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  1. #1
    MikeAK is offline Junior Member
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    Default Can an employee bid at his own auction?

    We had a truck up for auction today and it was voluntary meaning the client asked us to sell it. The truck was probably worth $2500 but we only had one bidder at $100. I did everything before and during the auction to maximize the selling price but no one was bidding. To avoid giving it away and dealing with the client I bid on it myself. I ended up winning it for $300. I did everything I could to make sure I didn't have a conflict of interest. Afterward the other bidder complained. I talked to the owner and asked him if he'd rather sell it to the other guy for $100 and he obviously said no.

    I know this was not the best idea but I was sort of between a rock and a hard place. Was this wrong? Do I have any liability to the other bidder? Next time I'll make sure to set a reserve.

  2. #2
    SMSSId's Avatar
    SMSSId is offline Senior Member
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    Default Re: Can an employee bid at his own auction?

    Nearly all states have statutes/laws that pertain to how storage facilities are required to do business. There is usually a section specifically for vehicles. It is important to follow your state laws. If it’s legal there should not be an issue with you purchasing the vehicle. We try to eliminate the problem of someone questioning the sale by inserting the following language in our legal notices and our buyer/bidder sign-in form.

    The seller reserves the right to reject bids less than the lien amount. This does not mean we will reject low bids; it just gives us an option if the need arises.

    On top of that, in our state we have the luxury of being able to assign our vehicle lien right to someone else. Before I would let a vehicle go for a $100, I would assign it to the local salvage yard. Pickup trucks go at salvage for $300-$500.

  3. #3
    hurlco's Avatar
    hurlco is offline Senior Member
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    Default Re: Can an employee bid at his own auction?

    Quote Originally Posted by MikeAK View Post
    We had a truck up for auction today and it was voluntary meaning the client asked us to sell it. The truck was probably worth $2500 but we only had one bidder at $100. I did everything before and during the auction to maximize the selling price but no one was bidding. To avoid giving it away and dealing with the client I bid on it myself. I ended up winning it for $300. I did everything I could to make sure I didn't have a conflict of interest. Afterward the other bidder complained. I talked to the owner and asked him if he'd rather sell it to the other guy for $100 and he obviously said no.

    I know this was not the best idea but I was sort of between a rock and a hard place. Was this wrong? Do I have any liability to the other bidder? Next time I'll make sure to set a reserve.
    It sounds as though you sold the vehicle without following the motor vehicle law since the tenant voluntarily asked you to sell the vehicle and to seek recovery of what was owed you voluntarily. There is nothing wrong with that by the way.

    Alaska does not require state licensing for auctioneers, however, you must still follow certain rules and practices. In this case, you were selling the vehicle for the owner of the vehicle, not the owner of the facility. Under the Uniform Commercial Code, you must tell the buyers in advance if the OWNER will be bidding. Inasmuch as you were the agent for the owner, if you, the auctioneer engages in bidding, you must also tell the buyers in advance that you will be bidding. Otherwise, the buyer can void the sale if they discover that you or the owner was bidding without disclosing this in advance.

    Of course the bidder complained since he did not win the bidding. It is not a good idea for the auctioneer to engage in bidding since this does create a conflict of interest. In other words, you cannot represent the seller and the buyer at the same time. Inasmuch as all auctions are assumed to be auctions with reserve, you could have simply said, "I'm sorry sir, $100 is not enough," and you could have not accepted his bid and sold the vehicle on another day.

    I have found that if you clean up a vehicle, wash it, wax it, clean the windows and perhaps get it running, is sells for a whole lot more than just trying to sell it as it sits. I had a vehicle a few years ago that I tried to sell and no one bid on it. I had completed all the DMV paperwork and everything. My maintenance man who is quite the moto-head went over it with rubbing compound, waxed it, cleaned the windows, aired up the tires and actually got this thing started. (It was a 1996 Chrysler Concorde) I sold it at my next auction for $2,250.00. My buyers exclaimed, "Hey! isn't that the piece of junk you tried to sell at the last auction?" They were impressed that it ran and I displayed the car for an hour prior to the auction.

    You don't have liability to the other bidder since he did not bid against you and thereby the owner without advance notice. Next time, if you want to reserve this ability, simply state that the auctioneer reserves the right to bid on any/all property on his behalf or on behalf of his consignor.
    "Freedom of speech, does not mean freedom from being offended. The Constitution does not protect your feelings..."

 

 

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