General Myths and Misconceptions about Auctioneers and Auctions

• Only used as a last resort
• Auctions are Fire Sales and everything is sold at a discount
• Only distressed property and junk is sold at auction
• You only see Auctioneers when there is… Debt, Death, Divorce, or Distress

Auction Facts

• Auctions have existed for over 2,000 years and is the truest method of price discovery.
• The competitive bidding of an auction determines the market value of an asset.
• Auctions generate excitement and allow interested buyers the opportunity to gather and tell the Auctioneer how much they are willing to pay for an asset.

Who says auctions are for distressed property only?

“Priceless” works of art are ONLY sold at auction!

Why?

The competitive bidding of an auction determines the market value and establishes the highest price a consumer is willing to pay. No More. No Less.

It’s Your Investment. Get the Most Money You Deserve.
Other Ways of Selling Assets but at a Discount: garage & yard sales, flea markets, craigslist, and swap meets

Only at Auction

• The auction team coordinates the auction, prepares the assets for sale and appraises their value
• Auctions are professionally marketed locally, nationally and internationally.
• Auctioneers utilize technology to increase bidder participation.
• Auctioneers create a competitive atmosphere among bidders achieving the market value for the assets they are charged with selling.
• Buyers come to auctions to find unique items and compete against other interested buyers.

Now you can see why auctions are so popular today, and they really are an advantage to the seller.

It seems that nobody really knows what the, “oldest profession” really is — since nobody bothered to note that first profession as it was developed.

While many reference prostitution as the, “oldest profession” it’s doubtful that can be substantiated either.

How old is the auctioneering profession? Is being an auctioneer the oldest profession? The second oldest?

First, what is a profession? Most authorities proclaim a profession is:

A job, vocation or other employment which requires specialized training and/or knowledge.

Per the National Auctioneers Association:

Records handed down from ancient Greek scribes document auctions occurring as far back as 500 B.C. At that time, women were auctioned off as wives. And, in fact, it was considered illegal to allow a daughter to be “sold” outside the auction method.

Does 500 B.C. constitute the oldest profession? Not hardly. Historians date other early professions, such as:

• Doctor/Physician, 2600 B.C.

• Massage Therapist, 2900 B.C.

• Dentist, 3000 B.C.

• Accountant/Scribe, 3000 B.C.

And, there are other professions likely pre-dating 3000 B.C. including: Mother/Caretaker, Teacher, Farmer, Artist, Tool maker, Priest/Clergy, Fishermen, Hunter, Carpenter, Architect and Woodworker …

It appears auctioneering has been around for over 2,500 years. That’s certainly a long time, but not nearly as long as some of the medical and other professions, which have been around over 5,000 years.

Any profession that has thrived for over 2,500 years is notable. The public knows well that auctions have been used for centuries to sell real and personal property, and that the auction method of marketing is a trusted method for converting property to cash.

Auctioneer: the oldest profession? Not nearly, but more aptly described as the most exciting, interesting, efficient and profitable way to sell anything …

Reprinted with permission by: Mike Brandly, Auctioneer, CAI, AARE has been an auctioneer and certified appraiser for over 30 years.

The National Auctioneer Association published this “history of auctions.” Here it is in entirety:

It seems that auctions have touched almost every century, every industry and every nationality, and this list I gave you was just a small sample. Auctions date back so far in history, that no one really knows for sure how they started or who started them.

The First Auctions
Records handed down from ancient Greek scribes document auctions occurring as far back as 500 B.C. At that time, women were auctioned off as wives. And, in fact, it was considered illegal to allow a daughter to be “sold” outside the auction method.

A “descending” method was used for these auctions, starting with a high price and going lower until the first person to bid was the purchaser, as long as the minimum price set by the seller was met. The buyer could get a return of money if he and his new spouse did not get along well, but unlike a horse, maidens could not be “tried” before auction.

Women with special beauty were subject to the most vigorous bidding and the prices paid were high. Owners of the less attractive women had to add dowries or other monetary offers in order to make the sale.

In Rome, Italy, around the time of Christ, auctions were popular for family estates and to sell war plunder. Roman Emperor and philosopher Marcus Aurelius sold family furniture at auctions, for months, to satisfy debts.

Roman soldiers sold war plunder at auction. The licensed auctioneer, called “Magister Auctionarium,” drove a spear into the ground to start the auction. Today we use an auction gavel.

