Two hundred people, one car, twenty seconds. As an auctioneer, my job is to use my powers of persuasion to create the urgency to buy. Quick glances, fidgeting, eye contact, folding of the arms. Your body language and uncontrolled behaviors often tell me more than you can ever imagine even before the bidding starts. Don’t worry though. I’m really no hero and hopefully no villain. I’m simply keeping the score in a game where subtlety and nuance will eventually dictate my every move.
When the interest is high amongst dealers at an auto auction, life is good. I will usually start off no more than $500 off the ‘money’ (the reserve price) and increase my bid by $100 every half-second to second. You may collude at this point. You may stare. You may even bid. It really doesn’t matter in the beginning. When the interest is strong, so am I, and I have a strong, entertaining and smooth rhythm that will keep your eyes alternating between the shiny vehicle and yours truly for minutes on end.
When our eyes do lock for a second or maybe two, I’ll offer all the things you need for assurance. Fearful looks especially bring out my smile and I’ll slow up my chant a bit if you’re new to this game. But then again maybe not. If I’m in a sea of familiar faces I’ll go to my strongest buyers first. Always. Even in an auto auction that’s loaded with the general public, over 90% of my ‘real’ bids will go to no more than a few dozen dealers. I pair off those who have the strongest interest while my ring personnel hoot, holler, and literally beg their way into getting just one more bid. Keeping the energy and excitement of the moment, in every possible moment, is what will make the car market move in the end.
Speaking of which, I have my own arsenal of phrases and lightning quick tricks. For example, newbies will almost always respond yes if I simply halve the bidding increment. If I’m at ‘five’ (smart auctioneers avoid saying the word ‘thousand’) and I’m asking $51, I’ll have my palm out, my expression open and gentle, and say “50 and a half, ONE time.” The age-old saying, “I’ll try anything once” almost always hits their subconscious and a nod of affirmation will happen 95+% of the time.
From there if the other fellow bids and they shake me off harder, I’ll usually try humor. “I’ll tell you what. If you bid just one more time and he don’t bid again, I’ll sell it to you! How’s that for a deal!” Keep in mind I’ll typically only break my regular chant when that one extra bid makes the difference between a sold vehicle and a “no sale.” Otherwise, I’ll keep on rolling to keep the sale going strong.
When the sale is weak, there are usually three reasons. High reserves, low interest, and/or my own personal favorite, collusion. When it comes to collusion, your only choice is to make a market of your own. At the point when a group of interested buyers are a little too relaxed and sitting on their heels, I just bump up the bid and get the car out.
That is unless I’m dealing with a seller who has jack squat’s worth of experience. In that case I’ll either “kick it out of the mud” (alternate between higher and lower asking prices until a firm bid takes place), find a buyer out there who will “hold the bid” (honor the current bidding price, in exchange I’ll pretend like I don’t have money and then sell it to him quick as a reward), or simply take one interested buyer and “run him up” (have them bid against themselves) until they either hit the reserve price or the colluders break rank and bid on the vehicle.
This entire process usually lasts less than ten seconds but the results make an absolutely enormous difference in the success of the sale.
“This entire process usually lasts less than ten seconds”
That’s sure not enough time for a guy like me to figure out what’s going on. So Steven, would you agree that an amateur bidder should stay out of these shark-filled waters, and instead rely on the more deliberative atmosphere of eBay?
So Steven, would you agree that an amateur bidder should stay out of these shark-filled waters,
Given that he has just admitted that he pulls bids out of the air when he feels like it, it seems wise to stay far away from such auctions.
Steve, I admire you for your honesty in this article but DO NOT admire you or any other auctioneer who, “run him up”…..I know, I know it’s part of the game but it’s just plain dishonest. I was a buyer for a dealer in the 70s. Bought at Bordentown, Manheim,Pa, Skyline and Chrysler auctions. The Chrysler dealer auction was the most civilized.
Anyone who wants to buy at auctions has to start somewhere so do as I did and go to as many auctions as you have time for and observe and learn. Hell, for that matter go to some antique auctions too……before you even consider bidding. Learn the game. I would never bid on a car multiple times unless I could actually see the other bidder bidding…..not a phantom bidder.
