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  • Writer's pictureMike Brandly, Auctioneer

Auctioneers and the “zero-sum” game

What is a zero-sum game you ask? Generally, in games or life, a zero-sum game means that a gain for one player is equivalent to an equal-sized loss for another player. What could this mean for an auctioneer and/or the auction industry?

Relatedly, the American Bar Association, suggests that attorneys serve various roles when working with clients. These roles include positions as an advisor, advocate, negotiator or evaluator. If an attorney is giving you advice, be sure you know his or her perceived role because these responsibilities vary depending upon the circumstance.

Today, we focus on so-called advocate attorneys who encourage auctioneers and their sellers to make the terms and conditions, contracts, policies, and procedures entirely seller-favorable, nearly always forgetting that sellers benefit from more bidders/buyers and this is indeed a zero-sum game.

In fact, this is nothing new. Auctioneers have historically made their auctions almost entirely seller favorable, with the only bidder/buyer benefit that all will sell to the highest bidder.

Does this sound familiar?

All sells today as-is, where-is, no guarantees, no warranties, no returns, no exchanges, no financing … and once you buy it you’re responsible for securing it.

In fact, many auctions today don’t even extend this modest benefit of “all selling to the highest bidder” to bidders/buyers, selling with reserve with minimum bids, seller bidding, seller confirmations and the like. In other words, in many cases, there isn’t even a modest “prospect of a deal” nor a “prospect of saving time.”

Further, and worse yet, some auctioneers routinely misrepresent property and/or take fictitious bids. We also see terms which say the auctioneer may refuse any bid for any reason, void any sale at any time and even retract your bid … it’s a wonder bidders/buyers ever think to purchase at auction, but they do all the time.

Our point today is that as the needle continues to swing to auctioneer/seller-favorable, it continues to swing away from “buyer-favorable” and with fewer bidders and buyers, sellers suffer as this is not only a zero-sum game but apparently counterintuitive to many auctioneers (and their attorneys.)

If your attorney is being an advocate, maybe suggest another role such as advisor or evaluator. It seems clear to us the advocator attorneys over-zealously promote positions with little or no regard for the long-term effects nor more subtle consequences.

As an auction expert witness in over 30 high-profile cases throughout the United States, it is clear to me that the vast majority of these cases were — at a minimum — prompted by auctioneer terms and conditions or other policies which were viewed as adversarial.

Finally, we’ll say it again … if your completely-seller-favorable terms and conditions are designed to win in court, you have your eye on the wrong target — and rather you should endeavor to stay out of court:

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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