Auctions Come to America
American auctions date back to the Pilgrims’ arrival on America’s Eastern Shores in the 1600s and continued in popularity during colonization with the sale of crops, imports, clapboard, livestock, tools, tobacco, slaves and even entire farms. Selling at auction was the fastest and most efficient means to convert assets into cash.

Fur was especially big during this time. In his book, “Going, Going, Gone!,” Bellamy Partridge says “the Bible and the beaver were the mainstays of the Pilgrims, the Good Book saving their souls and the beaver paying their bills.”

Initially, the furs were collected from Native Americans in the fall and winter, utilizing the “private treaty” method of exchange for “wampum” (the Native American word which meant money). The raw pelts (or hides) were transported to the closest shipping port. In the spring of each year, the auction method was used to sell the raw peltries to the European merchants who arranged the transcontinental voyage to the Old World. Once the ships returned to the port in Europe, the peltries were auctioned to manufacturers, who would process them for the retail market. The early fur trade was chiefly responsible for the settlement and development of North America.

Civil War Era
Have you ever heard an auctioneer referred to as “Colonel?” It’s a fairly common practice, especially at auction schools across the country. This came about during the Civil War era, a time when auctions were beginning to flourish.

History has it that the art of auctioneering was a common practice for Civil War Colonels who regularly auctioned off the spoils of war and surplus. However, only officers of the Colonel rank could conduct them, spawning the use of the term “Colonel” by many auctioneers still today.

A short historical narrative from one of the top auction schools details this process: “As the Civil War progressed, many troop battalions made a practice of seizing property of land owners and merchants as they marched. Contraband would be collected and carried to a favorable area, then the Colonel or commanding officer would sell the goods at public sale. Even after the Civil War, military Colonels traveled to sell surplus goods and seized goods. Auctioneers followed some of the same trails and dressed similar to army Colonels to such an extent that the public began to recognize auctioneers as ‘Colonel.’

Other Names for Auctioneers
Colonel is only one name that auctioneers have been identified with over the years. Other names include “Knights of the Hammer,” and “Brothers”.” The tools of these auctioneers included the Colonel style hat, a cane, bell, hammer or gavel, and a red flag. The flag, often boasting advertising, was placed above where the auctioneer would sell on the day of the auction.

Opening of Auctions Schools
Many auction schools started in the early 1900s in America. The Jones’ National School of Auctioneering and Oratory was believed to be the first. It was started by auctioneer Carey M. Jones in Davenport, Iowa. For the first term, the school promoted “competent instructors teaching general merchandise, real estate and fine stock auctioneering.” However, many auctioneers at that time did not believe an auctioneer could be “trained.” They believed that auctioneering was a natural ability that you were born with.

Challenges for Auctioneers
Though finding goods to sell was not a problem in those days, auctioneers faced other challenges. There was no amplification system for their voices – no microphones as we know them today. So they had trouble both being heard, and keeping their voices intact.

Because travel was more difficult, and was mostly by horse and wagon, auctioneers enticed crowds by routinely offering lunch to those who came to the sale. Weather often dictated the time the auction started, as all were held outdoors.

The Great Depression
The growth of the auction industry remained until the Great Depression of 1929. Some auctioneers traveled the country to liquidate the estates of farmers whose farms had failed because of drought and bank foreclosures. The decline of the auction method of marketing followed the poor economic climate and did not rebound until after World War II.

The 1950s
Auctioneering began to make great strides after World War II. The sale of goods and real estate was booming. There was a need in certain cases to move real estate and personal property faster than the private market would allow. Thus, the modern day auction business was born. Auctioneers were now businessmen who dressed in suits and ties. They began to nurture the business and raise the reputation of auctioneers. Besides the public, auctioneers began to have links to banks, attorneys, accountants, the court system and government agencies.

The 1990s through Today
During the 1990s, technology was finding its way into the auction business. Auctioneers were using computers, fax machines, cell phones and other technology to make their businesses run faster and more smoothly. Some auctioneers began taking photographs of small auction items and projecting them onto big screens so the crowds could get a closer look at the merchandise.

Auctions burst into cyberspace in the middle of the decade. The ever flourishing eBay was launched in 1995 and would go on to become an “online leader” in the bidding business.

Many auctioneers today offer both live and online auctions to meet the needs of customers near and far. Technology allows buyers to participate in the sale without even being there.

