Hidden reserves disguised as phantom bidding

[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