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  • Writer's pictureMike Brandly, Auctioneer

Absolute auction … and how many bidders is enough?

Absolute auctions [should] constitute the “genuine intent to transfer to the highest bidder regardless of price.” However, if there are -0- bidders, or one bidder, we have held that’s not a reasonable number of bidders to open the bidding.

What is a reasonable number of bidders? When are enough bidders registered that it’s prudent to open the bidding? Of course, it is paramount that the seller is informed and makes this decision to proceed or not — or allows the auctioneer to decide.

We completed a mathematical analysis concerning the number of bidders needed for one lot and the odds of having the most interested bidder and the second most interested bidder (alpha and beta.)

From that analysis, 5 or fewer bidders constitute less than a 50% chance of having alpha and beta and 6 or more bidders constitute more than a 50% chance of having alpha and beta.

Here are two treatises concerning that “alpha and beta” analysis:

In a broader sense, there appears to be substantial evidence 0, 1, or 2 bidders is not enough, and 3 or more bidders are essentially required. However, so long as auctioneers are consistent (given the circumstances) and following the client’s legal directions, this issue can be properly managed.

As we wrote in more detail about absolute auctions, there can be no conditions that counter the “genuine intent to transfer to the highest bidder regardless of price:”

Mike Brandly, Auctioneer, CAI, CAS, 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, Executive Director of The Ohio Auction School, an Instructor at the National Auctioneers Association’s Designation Academy and America’s Auction Academy. He is faculty at the Certified Auctioneers Institute held at Indiana University and is approved by the The Supreme Court of Ohio for attorney education.

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