The Future of Auctioneering
Over the years auctioneering has progressed and changed, and today it remains more popular than ever. Most everything thinkable has been sold by the auction method of marketing: antiques, household items, automobiles, land, livestock, homes, designer dresses, business equipment, and more. And thanks to professional organizations like the National Auctioneers Association, auctioneers are privy to countless educational opportunities that help them to keep up on the latest technology and learn new business traits. They network with other auctioneers to exchange ideas and to find ways to continue to meet the growing needs of the American public.

Auctioneers today are working to earn specialty designations such as Graduate Personal Property Appraiser (GPPA) , Accredited Auctioneer Real Estate (AARE), Certified Auctioneers Institute (CAI) and Certified Estate Specialist (CES). (Tell about any designations you have or classes you have taken.) NAA auctioneers are also bound by a code of ethics that protects consumers against fraud and unfair business practices.

Auctions have been around since the beginning of time because they are a highly efficient and effective business tool and they meet the needs of the public. But, they also are fun, entertaining and theatrical. Most people who attend an auction keep wanting to go back again and again.

If you have never been to an auction, join in and become part of history.

If there is one question auctioneers hear from new acquaintances, it is, “So, you can talk really fast?” Sure, we can in the United States, for the most part. Other parts of the globe have a tradition of talking a bit slower, such as England. However, generally, auctioneers are known for the fast talking technique employed when they are selling — “bid calling.”

Why do auctioneers talk fast? I think that question has a few answers:

• Tradition – The auctioneers who worked in the 1920′s talked fast, so the auctioneers in the 1930′s felt that must be the right way to bid call. The auctioneers in the 1930′s talked fast, so the auctioneers in the 1940′s felt that must be the right way to bid call. The auctioneers in the 1940′s talked fast, so the auctioneers in the 1950′s felt that must be the right way to bid call, etc.
• Economy – An auctioneer talking fast, generally, would allow the sale of 1,000′s of items to sell quicker. If an auction can be complete in 4 hours, that’s probably much better than an auction taking 10 hours for the same number of items.
• The “yes” factor – As David Palmer, Ph.D, CPA, notes:

“Fortunately, people often say ‘yes’ or agree with requests out of mindless compliance, they are frequently willing to say ‘yes’ automatically without thinking first. It makes their lives simpler and smoother.”

Mindless compliance? How could someone cause someone else to act out of mindless compliance? I think the answer is, “don’t give them a lot of time to think about it.” I’ve discussed with auctioneers all over the United States, and there does seem to be agreement that we talk fast to give the bidders less time, “to think.”

• Entertainment – Who would argue that an auctioneer talking really fast is much more entertaining than an auctioneer talking really slow? I’ve noted numerous times babies, or other young children staring at me bid calling, not even blinking once, in amazement or non-belief of what they are hearing. Fast talking is different than our every day conversations, and therefore more interesting — more entertaining.

With the myriad of other ways to buy at auction — by phone, via the Internet or by proxy, the fast talking of a live auctioneer continues, in my opinion, to allow for the highest prices in the shortest amount of time.

Anytime we give away tradition, economy, entertainment and the propensity to get a “yes” answer, we sacrifice higher prices and therefore automatically sacrifice the best interest of our clients.

Reprinted by: Mike Brandly, Auctioneer, CAI, AARE has been an auctioneer and certified appraiser for over 30 years.

What do auctioneers say, when they are bid calling? I bet I’ve been asked that thousands of times since I became an auctioneer.

Auctioneers use bid calling to communicate in a legal, entertaining, encouraging manner with bidders who are in attendance at an auction. The bid calling actually binds bidders with the auctioneer’s client (the seller) with various contingencies, while asking others to bid against the bidder in contract to form a new contract.

Then also, the typical auctioneer uses bid calling to publicize to all bidders two basic numbers: the amount that is currently bid (known as the “have”) and the higher bid the auctioneer would like to accept (known as the “want”). In between these two numbers, the auctioneer uses filler words or sounds to make the bid calling sound pleasing, and entertaining to the crowd.

For example, if the current bid is $500 (the have) and the auctioneer is asking for $550 (the want), the bid calling might go like this:

I’m at $500 n I wan $550, $550, bid on $550, I’m at $500 would you go $550, $550 …

Auctioneers typically note or announce the want between 70-80% of the time, and note the have about 20-30% of the time. Yet, these are only two of the three numbers the auctioneer has to keep in mind while bid calling.

