Hidden reserves disguised as phantom bidding

[sports-rings]

As I prepare for the Hunt auction this weekend, I had a long talk with someone on their staff today since I want to participate in the internet and phone auction.

I learned today, that if I am a phone bidder, and I am bidding on an item with a hidden reserve, the auction house will "bid against me" until the reserve is met.

I now must wonder, that in past years, as I won and lost various auction items at Hunt, if I truly was in a bidding battle with other collectors, or if I wound up in a bidding frenzy against an imaginary foe.

I am a disiplined bidder and will usually not go over a predetermined amount, however, I now feel like I have to be more careful than ever when bidding.

Why can't Hunt just come out and tell the hidden reserve price, or start the auction at this amount?

[glchen]

Is this only true if you are a phone bidder? I bid on Hunt all of the time but only through the Internet.

[sports-rings]

I am not sure.

At least on the internet, you could have time to plan and think about your next bid or move. On the telephone, you are blind to what is really going on and you need to make split second decisions.

I was at the Hunt Superbowl auction and I was able to bid and see if I was competing against others in the audience, or David Hunt who may have been bidding for an absentee bidder, or phone bidders. Now I guess not only was David bidding for absentee bidders, he was also bidding against the reserve.

[murphusa]

I have known David since he started the sports business from his fathers furniture one and have to say he has always been upfront with everything.

In auctions where more than one person has left a bid he take it to the highest bid between the two before it goes to the phone and live.

If the co-signer has left a reserve David will bid to the reserve and no more.

There are cases where both of the above take place

[iggyman]

According to the website the reserve is the "minimum bid" on their monthly internet/phone auctions.

#3. Each lot has a minimum bid, which must be placed in order for the item to sell. Our minimum bids are the actual reserve prices and if met the item(s) will sell; there are no other “hidden” reserves or minimum bids. All bids must be at least 10% above the current high bid showing. You may enter any bid amount you wish (rounded to the nearest dollar) as long it is at least 10% above the current high bid. See “ceiling bids” under #4 below for more details.

On the other hand, the rules for their "live" auctions are a bit different.

All lots will be listed with starting bids, which do not necessarily reflect
published estimates or reserve amounts. Proxy bids placed via phone, fax,
email, or mail (see #2 above) will be entered into the online pre-bidding
system along with any applicable reserve amounts so that online bidders
will be able to see the current high bid at any given time.

Also found this nugget regarding the live bidding format. Now, my wonderlic score is not the best, but I believe it basically says that Hunt can raise or reject your bid if they are having a bad day....

The auctioneer reserves the right to reject any bid or raise which, in
the auctioneer’s opinion, is not commensurate with the value of the
lot being offered or which may have a detrimental effect on the lot in
question or the auction as a whole. Reserve bids may be executed on
catalogued lots on behalf of the seller and shall be executed confidentially
in a manner similar to the execution of absentee bids.

Lovely Day...

[ruth-gehrig]

Yeah I don't like anything about hidden reserves. Yes at least they up front about it but still...
Hidden reserves encourage more bidder participation which the auction house(s) love because it encourages bidding wars even if it is against a pre-determined amount set in by a mystery person. For some people their egos get the best of them and they end up bidding it up just "a little" higher.

The part where Hunt allows themselves to reject any and all bids as they deem necessary is quite scary.

[thecatspajamas]

I think you guys need to remember there is a difference between internet bidding and "live" bidding. Hunt has monthly internet-only auctions that are in pretty much the same format as other internet auction companies where there is an ending time which is extended on lots that continue to get bids, etc. In the internet-only auctions, the reserve is the starting price.

The situation Michael is talking about is one of Hunt's LIVE auctions which they hold periodically throughout the year (but not monthly) in which he is on the phone bidding in real time in an auction that is ongoing with one item being presented for bidding at a time. You can submit bids via internet for these live auctions ahead of time (pre-auction bids), but to my knowledge, you cannot bid online in real time as the auction is going on.

Generally speaking, auction houses do NOT like reserves, hidden or otherwise, as it means there is a chance the item will not meet the reserve when it goes to auction (which means they don't make ANY money on it). If a consignor asks for a reserve on their item, they will almost always try to give them a lower reserve amount to ensure that the item actually sells. In some cases, typically for high-profile, big ticket items, they will agree to a higher reserve knowing that, even if that particular item does not reach the reserve, they can use it in marketing and draw in more bidders, whereas if they did not give the consignor the high reserve, they simply wouldn't consign the item. Even so, it can be quite a struggle for a consignor to get the high reserve that they want.

I have not been to any of Hunt's live auctions, though I do bid in their internet-only auctions frequently. From what I'm understanding the "hidden reserve" situation to be with the Live auctions though, it seems to be a matter of preference. The bar is still set at a certain dollar amount whether you know ahead of time what that amount is or not. One way or the other, if the bids don't reach that reserve amount, nobody is taking the item home with them. It may be that Hunt could be a little more up-front with the procedure, but as long as the auction house bidder drops out when the price reaches the reserve amount, does it really matter if you had to bid against a "phantom bidder" to get to that amount vs. knowing what the reserve was ahead of time and starting your bidding at that level? As long as you don't bid more than you're comfortable spending, you still either win the item or, if your comfort level is below the reserve, you don't. This isn't the same situation as some auction houses having a "house account" that actively bids in their auctions simply to drive the price up.

As for the bit about the auctioneer having the right to reject bids, my understanding is that also applies to the live auction situation and means that if an item isn't getting any bids, you can't shout out "One Dollar" and take it home with you, or every time someone bids you can't just repeat their bid plus one dollar. It means that just because you're in the audience, if your bidding is disruptive to the general process, they don't HAVE to accept your bids. They probably haven't had to enforce the rule very often, if ever, but it's there just in case.

Lance Fittro

[Mr. Zipper]

Originally Posted by iggyman

The auctioneer reserves the right to reject any bid or raise which, in the auctioneer’s opinion, is not commensurate with the value of the lot being offered or which may have a detrimental effect on the lot in question or the auction as a whole.

Isn't one of the primary draws of the auction format the chance that you may get a bargain?

It seems as if Hunts has eliminated that possibility. Now it seems as if the hammer must be catalog price... or more.

[Scott Garner]

Originally Posted by glchen

Is this only true if you are a phone bidder? I bid on Hunt all of the time but only through the Internet.

FWIW, this is also true of Hunt major auctions when you bid through the internet and live auctions. I personally found this out during the 2010 All Star Hunt's auction when I bid on one of the lots from the Dick Emberg collection.