Bid Increments, Tie Bids, Buy Bids & More

Bid Increments
A bid increment is the minimum amount a bidder must add to the current price in order to become the new high bidder on an item. Online auction sites have a very structured bid increment policy but live brick and mortar auction houses are nowhere near as strict. Some houses, especially the large high-end ones, have a policy that they follow faithfully but, more often than not, auction houses are usually pretty informal when it comes to bidding.

It is pretty much up to the auctioneer's discretion and every auctioneer is different. For the most part an auctioneer will usually consider the value of an item and the mood of the crowd when seeking an opening bid. Sometimes the auctioneer will try to start an item near its true value but if he doesn't get a bid, the opening he asks for will be dropped until someone in the audience holds up a bid card. Then it takes off from there.

It is the auctioneer's job to get as much money for an item as he can. The auction house and the auctioneer are the seller's representatives but, at the same time, they both have to try to keep the buyers happy as well. An auctioneer who continually tries to get more money for the seller and ends up undercutting the bidders because of it will have a very unhappy audience on his hands.

If an auctioneer is taking bids in $10 increments and a new player gives him the "cut it in half"* sign which means a $5 increase instead of $10, and the auctioneer accepts it, then the auctioneer has just undercut his other bidders. The bidders he undercut were honoring the $10 increments that were already in play on that item. Some bidders are more laid back than others and don't get upset by things like this but some do.

We've actually seen people get up and walk out of an auction after having this happen a few times. Although the auctioneer might have gotten $5 more for the consignor on that particular item, the lack of good will created within the audience was far from worth it. This type of situation is the main drawback to not having a bid increment policy in effect.

Tie Bids
Some auctions have what are called "ringmen." The job of a ringman is to catch bids for the auctioneer. Large auctions have bidders everywhere! They are not only sitting in the audience but they are also walking around, standing against walls or standing way down back where the auctioneer can barely see them. Sometimes they are even standing behind the auctioneer. This makes it difficult for an auctioneer to see every bid in every direction.

It is especially difficult when the auctioneer is getting "discreet" bids - a wave of a hand or a nod. We didn't allow people to clear their throats or scratch their foreheads to indicate a bid. That can get pretty silly and is almost impossible to keep up with. However there are many people, especially dealers, who don't want others to know they are bidding on an item. That's where standing way down back comes in. When you have an auction that draws a really big crowd, the ringmen can be invaluable.

If a ringman yells, "Yup!" the auctioneer takes him at his word and accepts the bid even though he never saw the bid being placed. He is busy catching his own bids. When the bidding finally stops and the auctioneer announces the winning bidder there can occasionally be a conflict. It doesn't happen often but it does happen.

The ringman thought the auctioneer had his bidder when in fact the auctioneer had his own bidder. Since the ringman is actually representing the auctioneer in front of the audience this becomes what is known as a tie bid. The auctioneer always settles tie bids and it is usually handled by the auctioneer opening up the bidding process again but only between the two bidders involved in the tie. On that particular item, the remainder of the bidding is closed to everyone else.

Buy Bids
This is a good place for us to mention the dreaded "buy" bid. Customers who cannot be at the actual auction can leave what are called left bids or absentee bids on those items they are interested in. The auctioneer will bid for those customers up to the maximum amounts listed on their left bid sheets. Well, a "buy" bid doesn't have a maximum.

At our auction house, we had two customers who loved to leave this kind of bid. These bids can truly be nerve-racking. The term "buy" bid means just what it says. The customer wants to buy the item and he doesn't care how much it sells for as long as it sells to him. Even though our responsibility is to get as much money as we can for the seller, "buy" bids are considered a little over the top and a number of auction houses won't accept them. They will only accept left/absentee bids with a specific ending amount.

I was at another auction house one night when the auctioneer was executing a "buy" bid. Of course, no one knew it was a "buy" bid except the auctioneer and the staff person who wrote up the bid. However, since the item being sold was only worth about $50 but the bid was at $650, I figured the auctioneer had to be executing a "buy" bid.

The auctioneer, who is a friend of ours, told me after the sale that he thought he was going to have a stroke. The bidder in the audience just kept on bidding against the left/absentee bid. He wanted the item as well. The auctioneer did something he never should have done but he was in a terrible position and just didn't know what else to do.