It’s no more honest for an auctioneer to, “run him up”, than for a deli owner to charge “selected” customers $6.00 for the same Ham & Cheese sandwich that he sold to other customers for $4.75….And I know a deli that will do that. I don’t go there anymore. Same as I would avoid the lanes at the car auctions that had the worst “run him up” auctioneers.
I’ve purchased cars at the car auction. Simple. Easy. Got the car. Got the market value. Take off few thousends of dollars (more expensve model-more money off) – that is the auction worth.
Bid. As soon as bid reaches your money point – STOP bidding. Let them have it.
I saw people paying dealer prices at the auction. Stupid. We go to the auction to buy well under value. For the value I can go and shop at privates or dealers. The auction guys on many ocasions were pointing their hoses (this is what they use to strike, a piece of hose) at me to go up just one more time. But i would fold my hands on the chest and stick my thumb down and they know, they got to the Great Chinese Wall at that point.
The example was given as “…take one interested buyer and ‘run him up’ (have them bid against themselves) until they either hit the reserve price…”
How was the bidder harmed if the unit in question would not have sold for any bid less than the reserve price?
Why do I get the distinct impression that it is very important to stand in the flanks of the room where all of this is happening ?
pleiter:
I think what is most important is not to be in the room at all. Otherwise someone like Mr. Lang will take advantage of you.
Okay, first of all auctioneers don’t sell ham and cheese sandwiches. For goodness sake. I would love it if everyone waiting at the sale would simply pay the same exact price for the same exact item. I could simply count numbers for two hours and collect my paycheck.
What I deal with is a market. Pure and simple. Everyone who is there, is there for their own self-interest and their behavior reflects it. Auctions are ‘social’ constructions of value, and what that entails is that anyone can bid, or not bid, whatever amount they wish. Your holier than thou sanctimony won’t change the fact that the seller won’t liquidate the vehicle if it doesn’t meet the reserve. It also won’t be worth a flip if he’s fired. The way I see it, my job is to ‘unfire’ that seller and get his property as much money as he’s entitled to given it’s quality.
Let’s use an example related to Iraq and the cost of that war. If five defense contractors got together and colluded on pricing for a particular service, to this countries detriment, what would you do? You can’t find a ‘ham and egg sandwich’ in the form of a bid when a few enlightened souls decide to keep them all behind the counter.
Auctioneers for thousands of years have used their powers of persuasion to destroy that behavior. If you have a problem with that, go find some college students or a federal agency you can teach ethics to.
cleek: “How was the bidder harmed if the unit in question would not have sold for any bid less than the reserve price?”
Well, he wasn’t harmed. He couldn’t have bought the car at a lower bid anyway. An auctioneer that “runs him up” is doing the same thing as the salesman who negotiates until the buyer meets the dealership’s minimum.
What I take away from this piece is that bidders must always remember the auctioneer is working for the seller, just like a real estate broker. The auctioneer isn’t some sort of neutral referee. And though he may be a real nice guy, his job is to get top dollar.
Sorry, Mr Lang, dishonesty is just that. Justify it any way you like, it doesnt change the outcome.
Well, as you yourself say, sometimes the reserve is set too high.
Taking advantage of the buyer by having him bid against himself until the artificial floor price set by the seller is reached means that the process is inherently skewed towards protecting the seller’s interests, even when the seller has been the one that overestimated the market value. In short, the game is rigged, and you help rig it. Let the seller drop his reserve or eat the no-sale; he valued his car too high. If it’s a market, let the market speak.
And in answer to your Iraq question, I’d try them for treason.
Now, want to talk about the sellers that use shills and plants? That’ll be fun.
“And in answer to your Iraq question, I’d try them for treason.”
Well a well run auction will actually do that in the financial sense. When buyers collude, the auctioneer will act on behalf of the seller to break up that cartel. If they continue doing it, either the vehicles will be no-saled or a willing buyer will get the opportunity to make a profit.
