DO YOU HIRE AUCTIONEERS?

by Deb Weidenhamer

I told you I was mad and I wasn’t going to take it anymore. So after last month’s column, my company continued to run the "Do you hire auctioneers?" ad campaign. I guess I wasn’t the only one who was mad because we received so many calls from other auctioneers that share concerns and frustrations about the ethics in our auction industry. It is even more apparent that there is a distinctive need for the industry to police itself and that policing begins with each auctioneer.

Along with auctioneers, we have heard from many clients of auctioneers -- possibly your clients. Most had easy questions to answer about the terminology of "absolute" or "reserve". We explained these terms and sent out a terminology sheet that also reviewed the typical auction process. We heard from other clients that had stories of bad auction experiences and just wanted to vent their frustrations.

The worst story we heard was from an auctioneer’s client less than 200 miles away. Three days prior to his call to my company; his mother’s lifetime doll collection had been sold at absolute auction. I was shocked as the client told me that he found original boxes and packaging for the dolls in the trash behind the auction site. If the packaging and dolls would have been left in tact -- the doll’s value would have substantially been raised.

The client read a proposal from the auctioneer that made it sound like minimum prices were guaranteed to the estimated amount of $40,000. The words "absolute auction" never appeared in the auction contract. Contract headings did not match the contents of sub-paragraphs. The client felt uncomfortable with the whole contract process and tried to terminate the agreement within twenty-four hours of when it was originally signed. The auctioneer said "no", it was too late as advertising had been placed for the upcoming auction.

The client in a determined effort to put his mind at rest contacted previous clients of the auctioneer. Adding to his uneasiness the client heard some very disturbing rumors about the auctioneer. The client attempted to discuss these rumors with the auctioneer and the auctioneer’s response was a demand that the client reveal the source of the rumors. Never once did the auctioneer deny the rumors or stand by his business practices.

The estimated $40,000 auction was in reality a $13,000 auction with about $3,500 in expenses. The client was disappointed in the outcome of the auction and the auctioneer’s response to his client was "hire a lawyer".

This is not an attempt to embarrass an auctioneer or share an auction failure -- every auctioneer has had one or two. This is a way to remind ourselves of the basics of good business practices. There are several business lessons to learn from this truly tragic story.

Explain every detail of the auction. Terminology such as tag, lot, sort, group, box lot, sold, absolute, reserve and minimum are not common to most auction clients. Make a terminology list for your clients to refer to during the auction process. This ready reference will be of comfort to your client and will save you and your staff many questions.

Know the auction product or find someone else who knows. As an auctioneer you are not expected to be an expert on every product -- you are expected to know an expert. One phone call to a doll auctioneer would have told the auctioneer in our story that he needed to sell the boxes along with the dolls.

It is impossible to explain the terms of the auction too many times. I have sat across from a client when signing a contract to conduct an absolute auction and have heard the client say - "now I don’t want to see this stuff sell for nothing - don’t give it away". I review with the client that there are no guarantees in an absolute auction. There is no easy way to deal with an absolute auction other than in an absolute manner. Don’t sugar coat the terminology - share your experience with auctions of the same type but always close with "there are no guarantees -- we will do our best for your auction". Then do your best. A written proposal should be included as an exhibit to the auction contract. Whether you agree or disagree with this practice; if an auction dispute goes to court, the proposal will be attached to the contract for auction. Make sure your proposal doesn’t say anything that your skills and staff can’t support. Adopt the motto: "under promise and over deliver". Have a lawyer review your auction contract. In the age of legal software and books of tear-out contracts, it is easy to copy language that sounds appropriate for an auction contract, but it may well not be in the best interest of your auction company. For a wise investment of $50 to $100 a lawyer will be able to review your auction contract and make sure it makes "legal sense".

Every written contract has an understood seventy-two hour cancellation clause. Yes, this means auction contracts too. Just because in an auction there is no waiting period for the finalization of the sale doesn’t mean it applies to the auction contract signing. If a client wants out of the auction -- let them out. Ask for payment for the advertising and possibly for retraction advertising then cancel the auction. If someone wants to terminate an auction with your company, take it as an omen and gladly go on your way. Never defend a rumor -- prove it wrong. Remember the time you heard a rumor about someone and your immediate response was "I don’t believe that". Let that always be what is said for you and your company. Staying above reproach is the best way to avoid the rumor mill.

NEVER, EVER, EVER, TELL SOMEONE TO HIRE A LAWYER. I mean never. There can’t be a bigger admission of guilt or an even bigger admission of an inability to do business. The greatest part of a businessperson is his or her ability to negotiate and make decisions. If the words "lawyer, lawsuit" or, "sue" are used -- everyone has lost. If you and your client can not come to an agreement find an arbitration party. Most Better Business Bureaus offer inexpensive or free arbitration services for business disputes. I am sure you are curious how the client and auctioneer ended their dispute. They have gone to arbitration conducted by the state auctioneer’s association. This is where the dispute should have started out, but the client didn’t know of the state auctioneers association. However, this is an issue for next month’s column.