Effect of Auctioneers on Auction outcome – Just as a referee’s actions are believed to have an effect on the outcome of a football game, an auctioneer’s actions affects the outcomes of an auction. Hence, it is safe to say that the auctioneer is the referee of an auction whose actions, inactions or behaviours during an auction affects the outcome of the auction.
Dictionary.com defines an auctioneer as a person who conducts sales by auction. And an auction according to Investopedia.com is a sales event wherein potential buyers place competitive bids on assets or services either in an open or closed format. The highest bidder is said to take it all. Basically, anything can be sold in an auction; from some historical Igbo sacred objects called alusi to abandoned cargoes at the Nigerian seaport! However, while we focus on the sales of landed properties through auctioneering, the most important question is: How does the auctioneer affect the outcome of an auction?
As you consider all the things that could be sold off at an auction, have in mind that these items are sold to the “highest bidder”. Meaning, there were different bids that were placed by potential buyers and the best or highest bid won. Those famous two alusi objects sold for a whopping NGN92, 821,168.75! What did the auctioneer say? How did/does he get a good price for the piece up for sale?
It is important to note that the desired outcome of every auction is that a property is sold, and sold at a good price. The outcome can likely be the opposite too. Going further, studies in auctions and auctioneering have shown that there are a bunch of other factors that could affect the outcome of an auction. They include; the seller’s price and the sentimental effect of the item in question. However, these studies have also outlined that the auctioneer effect completes the circle and sends the bids going up.
According to Lacetera et al in their 2016 published paper titled “Bid Takers or Market Makers? The Effect of Auctioneers on Auction Outcome”, the auctioneer-effect that affects the outcome of an auction rest squarely on the auctioneer’s ABILITY. Through their thorough experiments with different auctions, they discovered that the tactics employed by an auctioneer either makes him effective or not, thereby affecting the outcome of the auction. It was further established that in-depth knowledge of the property by the auctioneer, his ability to persuade buyers to a lower reservation and induce higher bids and his creativity to project the saliency of the property affects the outcome of an auction.
The paper also revealed that an auctioneer’s ability to stimulate what they call the “auction-fever” in the bidders can realize the seller’s desired outcome. Auction fever is a phenomenon that occurs as a result of an interplay of emotions by bidders which lead to an ascending prices of bids and an eventual dropout of bidders, finalizing with the highest bidder winning. These emotions come to play when the atmosphere is tensed with competition among the bidders triggered by the joy of winning or the loser regret. Adam et al, in their 2011 published paper on “Understanding Auction Fever: A Framework for Emotional Bidding” added that the economic environment can influence this sense of competition among the bidders as well as the bidder’s previous experience in investments.
Just as Lansar Aghaji and Co, a reputable Estate Surveying, Valuation and Auctioneering firm experienced in auction sales in Nigeria have pointed out; the chances of selling off a landed property, or any property at all, skyrockets once it is listed by a reputable auctioneering firm. In their words, “ …real estate require more strategies to properly procure or sell in an auction [but] the single most important factor to consider when opting for this medium of sales/purchase is the credibility of the auctioneer.”
Recognizing that every seller/buyer aims for profit and satisfaction respectively in an auction, the outcome of that auction becomes paramount. Therefore hiring the services of a credible, skilled and experienced auctioneer becomes key in attaining the desired outcome.
You can check out https://lansaraghajiandco.com/ for auctioneering services.
References:
Lacetera et al.; Bid Takers or Market Makers? The Effect of Auctioneers on Auction Outcome
American Economic Journal: Microeconomics 2016, 8(4): 195–229 http://dx.doi.org/10.1257/mic.20150020 195
Adam et al.; Understanding Auction Fever: A Framework for Emotional Bidding”, Electronic Markets 21(3):197-207, September 2011, researchgate.net
Christie’s Follows the Money, as it Auctions Controversial Igbo Figures July 5, 2020 , thisdaylive.com
How to Digitally Stoke that Old-time Auction Fever, sciencenews.com