Hiring An Auction Company

Estimating your assets value:

Typically, one of the first questions a business owner will ask me is, “how much will the assets bring at an auction”. After taking the time to review the assets, the auctioneer should give the client a conservative estimate of the sale based upon his experience and the current market trends. It is important that the company give realistic expectations so the seller can make informed decisions based on their best interest.

Compensation and Expenses:

Is the company you are considering working for you or against you? The agreement you decide may determine this.

A business owner should carefully consider how the auction company is compensated. The most common commission structures include: straight commission, outright purchase of assets, guaranteed base with a split above to both auctioneer and seller, guaranteed base with anything above going to auctioneer or a flat fee structure.

In a straight commission structure, the company is paid an agreed upon percentage of the total sale.

In an outright purchase agreement, the auctioneer simply becomes your end buyer. The company purchases your assets and relocates them. While this can be an option in some unique situations, keep in mind that they will want to purchase your assets at a very reduced price to make a profit at a later date.

In a minimum base guarantee, the auction company guarantees the seller that the auction will generate a minimum amount of sales. Anything above that amount either goes to the auction company or split with the seller. While a seller might feel more comfortable doing an auction knowing that he is guaranteed a minimum amount for his sale, keep in mind that it is the best interest of the auction company to secure a minimum base price as low as possible in order reduce their financial liability to the seller and secure higher compensation for the sale.

In a flat fee structure, the auctioneer agrees to show up for the sale and call the auction. There is no incentive for the auctioneer to get the best prices for your assets. The auction company is compensated regardless of the outcome of your sale.

What is the best option for business owners? In my experience, an agreed upon straight commission structure. This puts the responsibility on the auction company to offer the best outcome for everyone involved. There is an incentive for the auction company to work hard for both parties, set up and run a professional sale, get the highest bid and sell every item on the inventory. Successful auctions translate to a higher bottom line for both the seller and the auction company.

Auction Expenses:

In most auction agreements the expenses to conduct an auction are passed to the seller. If the auction company pays for the expenses, it is simply absorbed in higher commission rates.

All expenses should be agreed upon in advance in a written contract. Typical expenses will include the costs of advertising, labor, legal fees, travel, equipment rentals, security, postage and printing. A reputable auction company will be able to estimate all expenses based upon their experience in previous auctions. An agreement should be actual costs charged as expenses, not an estimated amount.

Advertising is typically the highest cost in conducting an auction. The auction company needs to set up an advertising campaign that will promote the sale to its best advantage and not overspend to simply advertise the auction company.

Once the auction is complete, the auction company should provide a complete breakdown of all expenses to the seller, including copies of receipts within the auction summary report.

Buyer’s Premium:

What is a buyer’s premium? If you attend auctions regularly, you are very familiar with this term. The auction company charges a fee to the buyer when they buy an item at auction.

The buyer’s premium has been around since the 1980′s and is standard auction practice. It was first used by auction houses to help offset costs of running brick and mortar permanent auction facilities. Since then, it has spread to all aspects of the auction industry. It is prominent in online auctions and allows auction companies to cover added expenses incurred from online sales.

It is the responsibility of the auction company to provide clear disclosure of the buyer’s premium to both the buyers and the sellers. Those not familiar with auctions are often taken back by the buyer’s premium. They looked upon it as an under handed way for the auction company to make more money. Reputable auction companies will provide full disclosure within the auction contract, advertisement and bidder registration.

Typically, an auction company will charge online buyers a higher buyer’s premium percentage than those attending an auction in person. Extra fees are incurred with online bidding and are charged accordingly to online buyers. This provides the seller a level playing field for both online buyers and those attending the auction in person. Without the buyer’s premium, there is no way to do this.

Pre-Sales:

We’ve all been there. We’re looking forward to attending an auction only to find that some items were sold prior to the auction date.

As an auctioneer with over thirty-six years of experience, I can honestly state that pre-sales will hurt an auction. When a company decides to liquidate their assets, it is easy to sell off high-end pieces of equipment through online sources, equipment vendors or to other businesses. The seller receives instant cash and avoids paying a commission to an auction company.