Besides the have and the want, the auctioneer has to have a third number ready. When a bid comes in, the auctioneer has to immediately note now that the want has become the have, and there is a new want. This new want is the third number the auctioneer must have in mind at all times, and it is called “the next.”

Therefore, while bid calling, an auctioneer has in mind:

• The have

• The want

• The next

In our above example, while the auctioneer has $500 and is asking $550, the next might be $600, which the auctioneer will say aloud only when a bidder offers $550. At that moment, the $550 becomes the have and the next ($600) becomes the want (and a new next is calculated, but kept filed away — probably $650)

Not coincidentally, the next is usually the same amount more than the want as the want is more than the have. In our example, the have is $500 and the want is $550 (a $50 difference) so the next would typically be $600 ($50 more than the want)

What are these filler words or sounds between the numbers? When auctioneers first learn to bid call, these filler words are fairly easy to distinguish, such as “bid to buy them,” or “do you want it here?” or “somebody give me” …

Then later, after an auctioneer has refined and practiced his bid calling, those filler words become more like sounds, as they are abbreviated or slurred, for example: “b t em” or “do wan her” or “sbody give m.”

What do auctioneers say? They say what they have and what they want, and they fill in with sounds to make their bid calling easy, and entertaining to listen to.

Reprinted with permission from: Mike Brandly, Auctioneer, CAI, AARE has been an auctioneer and certified appraiser for over 30 years.

Cory attends many auctions. He is always looking for something to buy for

which he believes he can resell for more and make a profit.

Sometimes he buys things and makes money, and other times he buys things

and loses money.

Cory assumes a risk when he buys something -- as there is not a guarantee

he will profit.

Valerie likes going to casinos. She plays blackjack, craps, roulette, and

other games by paying a fee, and hopes she comes away from the game with a

profit. Sometimes she plays games and makes money, and other times she

plays games and loses money.

Valerie assumes a risk when she plays -- as there is not a guarantee she

will profit.

We ask this question as there is a current lawsuit filed in the United

States District Court, Northern District of Illinois

alleging that Penny Auction sites violate all 50 state's laws prohibiting

unauthorized gambling because they charge a consideration for the chance

to win prizes (or something of value.)

Previously, we suggested Penny Auction sites resembled gambling

However, we've never concluded that fact, nor stated that buying at

auction should be considered gambling. Aaron Traffas also wrote about

Penny auctions and gambling

(http://www.auctioneertech.com/2012/legalized-gambling-with-penny-auctions/)

However, an interesting statement in this lawsuit caught our attention:

Unlike normal auctions, where there are no entry fees or bidding fees,

Defendants charge an entry fee and a bidding fee for each chance to win a

prize. This is a violation of Illinois criminal statutes, 720 ILCS 5/28,

et. seq.; Massachusetts General Laws Chapter 271, et. seq.; Georgia

Criminal Code, § 16-12 et. seq.; New Jersey Criminal Law 2A:40, et. seq.;

and the Ohio Revised Code Chapter 2915 et. seq.

Does this mean if a traditional live auction or online auction charged an

entry fee, it too would be considered gambling? What if the entry fee

wasn't really a fee but some other valuable consideration such as

promising to abide by the terms and conditions ... promising to pay, or

promising to remove?

There are many live and online auctions which require a deposit (payment)

in order to enter the auction. This deposit is typically returned if

nothing is purchased, or applied to any purchases; some online auctions

charge bidders a nominal fee to "authorize" a credit or debit card.

Some live auctions require a bidder paddle to be purchased, and that money

is returned only if the paddle is turned back in at the end of the

auction. Nearly all auctions, no matter live or online, require the

bidders agree to the terms and conditions before being permitted to

participate.

Some common definitions of gambling include:

* To bet on an uncertain outcome, as of a contest.

* To play a game of chance for stakes.

* To take a risk in the hope of gaining an advantage or a benefit.

Can we say that Valerie is gambling, but Cory is not?

It seems reasonable that if this lawsuit results in these Penny Auction

sites being considered gambling, that other live and online auctions could

be considered gambling as well.

For example, could a buyer who lost money upon resale successfully show

the auction was an illegal gambling operation in hopes of recovering his

loss?

This could be a very interesting lawsuit to watch.

Reprinted with permission by:

Mike Brandly, Auctioneer, CAI, AARE has been an auctioneer and certified

appraiser for over 30 years.

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