posted on May 9, 2001 09:59:32 AM
I've attended a lot of live auctions over the years, but recently ran across a "rule" I didn't know about. At this auction, the auctioneer had brought up 3-4 collectible plates. Two women were bidding against each other, when one paused and said "Is the blue one included?" The auctioneer affirmed that it was. The second bidder then said to the first bidder (they were standing fairly close to each other) "Hey, all I want is the white one--we'll split it!" The auctioneer (who has always been a nice friendly guy) then got really ticked off, and said "I won't have any of that at MY auctions!" and he refused to sell it to either of them. Apparently there is a rule (at least in my state) that you can't "conspire" to not bid. This really seems unfair, as the auctioneers are always "conspiring" to get the bid higher, so it seems like it would only be fair to allow the bidders to make a deal on the side if they wanted to! I'd never seen this before but after checking around I find it's common practice. Have any of you ever had any experience with this? Is it common in other areas?
posted on May 9, 2001 10:30:30 AM
Hi
I have been at auctions where if you wanted to do that you would arrange it before the auction. Example: 3 dealers wanted the same painting so rather then pay a high price for it they agreed to let one do the bidding and if they won it they would sell it and split the profit. Doing that is one way to avoid paying a high price on a bidding war.This works if you are a dealer.
But to arrange to do that in front of the auctioneer, it's not
right. I do agree with him on not selling it to either one after that happened.
posted on May 9, 2001 10:44:58 AM
This is taken from the Terms and Conditions of one auction company I have done business with:
9. It is unlawful and illegal for Bidders to collude, pool, or agree with another bidder to pay less than the fair value for a lot. Bidders in the sale acknowledge that the law provides for substantial penalties in the form of treble damages and attorneys' fees and costs for those who violate these provisions.
In my opinion, bidders making agreements among themselves to not bid on particular items in order to hold down prices is no different than sellers getting together and agreeing to bid on each other's items in order to drive up prices.
posted on May 9, 2001 11:20:54 AM
Check your state laws; in my state collusion is illegal. A case was prosecuted a few years
ago against dealers in decoys (if memory serves me correctly). Trying to save a few dollars at auction cost them dearly.
Whether you agree with the law or not is irrelevant; all you need to decide is if it's worth the risk or not.
posted on May 9, 2001 11:27:49 AM
Cool way to up the bidding ~ blocking both interested parties. I know I'd jump at the chance to bid, knowing that both were willing to go so high for just one plate. What a deal I could sell them for!
posted on May 9, 2001 11:48:33 AM
OK--I can see why the auctioneer wouldn't like it, and why he might make such a rule at his own auctions. But why is it illegal? Why isn't it just the freedom to make a good deal if you can? Auctioneers are always throwing together items to bring up the price, so why can't buyers make a deal (even if it's in front of the auctioneer and ticks him off) to share an item? In a real store, I can go in with my sister and buy something to share (thereby keeping the cost down for both of us,)--so why is this illegal at an auction?
posted on May 9, 2001 12:21:55 PM
It is illegal because not making the activity illegal would lead to professional bidding rings.
The law (where it may actually be written) is not aimed at the casual collector or auction going novice. It is aimed at the re-sellers who would band together as the opportunity arose to avoid the competition among themselves for various items. The selling price would thereby be deflated.
After the auction, the "ring" would meet somewhere to divvy up the spoils.
Jonathan Gash talks about bidding rings in some of his Lovejoy novels. I don't recall if these rings are actually illegal in England (where the novels take place) but if caught there is always an auctioneer's goon or two about to crack heads.
posted on May 9, 2001 12:42:05 PM
Bidding rings and collusion are illegal everywhere.
What happens in a ring is that one member of the ring bids, and buys the item. Later, the ring gets together and has their own auction. The excess paid over the original purchase price is split up among the members of the ring.
In effect, the ultimate buyer gets the item for less than its value, and those who refrained from bidding at the original auction get paid for their restraint.
The original auctioneer and the original owner of the goods get screwed.
posted on May 9, 2001 01:02:18 PM
capotasto
What you are saying is right.
