“Mr. Proffitt, I know you’ll understand why I’m calling when I tell you what an auctioneer did to my husband and me. We hired this man to sell some of our things and the prices he got are ridiculous. I mean absolutely ridiculous!

This is the most outrageous …”

I’ve had a lot of training to handle calls like this. God blessed me with seven children.

Over the years, when one of my kids started talking nutty and wouldn’t listen to reason, I learned to just tune it out … like I quickly did this caller. I’ve got more important things to do with my time than waste it listening to nonsense, and the above is a snippet of what was a bunch of nonsense.

Let’s understand something right up front – an auctioneer cannot generate selling prices beyond what a market will give. Bidders alone dictate how much they will pay for assets in a given auction. Auctioneers aren’t magicians that can make selling prices be whatever sellers want them to be. If they could they would, but they can’t.

When I was in private practice, this is what I advised auctioneer-clients to tell sellers who complained about selling prices:
“I proposed a marketing plan designed around the amount of money you wanted to spend. You agreed to the plan and we made it part of the auction contract. I fully executed the plan. I also prepared and conducted the auction, just as I contracted to do. You haven’t made a single complaint about the marketing I did or my conduct of the auction. Your sole complaint is with the prices your things brought. I can’t control selling prices and our contract says so. The prices you got were the best the market we reached would give you at this time under these terms. I can’t make bidders pay more than they will bid.”

All of that is true if the auctioneer has completed these five steps:
Design a marketing plan that the seller approves.

Make the plan part of the auction contract.

Include a provision in the contract that the auctioneer does not warrant any certain selling price or other outcome.

Conduct the marketing plan in accordance with the contract.
Conduct the auction in accordance with the contract.

We’re going to focus on steps one through three.

Sometime back, the auction industry rolled out the term “auction marketing” to describe what auctioneers do for sellers. Every auction must be marketed in some manner to alert prospective bidders of what will be offered and when.

A plan is a logical first step to any marketing effort and auctioneers should create marketing plans for every auction whether they are Friday-night box-lot sales or large real-estate offerings.

A marketing plan details how this effort will be pursued and typically includes the publications where ads will be placed, the number of fliers to be produced and distributed, direct mailings to be done, other media advertising, public relations efforts, and the details of the signage.

A seller’s interest is to have assets offered in an auction that will likely produce the result the seller is seeking. The auctioneer’s duty is to serve the interests of the seller.

Not only does the seller have a right to know how assets are going to be marketed, the auctioneer has a strong interest in sharing this information with the seller. There are three reasons for this. First, if the seller is paying for some or all of the marketing, the seller is certainly entitled to know where the money will be spent.

Second, if the seller requests revisions to the marketing plan, the auctioneer needs to work with the seller on these changes.
Third, the auctioneer wants to ensure the plan meets the seller’s approval. Failure to obtain this approval is an invitation for the criticism and attacks auctioneers frequently suffer when market response in auctions is less than what sellers want.

“Why didn’t you advertise my things in The Looneyville Herald?”
“Why didn’t you pass out fliers in all the surrounding counties?”
“Why didn’t you do radio advertising?”

“Why didn’t you …”

Here’s my question to auctioneers who don’t prepare and share marketing plans with their sellers: Why do you want to be second-guessed and have to answer such questions from upset sellers when a pre-approved marketing plan would have mooted all of this?

Once the seller approves the plan, it should be incorporated into the auction contract. There are two ways to do this. First, the details of the plan can be written directly into the contract.

Second, if the plan has been drafted in a separate document, that document can be incorporated into the contract by reference. Either way the auctioneer should make the marketing plan part of the contract to evidence the parties’ agreement to it. The process of creating the marketing plan, sharing it with the seller, and gaining the seller’s approval serves to bring the seller and auctioneer into alignment on this critical aspect of an upcoming auction.

The auctioneer needs to include an additional term in the auction contract. The contract should provide that the auctioneer does not represent or warrant any certain outcome from the auction.

Here’s an example: “Auctioneer cannot and does not represent, warrant, or guarantee any certain bid amount, selling price, or other financial result from the auction.”

By taking these steps, the auctioneer has properly positioned himself with the seller. He has created a marketing plan for the auction that the seller has endorsed. The plan has been made part of the auction contract and the contract provides the auctioneer is not responsible for selling prices.

When an auctioneer satisfies these five steps, a seller’s disappointment with an auction’s result is not the auctioneer’s fault.
Instead, lower-than-hoped-for selling prices would be what they are – a reflection of how the market valued the assets at the time and under the terms and circumstances of the auction.