Wednesday, October 04, 2006

How Our Auctions Work

We recently received an email from someone who felt that we should change our format and how we conduct our auctions. While we are always open to suggestions, some comments still amaze me... In the following, I have posted my responses to this individual who seems to feel that we shouldn't make money or that we should only offer the goods that he is interested in buying.

(Please note: Spelling & grammatical errors are those of the particular person, as this is copied from the original email and response. Some parts may be slightly modified from the original response, in order to insure clarity of the topic.)

Denny (not the real name, of course)
Thanks for your comments. I'm not exactly sure what is meant or intended by some of the suggestions, but I will offer my responses to each of your comments below. Some auctioneers aren't going to like me much, because I may be giving away some of their "secrets", but we try to help everyone understand how auctions really work, how some other auctions operate, and how WE operate.
Comment...........: i would like to make a comment about your auction my opinion is that it is not been done in the right format .

1. the auctioner is not susposed to start with a bid as you do. just offer the item with discription after the first bid is made then go from there

I guess I'm not sure how I should get a bid if a suggested bid is not made, as most people will sit there until they hear a number that they might want to start it at and put up their card. However, I think I know what you may mean... if you've been to other auctions, it seems that the items always get a decent starting bid and almost everything sells! This is because most of those use "House Numbers" and run the bid up to the "reserve" price and sells it back to the house number if they don't get a bid at or above the minimum reserve price that must be met before they can sell the item. A "House Number" is used as a consignor bidder number, since at a reserve auction, consignors or their agent may be allowed to bid. Of course, this gives the appearance that everything gets bids and is sold. There have been many discussions in auctioneer forums about this. While it may not be illegal, in our opinion, it doesn't seem ethical. I'm not trying to fool anyone and I let it be known that we don't use this format. Perhaps I should reconsider my position and do like the others?

2.all high dollar items if you expect to get or even come close to the value then it should be stated as a reserve auction so people will know that it will be going for a higher price.

In accordance with Texas Law, ALL Auctions are With Reserve, unless otherwise stated. This means, unless an auction is advertised as Absolute, then it IS With Reserves. There are very few auctions that are advertised as Absolute. Again, many auctioneers leave it to the buyers perception and don't make a big deal about this, so people may think that nothing has a reserve and HAS to sell. This is completely wrong. At an auction with reserve, it doesn't mean that everything has a reserve, nor does it mean that items without a reserve HAVE to be sold. The reason that the law is written in this manner, is to allow the discretion of the auctioneer to be used to also reject bids that are deemed to be Unacceptably low. An auctioneer has a fiduciary responsibility to the seller to try to get the highest price possible. The auctioneer also has a responsibility to the buyer to treat them in a fair and ethical manner, but this does not mean that he/she is required to sell an item for a two dollar bid if it is deemed to be unacceptably low for the item being offered for sale. So, if an item is worth $500 and someone wants to offer a $10 bid, the auctioneer is not required to accept it. At many other auctions, in an effort to keep this from happening, they may start the item at a higher starting bid and "run through the bid" in the hopes someone will jump in and bid before they sell back to the house number, or if they accept the $10 offer, they may then bid on behalf of the consignor's reserve until they get to the reserve price and sell it back to the house number (if they do not get a floor bid above the minimum reserve). If we do not get a reasonable starting bid, we simply "pass" the item. If an item has a reserve and only one person is bidding, we will bid on behalf of the reserve until it is met or it will be passed if the reserve is not met. However, perhaps you meant that we should announce whether a particular item has a reserve. There is one problem with this (which is why many other auctions use the "house number" and just run the bid up to the reserve)... If an item is announced that it has a reserve, most often it won't even get a starting bid. People want to bid, but if they are told it has a reserve, they automatically think it's going to sell too high (as implied in your statement) and won't even bid. While we have very few items with reserves, MOST of the items we do have with reserves tend to sell for more than the reserve price. This is because we do not allow consignors to give unreasonably high reserves or we won't accept their goods.

A primary point I would like to point out... we had bidder leave an absentee bid for a RedWing Crock of $200, because they had to leave for a little while and didn't want to miss it. We explained that it would be opened for bidding at one-half of their their absentee bid and that we would bid on behalf of their maximum absentee bid. The person came back before we brought it up and we pulled the absentee bid. I asked for $100 to start the bidding and they didn't even raise their card. When we passed the item, someone called out $25, which we felt was unacceptably low. Therefore, as I stated above, the auctioneer is responsible to obtain a reasonable price for the consignor and the bid was rejected. Perhaps we may need to reconsider our position and do it like the other auction houses that sell it back to a house number?

Please keep in mind... if you consigned goods to our auction, we would offer you the same consideration to help insure that your items weren't sold for an unreasonably low amount. Bargains are one thing... but, if I only had a $25 bid on a $500 item, I don't think you'd be too happy with me, as a consignor, if I sold it for $25. However, if I tell the bidders that this item has a reserve, then the likelihood of even getting a bid is almost zero. Therefore, we do not announce reserve prices or whether the item even has a reserve. This helps to get the bidding started and most often results in a sale.

