QUESTION: What is the normal percentage of results at an auction compared to the retail value of an item?

ANSWER: We hear time after time at our auctions that we attained more than what they could have bought the item for at retail. This type of statement shows that many individuals are not familiar with the true anticipated results of an auction. A properly conducted auction will draw the marketplace to a sale, will place them in a competitive bidding situation which results in bringing true market value for any item. To illustrate this point, here's what happened at a recently conducted auction.

A family approached one of our affiliates to sell 90 acres of land they had owned for many years. They had a current appraisal on the acreage by a credible appraiser for $238,000 and were apparently prepared to market the acreage for that amount.

Realizing that the family had no debt on the land, only wanted the fair market value for it, and that the acreage might have more value if sold in smaller tracts, our affiliate suggested that they consider another marketing alternative before making a final decision. At that point, we shared the auction concept with the client.

The family agreed to auction their acreage with no minimum or no reserve sales price. No minimum means that the auctioneer will sell the property for the highest bid. No reserve means that the seller cannot reserve the right to accept or reject the highest bid within a specified time.

The acreage was surveyed to divide into 12 tracts and was offered individually, in combinations, and as a whole. Then, the marketing strategies began with the acreage being exposed to the market through direct mail brochures, an auction sign, newspaper advertisements and personal solicitations.

On the day of the auction, the aggregate total was $471,000 after offering the acreage to a large crowd in individual tracts and in combinations. Next, the acreage was offered as a whole, increasing the total to $575,000. After another round of offering the acreage by individual tracts, the entire acreage was offered one last time, establishing the final sales price of $610,000.

If our sales associate had listed the property, when initially approached by the family, for $238,000 and had sold it for that amount, no one would have ever known that the land would have sold below value by $372,000. A properly conducted auction will not attain more than the true value; but, as in this case, it "always" guarantees the seller 100% of the value and avoids the risk of over or under pricing the real estate.