Auctioneer’s find themselves appearing to acting in a self-serving capacity when potential clients say they are planning to sell off parts of their inventory prior to an auction. It’s hard not to consider the auctioneer’s commission when they warn you not to pre-sell anything. Yes, the auctioneer wants to earn a commission on those sales but it is more important that the auctioneer protect the sale from potential negative backlash that comes from pre-selling. The buying public knows when an auction has been “cherry picked” prior to the sale and it reflects in their bidding. It becomes a sale of “leftovers” and that impacts prices.

A buyer who purchases prior to the auction usually does not attend the sale. They already bought equipment at a good price with no competition. If they do attend the auction, they tend to let others know of their great pre-sale purchases which again, impacts prices and the overall excitement of the sale.

It is important to understand that auctions work best with a complete inventory. You want competition on your higher end equipment. The easy to sell items make it possible to gain respectable prices for hard to sell items.

When a business owner decides to liquidate their equipment assets, there is only one opportunity to do it right. Hiring a reputable auction company will assist you with a professional, orderly and timely liquidation.

Differences in the Types of Auctions That Take Place Around the World

Auctions are those events where properties or goods are sold to the highest bidder. Auctions are mostly public events, where bidders make a series of bids and purchase a particular item for a high price. During auctions, bidders decide the price of an item rather than the seller. It depends on bidders to decide the amount they would want to pay for a specific item. During an auction, a bid is a proof of a legal binding. Bidders agree to pay the amount that they have bid. In a high profile auction, bidders may have to pay a deposit in escrow accounts or give a proof that they can pay for those items.

Types of Auctions:

Different types of auctions take place around the world. Below mentioned are some types of auctions:

1. English auction:
This is a basic type of auction. In this type, people can see the item and then start bidding. Bidders slowly raise the value of their bid until everyone gives up. The highest bidder is the winner. An auctioneer manages an auction, keeps records of the on going bid and decides the winner. Sometimes, the seller will quote a minimum amount for an item to the auctioneer, below which the auctioneer cannot sell that item.

2. Dutch auction:
In this type, the auctioneer sets a particular price and then gradually lowers the price. People in public will start bidding and later decide which prices are suitable for the item. A seller may use this type of auction to sell large quantities of same products to the public. For instance, a seller may want to sell a large amount of hay and will thus, decide to sell this hay to people for the same amount, once a reasonable price is decided.

3. Silent auction:
In this type, the bidders in public will present their bids in a sealed format. These sealed bids open at the same time and bidder with the highest bid wins. There could be a modification in this type of auction. The bidders are allotted a specific period to bid. They can roam in a room displaying the items, and write their bids on an associated sheet of paper. The bidders are allowed to see bids of other bidders and can choose a higher price for an item. At the end of the allotted time, bidder with the highest bid is the winner.

Examples of Auctions:

Auctions can be of two types either public or private. Sellers may trade any kind of items in both types of auctions. Some areas where auctions take place are:

1. Antique auction: An antique auction consists of a trade opportunity as well as provides entertainment.

2. Collectable auction: In a collectable auction, the seller may put up collectables like coins, vintage cars, luxury, stamps, real estate, and luxury for sale.

3. Wine auction: In wine auction, bidders can bid for rare wine, which may not be available in retail wine shops.

4. Horse auction: Bidders can bid for young horses of the best breed.

5. Livestock auction: In livestock auction, bidders can buy pigs, sheep, cattle, and other livestock.

The other examples of auctions may not be public. These auctions are for bidders from corporate levels. Some examples of private auctions are:

1. Timber auction
2. Spectrum auction
3. Electricity auction
4. Debit auction
5. Environmental auction
6. Auto auction
7. Electronic market auction
8. Sales of business auction

Bidders in an auction need to examine the items displayed and decide an appropriate price for an item. Thus, auctions help buyers in getting the best deals and in gaining better profits for sellers.

Advertising: Art, Science and More

“Advertising is based on one thing: happiness. And do you know what happiness is? Happiness is the smell of a new car. It’s freedom from fear. It’s a billboard on the side of a road that screams with reassurance that whatever you’re doing is OK. You are OK.”

