Hammer Time: The Power of Nuance
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.
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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.