What's Going On At An Auction?
What Is It That Makes People Want To Bid, Bid, Bid and Bid Even More?
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Auctions date back to the earliest recorded history as a means of commerce. The word "auction" is derived from the Latin augeō and Ancient Greek αὐξάνω which means "I increase" or "I augment". During the Roman Empire, Roman soldiers would often auction the spoils of war.
The most famous of auctions in the history of this world is for the garments of Jesus Christ. Amazing how the prophecy of David in the Psalm 22:18 was fulfilled as we read in Mark 15:24 His garments (τὰ ἱμάτια). This would be the loose, flowing outer dress with girdle. The tunic (χιτών) was a closefitting dress, worn underneath the ἱμάτιον. There were four soldiers employed for each crucifixion. St. Cyril refers to the clothes of criminals as the perquisite of the executioners. The first century Jewish historian Josephus stated in his Antiquities (History) of the Jews that the temple's high priest had to wear a vestment colored blue. This clothing was not made by pieces of clothe sewn together, or even two large pieces. It was one long vestment that was parted along the breast and back. Unlike clothing made from pieces and thus easier to tear up, Jesus' coat would have been harder to separate into pieces. Additionally, the act of trying to divide such a seamless coat would likely make any pieces frayed and useless. Jesus’ vesture, or seamless coat, because they would not rend it is the piece, they cast lots by dividing up the clothes and were sold at auction.
The one-percent-tax on auctions (cenesima renum venalium) was under Tiberius in A.D. 15 and paid by the buyer. A four percent tax on slaves was created in A.D. 7 from the time of Nero was paid by the seller.
Auctions often would take place after conquests by the Roman Soldiers.
In Roman society, auctions were used to sell goods in a wide range of social stratums. Roman emperors would sell goods and generate money in cash for pressing needs. Auctions were part of everyday life in the Rome ranging from agricultural crops, slaves, cattle and land but served to get money for rummage. The Pompeian tablets illustrated the affairs of Jucundus slaves where linen and wood were mentioned as objects of auctions. Tablets of Sulpicii from Puteoli described purple clothes, landed property and slaves being sold at auction.
The praeco (Latin for hearld, crier) would announce the times and place of auctions and often acted as the auctioneer. Praecones were prominent literary characters of the time. The praeco acted on behalf of the seller of goods and was paid by the seller for his services. The dominus auctionis was the either a guardian acting in the name of the person, a creditor or the proprietor of the goods being sold at auction. Historically the dominus auctionis (proprietor) used the services of an argenarius, a coactor or a coactor argentarius (banker, money changer) for the execution of the auction paying a percentage of the purchase price. This today would be the Registrar/Cashier at the auction.
The choice of using the auction method to sell has several advantages for sellers and purchasers as well as lowering the transaction costs. Transactions costs are normally divided into several categories.
Information – These costs are reduced by using the auction method. In a modern society, having a system which is known by sellers and possible purchasers reduces the costs considerably. The rules of the system are know by both sellers & buyers (terms and conditions of auction). The seller does not know the valuation that bidders will attribute to the real estate or personal property, goods, wares that will be sold. This means that the seller’s ability to sell at an exorbitant price is limited. A monopoly-oligopsony can be expected with auctions.
An oligopsony - Greek ὀλίγοι – “purchase” is a market form in which the number of buyers is small while the number of sellers in theory could be large. A good example today would be where there are small number of buyers like WalMart or Target or Lowes & Home Depot or Staples & Office Depot in their respective niche where they can control and dictate the price they pay to suppliers.
This means that competition between bidders will rise the price of anything auctioned. As prices are raised by incremental bidding means that a greater price will be realized by the seller.
Negotiation – These costs are lowered as well with the auction method of selling. Even in Roman Law the bid was an oral act of sale and was liable for trial in a court of justice. This means that negotiation costs regarding contracts are much less than private treaty sale.
Pricing, Monitoring & Enforcement Costs – Since auctions bring about the sale with bidding the oral act of the sale eliminates the monitoring and enforcement costs.
The auction method is the best mechanism for the formation of price which lowers transaction costs for all parties.
From ancient history, Auctions have provided a fair playing ground for participants both buyers and sellers. The management of risk for both sellers and buyers is equally shared with the auction method.
Auctioneers in the Roman Empire were specialized because of the importance of the wine trade in Rome and Ostia. This is no different today where auctioneers specialize in different markets. From real estate to equipment & machinery, to livestock to automobiles, estates and luxury homes, the auction method has been a time tested and proven method of being the most efficient and beneficial to both sellers and buyers.
Auctions in the United States have not varied much since the ancient of days. The Civil War era had Colonels selling spoils of war. The nick name “Colonel” has since been associated with Auctioneers.
Auction companies are able to sell anything you can think of. You can find just about anything you can think of being sold at auction today. But where do the auctioneers find these things to sell? According to Skip Dreiblebis, entrepreneur, Auctioneer and founder of True Blue Auctions, the real property (real estate) and personal property (items owned by an individual, estate or business) are consigned by individuals, estates, corporations and small business owners and sometimes even the government wants something sold at auction. From the individual collector or families seeking to liquidate assets of an estate, trusts, financial institutions, agencies and charities wishing to raise funds for a cause all call upon auction companies to bring top dollar. Regardless of the economy, there are always people wanting to bring liquidity to real estate, personal property or from their business.