How To Not Get Scammed At Live Auctions

Should you ever venture into a live auction, you know, gavel, real chairs that you sit in, etc, Consumerama has some tips on auctioneer scams to watch out for. Let’s say the price drops to $300, and three hands shoot up. By law, he’s supposed to just accept one bid at $300 and move on, but:

“A slick and slippery auctioneer will see three hands go up at once (each intending to bid $300.00), and he’ll point quickly to each, “$300.00, now $325.00, now $350.00″ before they can drop their hands. Then he’s off and running. It happens so fast that the bidders hardly realize what he did.”

Also discussed are shill bids, how any bid may be retracted until SOLD is announced, and the “backing off” scam.

Live Auctions — Bargains & Bamboozles [Consumerama]
(Photo: Getty)

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  1. ry81984 says:

    If you bid 300 and the guy says you bid 350, how will they make you pay?

  2. humphrmi says:

    @ry81984: In most cases phantom bids aren’t used for the purpose of collecting on that particular bid.

    Phantom bids are used to drive the price up by making it appear that there’s a sudden surge of demand for an item. So when the auctioneer says “I’ve got 300, now 325, now 350″ and someone bids $375, the auctioneer has driven the price $75 above the starting price with one bid. The person who just bid $375 should have been given the opportunity to bid $325, and the possibility of winning on that bid if nobody else wanted to bid higher.

  3. Jasmo says:

    My dad was an antique dealer. I went to lots of auctions as a kid. He always told me “whatever you do, keep your hands in your pockets”

  4. bohemian says:

    I have seen all of the described tactics happen.

    We helped someone who was closing a business wipe all of her office computers before they were auctioned. We stuck around just to watch. Computers that would have gone for maybe $75 on Craigslist were going for over $400 and they were hardly new.

  5. BuddyHinton says:

    Try this with uBid. It used to work in the dot-com late 90′s. Let’s say there are 10 widgets up for bid. And the bids at the final minute are 3 bids at $25, 2 bids at $20, and 5 bids at $18. Place a bid at the last minute for $18. Guess what, more than likely you’ll get the widget. Clear sign that the existing $18 bids were shills. Shameless. Not sure how it is now.

  6. BuddyHinton says:

    Also check out Alameda County Auctions in the SF Bay Area. They auction off used cars every week. Quite sad really.

  7. Kidazy says:

    I’ve always been way too intimidated to attend a real auction but i’m thinking of taking Jamo’s advice and just going to observe one and making sure I keep my hands in my pockets!

  8. BigNutty says:

    I sold through auctions in Vegas in the 80′s and to my surprise the people that ran the auction were very strict in monitoring for phantom bidders and did not stand for any funny business.

    They had a very good reputation and many people would come. I’m sure the stuff mentioned above happens but their are still some good ones around.

  9. FLConsumer says:

    I was at a terrible auction in Orlando, FL awhile back. They claimed they were doing the auction online as well and would suddenly jack up the price in the middle of heated bidding and claim it was an online bid. Supposedly streaming video as well. There was no way at all that they’d be able to get bids in like that THAT quickly with the delays involved with video streaming. Very scummy and unprofessional auctioneer as well.

    @bohemian: I’ve observed this same thing as well. Used items selling in far excess of what they would sell for new, retail. It really is disappointing to go to an auction with a ton of noobs who don’t understand the true value of things and drive them up well beyond market value.

  10. MercuryPDX says:

    @BuddyHinton: What you’ve just described is called a “Dutch Auction”. When multiple items are for sale, the lowest successful bid sets everyones price.

    Here’s a few links to learn more:

    [pages.ebay.com]

    [www.epiqtech.com]

  11. doctor_cos wants you to remain calm says:

    We have a fine small-town kind of auction every week down here in SWFL, and our auctioneer (Joe!) runs a fair and evenhanded auction all the times I’ve been there.
    [www.veniceauction.com]

    So it’s not all theives and charlatans running these.

  12. ManiacDan says:

    @FLConsumer: I am a software developer and I worked for an auction house. I wrote online bidding software like that which you described. I guarantee that the response time is less than a second. The online streaming video uses high compression rates and streams audio as a separate channel so that the response time is ve,ry low. Bids are placed using a ready-and-waiting ajax function that is constantly streaming bid status. The user sees the auctioneer at about a half second delay, and the bids come in after a quarter second. It’s very realistic to expect your bids to be increased by online bidders in real time. Ebay has had online auctions that follow in-person auctions for some time now.

    To everyone else, if you’re going to go to an auction, go to one in America by a reputable broker. Christie’s, Sotheby’s, Heritage, Bonham’s, any of the big ones will treat you fairly because they have millions to lose by being caught doing something illegal. Never go to Big Bob’s Truck and Tractor Auction as your first auction experience. And don’t go to a state fair either, the “auctioneer speak” that you so often see in movies and commercials isn’t how a professional auctioneer talks, that’s another tactic to keep the bids flowing so fast that they can catch you before you put your hand down.

  13. ChrisProudlove says:

    I’m with Maniacdan on this (I worked for some of the auctioneers he mentioned).
    What’s not been factored in here is that in “real live auctions” everything has a reserve price. This is a secret price agreed between the seller and auctioneer below which an object cannot be sold.
    Let’s use the example cited. If a painting is offered that’s worth $500, it will be reserved at that price or perhaps slightly below. So let’s say the reserve is $450.
    If the auctioneer doesn’t take the three bids starting at $300, the sale is unlikely to happen. Even if the auctioneer takes bids up to $400 (fictitious or otherwise – which he is entitled to do) he still cannot sell the piece. He waits for a bid of $500. If it doesn’t come, the lot is unsold. No one has been scammed.
    No auctioneer with a reputation to lose is going to risk anything illegal.

  14. anatak says:

    @kidazy: By all means, go. It helps if you go with someone who knows the ropes, but you’ll find that you aren’t the only one just observing.

  15. Aladdyn says:

    You can bid by doing anything really. Say winking or nodding your head. It wouldn’t likely be taken as a bid though unless you are clearly interested in the item and the auctioneer is looking for a sign from you. I went to a used car auction with a friend and we were talking about one car and pointing at it. The auctioneer picked it up and was staring at us waiting for a sign for a bid. I froze right up afraid I was going to make him think i was bidding. Fun experience though.

  16. popeye_doyle says:

    @ManiacDan: “[the big houses] have millions to lose by being caught doing something illegal”

    That didn’t stop them from price-fixing. Doesn’t stop them from shady and undisclosed financing for buyers and sellers. Doesn’t stop them from making dubious claims to both the seller and the buyer about the merchandise they sell.

  17. ManiacDan says:

    @popeye_doyle: Unfortunately for buyers AND sellers, the collectibles markets are self-sustaining. These things have value because people are willing to pay for them, and people are willing to pay for them because they have value. Most collectibles are independently priced by third parties, and most unique items like art carry a similar appraisal process.

    As for financing, I wasn’t aware any of the big auction houses allowed for financing. In general they take a fixed consignment fee, then affix a buyer’s premium of a fixed percentage onto each sale. I’ve bought a number of things at auction and have never encountered any “shady” dealings.

    If you do have specific examples, I’d like to see them.