer” or gavel to the use of the bell, added formality and a sense of finality to each and every Auction transaction. Hanging a red flag above the central location of the Auction also provided the image of an official event. Even the Auctioneers apparel was meant to elevate his position a notch above the common folk and give the illusion of importance.
It is still true today, that many auctions contain functions once used by the Town Crier. A court ordered foreclosure Auction sale may be conducted in the lobby of a municipal building with official public readings rendered in a clear loud voice prior to conducting the sale.
As the Out Crier evolved to be known as an Auctioneer “crying” techniques changed. Auctioneers transitioned to “Bid Calling” and perhaps a more rhythmic and refined “Chant” depending on their specialized markets of employment.
The 18thC Auctioneers of pictures (paintings) and books were very knowledgeable salesmen who very quickly described the positive attributes of what they were offering in their specialized fields to a primarily “dealer based” crowd. The country peddler Auctioneer who purchased his goods at a rapid fire wholesale auction on the docks of an American city, would bid call from his wagon at a much slower pace to his retail customers. He would take time to explain the fine attributes of his imported goods – get the highest price and distribute as much as possible to the crowd at that price.
Auctioneers of timber, standing grass, livestock and animal furs would sell very quickly to their educated buyers in a wholesale market. However, they were no match for speed in comparison to the Auctioneers selling perishable goods in a daily wholesale market. The auctioneers that were selling fresh fish, fruits & vegetables daily had to sell extremely fast and disperse the goods fast enough to get to a secondary market to be distributed to consumers by late morning on the same day.
So who is responsible for today’s rapid fire “dealer” market chant? It can’t be the automobile Auctioneers as their very first multi-vehicle dealer style auction wasn’t until 1938. However, the Automobile Auctioneers and Livestock Auctioneers certainly have developed fantastic bid calling chants.
I would credit the Tobacco Auctioneers for being the first group to truly combine speed, rhythm and clarity to quickly disperse their commodity to professional buyers in a wholesale market. These knowledgeable Auctioneers were responsible for properly allocating the pallets of tobacco leaves to the small group of professional buyers as they walked and sold in the warehouses of the American South. Eventually, the Tobacco Auctioneer’s rhythmic chants were used in radio marketing to millions of Americans by the American Tobacco Company (Founded 1896) ending with “Sold American.”
Crying any Auction to the general public will warrant a slower bid calling style, with perhaps more explanation of the items being sold. This is true of Real Estate, Benefit or Fund Raising Auctions, the sale of Antiques and Collectibles, as well as specialized commercial equipment.
Regardless of what an Auctioneer is selling, it is perhaps one of the few instances where “crying” is joyful.
But the industry is changing to online auctions. I must say online only is less man power, but I still like to out cry an auction.
On April 29, 2014 we had a successful industrial real estate auction of the bankruptcy of Kenactiv Innovations Inc. the personal property we had sold at auction in March for $200,000. On April 3 United States Bankruptcy Court approved Carolina Auction & Realty to market and obtain an opening offer, so that we could commence with an auction. There were all over 25 inquiries. On April 29 the auction was held with bidders from North Carolina to Las Vegas. The bidding opened at $700,000 concluded in a high bid of $1,060,000 in the court approved the sale. If you want to get your property sold call Carolina auction and Realty.
Subscribe for updates about upcoming auctions
Carolina Auction & Realty
CAI, AARE, ATS, CES, MPPA
Raleigh, NC 27606