Last week I wrote about an auction “torpedo.” That is how I described a prospective bidder who tries to damage an auction lot in an effort to depress bidding and, therefore, selling price. That column stemmed from an auctioneer relating to me his experience with a man who tried this tactic with a valuable lot. In the days leading up to the auction, the fellow disseminated negative information about the property to everyone he thought might be interested in bidding for it. Such activity always traces back to the same cause - greed!

The auctioneer asked me what legal action he could take in the future against someone like this. I gave several reasons why legal action is almost always the wrong answer for this type of situation and promised to share four steps which are much better options for an auctioneer. Here they are. 

First, timing is a critical element for determining how to best respond to a threat like this. If the issue is discovered sufficiently in advance of the auction, a letter demanding that the offensive conduct be stopped is a good, initial step. The letter should outline the complaint and state that the party must desist from further action of the sort that has occurred. 

A well-written letter is a formal communication that imparts a sense of importance to a matter, along with providing several additional advantages. The format provides a perfect recitation of the message, a permanent record of it, and the exact message is repeated to every reader as often as it is read. In aggravated cases, the letter can advise the recipient that he will not be allowed to attend the auction and doing so will be considered a trespass and the police will be called. A letter can also be credible and persuasive evidence in any future action, as would be the case if stronger measures are subsequently needed. 

Where an auctioneer gives an offender an oral rebuke, if time permits, a letter should promptly follow to confirm the demand. I have written these letters where time was of the essence and had them delivered, from instantly to no later than the following morning, using email, facsimile transmission, and overnight courier service. 

Where time allows and the conduct is egregious and the threat significant, the auctioneer should ask the seller to bring in the seller’s attorney for guidance and possibly a stronger notice. The attorney is in a position to give professional advice, including the option for legal action, as well as send a letter to the offender that shows big teeth. 

Second, when there is no time for a letter to be sent, such as the disparaging conduct being discovered just before or even during the auction, the assault on the property or seller should be dealt with head-on. Every auctioneer should have a key tool in place to use in addressing such an instance. This is a provision in the “terms of auction” like this: “Auctioneer may refuse to register to bid, or expel from the auction and site, any person who is disruptive, noncompliant, or previously has caused a problem for the seller or auctioneer.” With this authority in hand, the auctioneer or a competent staff member should engage the troublesome person in discussion to learn what is being done or said and why, and then advise that person that nothing detrimental to the property or seller will be allowed. A decision then must be made as to whether the matter has been cured and the person should be allowed to attend or remain at the auction. If the answer is in the negative, the actor should be immediately advised. Where the auction is in progress and the offender refuses to leave, the police should be summoned to deal with a person the auctioneer has designated “a trespasser.”

Third, in conjunction with the preceding points, whenever there is concern that someone has said or done something that could damage the property in the eyes of prospective bidders, the auctioneer needs to speak directly to the issue. While doing nothing to identify the perpetrator, the auctioneer should say that he has learned someone has been making adverse statements about the property. The auctioneer should then invoke his credibility and say something along this line: “I am sad to learn that someone has spoken ill of this seller’s property and its condition and potential value. To my knowledge and belief, what we are going to offer and sell today is very good merchandise. You can inspect everything for yourself and make your own judgment, just like I have done. Please remember this - if someone told you something bad about any item that we are going to offer, that does not make it true. Sadly, people say things all the time that are not true. What is true is that some people are so selfish that they would say and do just about anything to try and hurt selling prices in auctions in hope of being able to buy the goods they want for prices that would be next to stealing them.” 

Fourth, here is the ace-in-the-hole option. Where the property is scheduled for an auction “without reserve” (i.e., “absolute auction”), and the concern that it might have been damaged is significant, the seller can change the terms of auction for the lot and use a reserve to protect it against an unwanted sacrifice. Before doing this, however, the auctioneer should have some credible evidence of the threat. This information should be shared with the seller so the seller can make an informed decision on whether to make this profound change in the auction method. If the seller decides to do so, the auctioneer should obtain the seller’s decision in a dated and signed writing. 

Should the issue arise during the conduct of an auction, and the seller is available, the auctioneer can take a brief recess to huddle with the seller to obtain a decision. If the seller is not available, the auctioneer should make the decision that the auctioneer feels will best serve the seller’s interest. Whichever is the case, everything should be carefully documented for the auctioneer’s file. This is because the chance of a subsequent regulatory inquiry can be both real and serious.

The views and opinions expressed in this column are those of the author and not necessarily those of Farm World. Readers with questions or comments for Steve Proffitt may write to him in care of this publication.