The same is true with sellers. If they want too much, they get nothing. If only one person sees the ‘reserve’ value of that asset, it’s my job to act in the interests of both parties so that the deal gets done. I’m an agent, and I will only make money over the long run if deals get done.
Like any transaction, auctions always reward those who have the product knowledge and the relationships needed to make good deals. If you simply want to order a car, there’s always the ‘ham and egg sandwich’ you can enjoy at Carmax or the Saturn dealership. Some people value a no-hassle experience and are willing to pay for it. Fine by me. I do that whenever I go food shopping. When it comes to higher cost items, many of us prefer doing due diligence and buying at auctions.
“Well, as you yourself say, sometimes the reserve is set too high.”
If you want to get that seller to lower their reserve, that’s your job as a buyer. Collude, lowball, go up to him after the sale, or whisper to one of the ring personnel what you’ll be willing to pay while the sale is going on. It’s not the auctioneers job to listen to rationalizations that go beyond a dollar number.
Auctioneers put deals together period, and exceptional ones do so as quickly as possible. If that means rewarding a good buyer who buys up a substantial portion of the inventory with a lower price, or bumping the price up to the sellable range, that’s what I should and will do.
It takes two parties to deal, and so long as that reality exists at the auction it’s my job to help make that deal happen. Whether I ask for that higher price, or the seller does after the bid calling, is completely irrelevant. In any negotiation buyers and sellers will always have the opportunity to do these things, and I simply do the exact same thing on the block for both parties. I am an agent. An agent who just happens to represent each item available for approximately twenty to thirty seconds.
If you can’t take responsibility for your own actions, and won’t be willing to learn and build relationships, don’t buy at an auction. Those who don’t know anything about the product they’re buying are far better off buying from a retail location with far stronger guarantees, That’s why I get my meat at the supermarket instead of the livestock sales.
Bidders in the lane have a simple choice- bid or don’t bid. Don’t see how you can blame the auctioneer on that. As far as auction experience goes- I’d recommend attending at least 1 sale with the intention of just observing. At the first sale I attended, I was overwhelmed by the cadence, noise, exhaust and overall atmosphere. By the second or third sale I was “in tune” and ready to buy confidently.
While I don’t have the inclination to buy a vehicle at an auction, I find this very interesting. It’s an excellent picture of a free market at work – the seller has more information on the product up at the block than the buyer(s), and the intermediary auctioneer’s incentive is to make those needs meet or they don’t get a cut of the sale. It’s not collusion IMHO – the auctioneer doesn’t feed their family unless both the seller and buyer feel it’s worthwhile.
I have to disagree with the idea that running someone up is okay. First of all, a hidden reserve is a set up against the buyers. If you hide the reserve, you are more than protecting the seller, you are really cheating the bidders of their time. If the reserve is not hidden, then I see no rational point to bidding less than the reserve. However, if the buyers know their are hidden reserves, it’s their own fault for playing along.
Regardless of reserves, “running up” the bid is the same as using a shill, and I believe in Texas both would be illegal. The good news for the auctioneer is that we won’t string him up on sight anymore, he gets due process and fines/jail time.
I would be interested to hear if Mr. Lang has ever tried slowing the sale to a crawl to break up colluding buyers. Their time is money after all. If they are not dealer principles, they may be under pressure to get inventory (not likely in this market, but ordinarily), and if they are dealers they won’t want their time wasted anyway. Perhaps staring them down may be the way to go. He knows better than I do.
At any rate, I don’t go to auctions because I know better. It’s a game for people who can average out their mistakes over many deals. They are also rarely really honestly run, as we can tell from the editorial. They live in the world of “that’s the way it’s always done,” rather than the world of clearly right and wrong. I doubt 1 in 100 would understand it if you told them that according to Kant, colluding in an auction is clearly wrong because obviously it ceases to be an auction if either side colludes.
I have only known one auctioneer personally, and he definitely was the type to play by the rules rather than act on principle. I doubt questioning the integrity of the common practices ever passed his mind. Most of your good neighbors are exactly the same type of folks.