He actually looked at the bidder in the audience and said, "You need to understand that you are NOT going to get this item." The guy ignored him and just kept on bidding and the final price was $900 to the "buy" bidder. I found out later that the "buy" bidder thought he would end up having to pay maybe as much as $150 for it. Good grief!

By the time the buyer's premium and the sales tax were added onto the cost of that $50 item the bill exceeded $1000. I give the absentee bidder a lot of credit because he took it like a man. I heard that he paid the bill in full the next day and didn't complain once. After all he was the one responsible for leaving the dreaded "buy" bid.

Times the Money
Some auction houses will occasionally use a method called "Times the Money" to sell an item that is made up of more than one piece. For example, a set of china is being offered and there are 200 pieces in the set. Rather than selling the entire set for one amount of money, the auction house will take bids for just one piece which will then be multiplied times the total number of pieces for a final selling price.

If the high bidder bid $3.00 then the $3.00 would be multiplied times 200. The final selling price of the china would then be $600.00. We used this method but we used it very infrequently. If we had a very expensive pair of chairs or a very expensive pair of lamps, we would sell them "Times the Money". The goal was to get more money for them. We never used this method when selling a set of china, or a set of glassware, etc.

Using "Times the Money" on an item that has a large number of pieces can be very distracting and difficult for the bidders to track. Bidders need to do the math in their heads as they are bidding and this could cause them to hesitate and maybe not bid again because they can't figure out the total cost fast enough. Sometimes bidding goes pretty quickly and in cases like this it can be too quickly.

High Bidder's Choice
Another common method of bidding at some houses is "High Bidder's Choice". Rather than bidding on a single piece within a multiple piece lot for one total price, single pieces within that lot are sold to different bidders. There is no final price for the entire lot. For example, a lot of 10 porcelain dolls is being offered. Bids are taken on the price of just one doll. The auctioneer then asks the high bidder how many of the 10 dolls he or she wants to take times the price of the bid.

The high bidder can take just one, all ten or any quantity in-between. If the dolls are different from each other, the high bidder also gets to choose exactly which dolls he or she wants. If the high bidder doesn't take them all, then the auctioneer will ask the back-up bidder if he or she wants any of the remaining dolls at the same price for each. The back-up bidder is the person who had the second highest bid when the bidding stopped. The back-up bidder can accept of refuse.

After the auctioneer is done with the back-up bidder, the bidding starts again for "High Bidder's Choice" on the dolls that are left. The same process is followed until all the dolls are sold. If there is no longer any interest at "High Bidder's Choice", and there are dolls remaining, the auctioneer will sell those dolls all together for a single amount of money which is referred to as "all for one money".

The No Name Bidding Option
One more method comes to mind although we hardly ever see it used anywhere. To the best of our knowledge this method does not have an official name. For the purpose of writing this article, we asked four friends who are all auctioneers what this option is called and none of them know.

Whatever it is called, it is usually only used when auctioning a suite of furniture such as a bedroom or dining room. Each piece is put up for auction separately. Each piece is "bought" by a particular bidder. After all of the individual pieces have been "sold", the auctioneer then adds up what the final total is for all the pieces. For example, say all the pieces total $1000.00. At that time, the auctioneer will ask if anyone wants to be $1100.00 for the entire set. If someone does then the bidding for the whole set continues until no one else bids.

The individual bidders who bought the pieces separately really didn't buy anything. If no one wants to increase the bid on the total value of the individual pieces then the original bids would stand and the pieces are sold to the original high bidder on each piece. If a single bidder happened to "buy" all of the individual pieces then no attempt would be made to combine the pieces together for another round of bidding. Whew!

Personally, we don't care for this method and never used it. Our position is either sell the pieces individually or sell the entire set together for one price right up front. It does make sense to break up a set if a set contains a really special piece of furniture that could stand on its own.

For example, a dining room set could include a wonderful sideboard that some people would love to have but they don't want the rest of the set. That particular piece would bring more money if more people were to bid on it. To keep it as part of the set can limit the number of bidders.

Written by Anne Benedetto, Auction House Talk
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