The above lines from the Mad Men could be a timeless classic in beautifully expressing the essence of advertising. Advertising is indeed all about happiness, of being assured, of being worth it, of being taken care of, of being valued and of being loved.

Love of Advertising

Ask any advertiser, what do they love about a job where work hours a tiresomely long and the pressure to come up with new ideas consistently, is high? Whether or not they answer you, their answer would invariably come to rest on one thing – the thrill of creating something which could affect the minds of many.

Like the gloriously heady concept of ‘Dream within a dream’ in the movie inception, the power to affect the minds of others through your art and witticism, is a great one. It is not hard to miss for most advertisers.

Art of Advertising

Also, all advertisers are essentially artists who use their art for a purpose. There is no greater happiness than being able to express yourself through your art and getting paid for it, maybe even obscenely (yes but only if your ‘art’ is loved equally well by others, that is).

Being allowed to be able to be an artist for a career and not be a starving one at that (in fact quite the opposite) is what draws many talented people to advertising and also keeps many working in this line of work despite everything.

Science of Advertising

Any ad concept or a campaign is well researched before coming into picture. This research could be quite in depth and intricate which is directly proportional to the budget of the ad and the stakes involved.

The science of advertising is the complete planning which takes place before an ad comes in front of the audience. There is market research, target audience’s psychology analysis, decisions with regard to place, product, pricing, packaging and people, understanding of the client’s needs and goals plus so much more.

It is only by a proper understanding of the science of advertising that the ad creative’s are briefed accordingly to take over the next step.

People in Advertising

There are several different kinds of people who work in advertising – right from ad visualizers to copywriters to filmmakers to graphic designers to art directors. Each has their own specific role in the advertising ecosystem like an ad director is responsible for how an ad will look like in terms of its visual appeal and a copywriter will be responsible for writing the content for the ad.

Advertising also has its set of mangers and client servicing people who may or may not be involved in the creative process. Normally the ad world creative’s are known to be wild and woolly, bratty and sentimental, poised and wild, simple and complicated, normal and crazy and what-have-you, usually all together in one person.

The people in ad world are generally quite liberal in values and open minded as compared to people in other industries.

Atmosphere at an Ad Agency

Most of the times, an ad agency that you may work at may have quite a chilled out environment. Clothing could be casual on all days (not for the managers and client servicing people though) and more than average make up, revealing clothes, torn clothes etc may all be okay as long as you are producing good work.

Drinks may be easily available and most people won’t mind you smoking. There may be some game room or some games handy that you probably will never have the time to play. Every day may seem to be like a high pressure party where you must keep working too hard to stay.

Architecture and Interiors of an Ad agency

An ad agency may have one of the most interesting architecture or creative decors. With over sized human dolls, interesting paintings on the wall, makeshift furniture, crazy curtains, cool office stationary, spray paintings, swear words, collages or other messages on the walls and what think you, things certainly feel quite crazy and creative in an ad agency.

One surely cannot comprehend what these creative’s may fancy next and which may form a part of the decor. Things present in an ad agency may spell creativity out loud and make a creative person feel amply at home in their imaginative world.

The architecture may be equally interesting with completely round buildings, differently shaped ones or even a fusion of architectural styles.

New age advertising

With the advent of technology, advertising too has moved up the quarters. No more is the ad must sitting in the print or even in the television commercial. Today we find advertising having taken over the short message service (SMS) and OBBD in the phones, social media networks like Facebook, Twitter and LinkedIn, websites like YouTube and blogs with any content worth their salt. Advertisers make sure that anywhere there is human presence; there must be ads to call them to action.

Criticism of Advertising

And like all good things, the field of advertising has had its share of criticism too, chiefly among these, is that it is a field which makes money by fooling people.

While good advertising never writes lies but the whole profession of advertising works on highlighting the good. Sometimes it might happen that the good gets highlighted so much that it may make the consumer blind to other aspects which could be detrimental to them. In any case, too much of even a good thing is harmful.


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