3. an auction is susposed to be fun not if you dont get what you want for a item then you want (sic) sell it.

Most of Comment #2 addresses this.
Most of the items we offer, do NOT have Reserves and if we get a bid, IT SELLS! However, if no bid is offered or a reasonable bid is not offered, it is "passed," as stated above.

4.give better discription of all merchandise

We try to describe the merchandise to the best of our ability. We encourage everyone to attend during the Preview time and inspect all items prior to bidding. Most people that have an interest in an item, already know what it is and are waiting for it to come up for bidding, as they have seen the item while they were Previewing before the auction started. If we have a particular item that we feel needs a more detailed description, such as some higher dollar items, we may spend a few moments to make sure everyone knows what it is and in some cases, a little education or history on the items and perhaps it's retail value. However, we don't have the staff or the time to research every item and we leave it to the Bidders to determine how much they are willing to bid, as they may often know more about an item than we do. If we have a particular item, such as the Roseville or Red Wing items in a previous auction, we try to find out a little about the item, but we can't do this for everything. It's up to the bidder to make their own decision on the item and bid according to their own judgment.

5.expect that not everyone likes japan made items try some good old usa made items.
6.never offer junk you cannot expect to succeed in being a better auction house if you continue in operateing that way and you wonder why people leave or you cant draw more people in to your auctions.

We have a wide assortment of items, from "Japan" to "good old U.S.A" and other parts of the world. While one person may not care for "Made in Japan," there are many others that collect them. Those that are looking for the "Japan" items may be patiently waiting for those items, while we're also selling McCoy, Hull, Roseville, Red Wing, Haegar, Rosenthal, and other items. Some are looking for smalls, general household goods, furniture, and many other things and are also waiting through the other things they may not have an interest in... Our auctions usually feature 350 to over 500 items, which sometimes is more than we may be able to get to in the evening. If a particular item did not make it to the auction block this week, it could possibly show up again next week or within a couple weeks or so.

As far as "junk"... I'm not sure which items you are referring to... I had one person tell me that they thought Roseville was junk, but to others it is HIGHLY collectible (not to mention, expensive "junk"). The old adage "One man's junk is another man's treasure" has real significance in the auction business. We try to offer a wide variety of goods to suit the varying interests of those who attend. By the same token, I'm often surprised at what some people bid on and how much it sells for, when I didn't think it was worth much. By the same token, I'm sometimes surprised by how little a particular item brings.

7. some of what you call antiques has been repaired and not by a restorer.

You are correct in some cases. We also have a lot of items that are brought in from estates that we must sell. If it is a high value item that the person tried to repair, it may still be offered, although we know that it won't bring anywhere near what it might have. But it doesn't mean that is doesn't have an interest to someone. If it still doesn't sell, it may end up in a box lot. We do not normally accept such items from a Consignor. But, if it's an estate, in most cases we have to take everything and try to get the best price for the estate, as we are expected to do so by law and the administrator of the estate. Sometimes, we may miss things and not realize that an item had been repaired, unless someone points it out. We're human, but we do try the best we can to make sure that people know what they are getting. However, this is an auction and like all auctions, everything is offered "as-is, where-is" and the buyer is responsible for making their own determination of condition, value and suitability of the items prior to bidding.

8.and be reasonable you should always offer a 30 day return policy

As I stated, this is an auction and like most EVERY auction, everything is sold "as-is, where-is" with no warranties or guarantees expressed or implied. This is standard throughout the auction business. If I state that an item works, then we have made a guarantee and we will stand by it. If we weren't able to show that it worked when it was brought up and you get home and it doesn't work, as long as you contacted us promptly to report the problem, we would be happy to refund you for the item. Otherwise, it is up to the bidder to determine the items' condition, size, quality and value, separate and distinct from any representation made, as stated in the Terms & Conditions of almost every auction in the U.S.A.

9.and finaly its not all about the auction house makeing all the profit its also about the people that attend the auctions to get fair deals also

If we don't make a profit, we won't be around very long. There is no business that can sustain a loss a stay in business. So far, we aren't making a profit, yet. People attending our auctions have definitely been getting fair deals, as many items may sell for less than they should. What is considered fair? Would you consider it fair if you were the seller and your items were sold for only a small fraction of their wholesale value (not to mention the retail value)?
Or is it that it just appears that some items are selling lower at other auctions and being sold to a house number? Perhaps we need to reconsider our operations and start using this method also?

We're trying to run an honest and ethical auction. It's hard to do when you're trying to also overcome the perceptions that so many people have, when they've seen it done differently and think that things are selling, when they're not. But, we hope to build our customer base on our reputation of honesty and try to help others understand that we are the ones to come to if you want someone that you can trust.

If you would like to come by, we would be happy to sit down and talk about the auction and listen to your suggestions and try to see how we can all learn from each other.

Jim & Patricia Ford
Texas-National Auctioneers
Office: 281-479-7848