Can a bid be bumped up by an auction house to force a sale?

FelineAmazing

My husband and I recently entered an item into a local auction with an agreed reserve. The auction house specifies a 10% discretion on the reserve. The highest bid did not meet the reserve, even with the 10% discretion. We understood it to be unsold and then discovered the auction house had processed the sale anyway, saying they’d made up the difference. In our view they should have agreed this with us first and we said no, we accept that the item hasn’t sold and would like to arrange for its return. They’re now saying this means we’re withdrawing the item and will be charged accordingly. We don’t agree! We’re not withdrawing and feel like they’re forcing the sale. Anyone else have experience of this or know where we stand legally? 

DoaM

Will you be getting the reserve - 10% amount for the item per the auction T&Cs? If yes then I fail to see why it matters how that sum is made up. Or is this more a case of seller's remorse as you believe you could get a better price elsewhere?

Sandtree

Why couldnt they? 

You agreed to sell at a price, the discretion is a bit pointless, you really agreed a 10% lower reserve. That price has been met so whats the problem? If they had taken bids off the wall to drive up real bidders bids would you have insisted taking a lower amount because their tactics were unethical to the real bidders?

FelineAmazing

DoaM said:

Will you be getting the reserve - 10% amount for the item per the auction T&Cs? If yes then I fail to see why it matters how that sum is made up. Or is this more a case of seller's remorse as you believe you could get a better price elsewhere?

Hmmm, well we were certainly hoping for more but if the highest bid had met the reserve we would have accepted it. What I don’t think is fair is it didn’t meet the reserve so that to me means we have the right for it to be returned. I think it’s a bit underhand for the auction house to bump it up without even asking us therefore denying us the opportunity to try a different route. And I don’t think they should be able to accuse us of withdrawing the item just because we don’t want them to do that. 

FelineAmazing

Sandtree said:

Why couldnt they? 

You agreed to sell at a price, the discretion is a bit pointless, you really agreed a 10% lower reserve. That price has been met so whats the problem? If they had taken bids off the wall to drive up real bidders bids would you have insisted taking a lower amount because their tactics were unethical to the real bidders?

We weren’t actually aware of the 10% discretion when we agreed the price - it’s on the website but we’d phoned them and they’d come round to do the valuation and they didn’t mention that then. That’s on us, we should have checked and I accept that but we’re not disputing that. I think the 10% itself surely gives them enough wiggle room so deciding to add on the extra to force it through feels like a bit of a con. I just think that’s something they should have discussed with us rather then deciding to do it off their own back and I don’t consider not agreeing to that means we’ve withdrawn. 

Grumpy_chap

So, you set a reserve price of, say, £100 with a discretion of -10% = £90. 
If it sells at £90, the auction house get a fee of, say £5
Final bid at £89.
Auction house "top-up" the final bid to meet the discretion level, so sold at £90.  Buyer pays £89.  Auction house takes the £5 commission, but then gives you £1 commission back to ensure they met the discretion level.
It is actually not all that uncommon in auctions, if the reserve is not quite met, then the auction house find a way to conclude after the sale closed.

I have to be honest, setting a reserve with 10% discretion seems a bit odd.  Why not just set the reserve 10% lower?

unholyangel

FelineAmazing said:

Sandtree said:

Why couldnt they? 

You agreed to sell at a price, the discretion is a bit pointless, you really agreed a 10% lower reserve. That price has been met so whats the problem? If they had taken bids off the wall to drive up real bidders bids would you have insisted taking a lower amount because their tactics were unethical to the real bidders?

We weren’t actually aware of the 10% discretion when we agreed the price - it’s on the website but we’d phoned them and they’d come round to do the valuation and they didn’t mention that then. That’s on us, we should have checked and I accept that but we’re not disputing that. I think the 10% itself surely gives them enough wiggle room so deciding to add on the extra to force it through feels like a bit of a con. I just think that’s something they should have discussed with us rather then deciding to do it off their own back and I don’t consider not agreeing to that means we’ve withdrawn. 

Parties can only be bound by obligations they were aware of at the time they entered the contract..

But, is it going to be worth arguing over? If you get the item back, what then? Is it a item that might be better in a specialist auction or selling to a collector/dealer? Or will you be in a similar position with another auctioneer? 

FelineAmazing

Grumpy_chap said:

So, you set a reserve price of, say, £100 with a discretion of -10% = £90. 
If it sells at £90, the auction house get a fee of, say £5
Final bid at £89.
Auction house "top-up" the final bid to meet the discretion level, so sold at £90.  Buyer pays £89.  Auction house takes the £5 commission, but then gives you £1 commission back to ensure they met the discretion level.
It is actually not all that uncommon in auctions, if the reserve is not quite met, then the auction house find a way to conclude after the sale closed.

I have to be honest, setting a reserve with 10% discretion seems a bit odd.  Why not just set the reserve 10% lower?

I know, we didn’t know about the 10% discretion when we entered it - had we known we would have increased the reserve! 

It’s not even that I object to them offering to make up the difference - they want the sale, I get that. But they did it without asking - I think they should ask. And I think I should have the right to say no without being accused of withdrawing. 

There is nothing in their t&cs or on their website to suggest this is what they do. I’m no expert believe me but it’s the principle of the thing. They’ve been really unpleasant about it too and we’re not ‘difficult’ people who make a fuss about the smallest thing, quite the opposite. 

Sigh. 

FelineAmazing

unholyangel said:

FelineAmazing said:

Sandtree said:

Why couldnt they? 

You agreed to sell at a price, the discretion is a bit pointless, you really agreed a 10% lower reserve. That price has been met so whats the problem? If they had taken bids off the wall to drive up real bidders bids would you have insisted taking a lower amount because their tactics were unethical to the real bidders?

We weren’t actually aware of the 10% discretion when we agreed the price - it’s on the website but we’d phoned them and they’d come round to do the valuation and they didn’t mention that then. That’s on us, we should have checked and I accept that but we’re not disputing that. I think the 10% itself surely gives them enough wiggle room so deciding to add on the extra to force it through feels like a bit of a con. I just think that’s something they should have discussed with us rather then deciding to do it off their own back and I don’t consider not agreeing to that means we’ve withdrawn. 

Parties can only be bound by obligations they were aware of at the time they entered the contract..

But, is it going to be worth arguing over? If you get the item back, what then? Is it a item that might be better in a specialist auction or selling to a collector/dealer? Or will you be in a similar position with another auctioneer? 

I’m beginning to wonder :-) It’s quite an unusual item (I suppose everyone thinks that) and we really weren’t sure about selling it locally but we were persuaded. We don’t regret trying it, even now. This just feels like they’re forcing our hand and I don’t think it’s right. 

tizerbelle

How much are you talking here for this 10% difference? 

Is is really worth stressing about?

shaun_from_Africa

It sounds very dodgy to me.
Just as an example.
Item reserve price £200 with a 10% discretion so it could sell with a hammer price of £180. Of this £180, the OP would pay commission which if it's 15% (about the going rate), would be £27. The buyer would also pay a buyer's premium of around 10% so that would be £18.
This means that at the hammer price of £180, the auction house would earn £45.

Say the final bid was £160 (£40 below reserve and £20 below the reserve with 10% discretion) and the auctioneers sold it at this price and made up the difference of £20 payable to the OP. This means that for their £20 outlay, they get £45 back in buyer and seller fees.
Quite a nice little earner.