Explanation and History of Auctions

Auction DressAn auction is a staged production. The auctioneer is not only the star of the show, but sometimes also the producer and director. It is a place where props are arranged to reinforce ambience, convey seriousness, affluence, glamour, tradition, and risk. Some estate and liquidation auctions could be affectionately referred to as a “traveling circus” because they are often held inside large tents.

Most antique and art auction houses will hold a viewing prior to the actual auction so potential buyers can inspect the items. Everything from the goods, food, and beverages are carefully staged to create areas where small groups of buyers can congregate. Sometimes a private bidding will take place between sellers, or they will have a loud conversation that is meant to be overheard and discourage potential buyers from a particular item. All these tactics are designed to conceal their own plans.

Whatever the type of auction the ambience varies considerably in an attempt to accentuate the particular goods being auctioned. However an auction is staged, there are various forms of specific dress codes among the buyers, staff, and auctioneers. Dress codes include formal wear, cowboy hats and boots, jackets and ties, or Bermuda shorts with brightly colored shirts.

The auction chant itself is symbolic and specific to an auction. Some auctioneers use a sophisticated chant, which makes it very difficult to understand everything being said. Therefore, it is important that TV screens are used allowing participants to see what the current bid is. The chant plays an important role; it controls the order of the auction and the movement of the bidding process. All this happens very quickly, and to the knowledgeable buyer the rhythm changes in the auctioneers chant let them know when lots are about to wind down or come to a close.

Not all auctioneers use the sophisticated chant, but whatever they do they must keep the audience from falling asleep. Like any good movie you have to keep people's attention until the end. To help achieve this auctioneers use filler words and humor to tell stories and jokes, especially if they see the same buyers time and time again. Keeping a light hearted atmosphere puts people at ease and may help buyers part with their money easier.

Auctioneers have a vested interest in selling items at the highest price possible because they are paid a percentage of the price. Of course the auctioneer’s success depends upon their reputation, their ability to convince people to dispose of their goods through their auction, and, of course, their charming personality. All these help keep the bidder's interest.

Auction WomenAt Sotheby’s New York gallery buyers arrive in high style ranging from Limousines to expensive exotic cars. Formal dress is the attire of choice; men in tuxedos and ladies trying to out do each other with their expensive gowns and jewels. The receptionists and staff will often be attractive and well dressed. The auction room will have expensive decorations, carpet and comfortable chairs arranged to mimic a small theater setting. The auction items will often be on display around the room. Wine and hors d’oeuvres are made available for potential buyers.

In contrast, Fish Auctions are held at dawn and attended by men arriving in dirty trucks dressed in work clothes and wellington boots. The air is filled with a salty fish smell. The large run-down warehouse setting will have a stone floor, an ecliptic mixture of folding chairs, and tables randomly scattered around the room. A giant blackboard stands at one end of the room with all the names of the fishing boats in a column running down the right hand side, followed by several other numbered columns listing the types of fish to be auctioned. Strong coffee would be the beverage of choice and about half the men would be smoking. To the casual observer the room would appear to be chaotic.

At Keenland and Fasig-Tipton thoroughbred horse auctions the pavilions have extravagant rich decorations. Upholstered seats are arranged in terraced circular rows. There are no windows or clocks to distract the multi-millionaires from parting with their money. The phones in the arenas can only receive calls and are manned by staff to connect them to buyers unable or not wanting to attend in person. Potential buyers may choose to watch the auction on close circuit TV’s while relaxing and enjoying fine dining in the pavilion's plush restaurant.

Overall, auctions are very interesting and can be intimidating at first. First time buyers are sometimes reluctant to scratch their nose, raise their hand, or cough because they do not want to accidentally place a bid.

Auction Gavel

 

As we have mentioned there are many different types of auctions, and they all operate differently. We will discuss some of the more popular types. The types discussed will include:

  1. Dutch Auctions
  2. Commodity Auctions
  3. Tobacco Auctions
  4. Publishing Auctions
  5. Car Auction

 

1. Dutch Auctions

The Dutch auctions are called reverse auctions. This type of auction was initially adopted to sell flowers in Amsterdam. The buyers would gather in a room and watch a display on a clock that would initially show a higher price than any buyer would be willing to pay. The price would continue to tick downwards until a price was reached that a buyer was happy with. At that point the buyer would hit a button that stopped the clock and be able to buy as many flowers at that price as they wanted. If any flowers remained then the clock would continue to tick down until all lots were sold.

2. Commodity Auctions (Fish Auctions)

The price of fish is set on a daily basis, dependent upon the allocated daily quantities. Before the auctioneer mentions the opening price, for a given species, they take into account the catches of the different species from the many boats unloading that day. Then the price is set and everyone knows that the price applies to all other catches. This allows each buyer to acquire enough fish to satisfy their customers. The amount allocated to each buyer is tied to their position within the industry. When there is a shortage of fish the major wholesalers are entitled to a larger share of the fish. Equally, when there is a surplus they are expected to absorb the extras.

3. Tobacco Auctions

The warehouse owner usually sets the opening price for each bale of tobacco then turns the action over to the auctioneer. The owner, who also serves as the lead man, follows the auctioneer down the aisles of tobacco bales. Prior to the auction the prices are based on negotiations with the tobacco companies.

4. Publishing Auctions

There are several variations in auctioning publishing rights. Not all countries offer the same opportunities for the rights to manuscripts. Many things are taken into consideration. Some variables factored include:

  1. Authors Status
  2. Topic
  3. Ability to Sell
  4. Market
  5. Buyer’s threshold

 

In the United Kingdom the publishing industry was born when the University of Cambridge received a royal charter to print in 1534. The University of Oxford followed in 1956. Agents with a good book may submit it to several publishers. When several publishers show an interest in the book the agent will initiate a book auction to set the price. The agent sets rules for what they want publishers to offer and also determine if the auction will be “rounds” or “best offer.”

Rounds: Publishers are given a deadline for submitting initial offers. This type of auction can be done on the phone or face to face.

Best Offer: The agent asks the publisher for their best offer. In a best offer auction the highest bidder may not win because a lower bidder may have a better marketing plan. A well marketed book may fetch a higher bid resulting in more money going to the writer.

If a hardcopy of a book has been very successful the agent may choose to auction of the paperback rights to a paperback publisher. Bantam Books in 1979 paid $3,208,875 for Judith Krantz’s Princess Daisy.

5. Car Auctions

The setting is normally a large parking lot. Hot or cold, rain or shine car auctions usually bring a mixed crowd. The vehicles are a mixture of mostly repossessed or impounded vehicles. The smell of gasoline fills the air, as the workers drive the cars onto the stage. Some cars are not in working condition and have to be pushed up onto stage. The police and or Marshals usually hold their own auction for vehicles that have been impounded or seized for one reason or another. However, they still use an independent auctioneer.