But, how about the innocent people who don't know that the auctioneer has
his bidders in the back of the auction raising the price until it reaches it's reserve......That is not legal either but they do it. And how about the owner of the item, he/she is raising his card so as to raise the price until it reaches the
reserve. I know, because I am an auctioneer. And what we do is start everything at $5.00 where it ends, it ends. To me that is what is called an auction. Today there is too much fixing at auctions that it takes the fun out of it.
posted on May 9, 2001 03:20:52 PM
Actually My Mom just did this the other day. There was a bedroom set she wanted, but she didn't need the bed. There was a young man who only wanted the bed. So, my Mom bid and won, and sold just the bed to the young man. It actually was to the benefit of the auctioneer, because the young man never would have paid what the set went for,and neither would my Mom. But since she new that she could some some of the money for selling the bed, it allowed her to go higher than she would have. It was really a win-win for everyone. Except of course the person my Mom was bidding against.
Our auctioneers knew about it, and didn't say a word about it. But we have been going to the same place for 20 years. Never knew it was illegal though!
posted on May 9, 2001 04:15:08 PM
Tonimar1...if there is a reserve the item won't sell unless the reserve is met, correct? So, the buyer is either going to have to bid the reserve or he won't buy the item and it doesn't matter who is bidding when the item is under the reserve amount because the item isn't for sale then.
posted on May 9, 2001 10:55:07 PM
I think one should define what kind of live auctions one is talking about. Highend commercial auctions would not tolerate any kind of collusion on part of bidders or sellers shilling on their own lots. Their reputation is too important to have such activities. They do not want to loose the confidence of either consignors or bidders.
Local estate sale auctions - anything goes. You have to judge where the merchandise is coming from and who owns it. If it is owned by the auctioneer, than watch out for house bidders raising prices on you. If it is a friendly auction atmosphere, than certain illegal buyer collusion will be tolerated, if done discreetly.
If is a small operation with regular auctions in hotels with a mix of consignors and house owned material, than you have be to extremely careful. Hard to find bargains as the auctioneer will try to max the price on their own material. Usually items open with reserves or will be shill by house bidders. If price not met, they plan to not sell the item and auction it again in the next sale.
Problem with ebay is everyone thinks they now know how live auctions work. In reality, very few truly know how live auctions work, and all the games that goes on. If you are planning to bid in live auctions, look for a mentor. Or better yet, use an auction agent if one is available. Will save you a lot of money.
posted on May 10, 2001 01:16:44 AM
All auctions are different, each with its own 'personality' which is determined by the house rules, the auctioneers, and the clientele. Some look simple, but may actually require weeks to learn. They are geared so that the average person will be fleeced. But they can be a goldmine to those who know and abide by the unwritten rules. If the auctioneer knows you and likes you you will find that Tiffany vase described as 'a piece of old glass'. If he doesnt like you he will carefully read the signature and throw in a free appraisal.
Shilling is occasional but you need to respect it for what it is and not make waves. Bid pooling is rare, and would normally be voided by outsiders. It is best to establish a specialty or a niche at regular auctions so that the other dealers will often respect your bid and not compete.
And for you to do likewise. In other words dont try to be a hoover and vacuum up everything in sight. People will get annoyed and run you up for general principles.
Now and then you might find someone dogging your items. If they are a regular then it might be worth your while to pay retail to teach them respect. Or run them up and pull out at the last second. After a while they will avoid you and your items like the plague.
And dont ever assume the the 'high roller' bidders necessarily have the slightest idea of what they are doing. For some its a head trip, just to say they spent $200 on a coke bottle when in reality it might be worth $2.
Ive seen those types get shafted so many times by repros that watching them has almost become a spectator sport.
posted on May 10, 2001 01:14:03 PM
Joycel: It simply is illegal. It's called "bid rigging" and/or "collusion"and is universally against the law if not so universally enforced. The auctoneer, since he openly heard their remark in the middle of calling the bids, would have been in a very compromising situation if he had continued the sale of that item. In fact legally he could no longer sell that item on that auction. Next week he could sell it. If he had been off to the side of the room before the sale actually started, where he could have "claimed" he had not heard any such remark(regardless of whether he had), probably he would have let sale of that item continue. If the seller of that item had heard the remark, he at his option could have pulled it from the sale. One of the few incidents that would give the seller the legal right to do so, since technically once placed on the auction an item belongs to the auctioneer until he sells it.
[ edited by PaladinLvs on May 10, 2001 01:21 PM ]
