Online Auctions - "The Fine Print"

[Tallcool1]

I guess the reserve issue to me is not that big of a deal, no matter how it is handled.  The auction company can have a number and manually bid, the owner can do their own bidding, or it can say reserve not met.  In the reserve not met situation, I do like the idea of a BIDDER being told what the reserve is however from the seller's perspective this is tough.

I don't auction cattle, but I do auction cars.  When I take 10 cars to auction, I basically have a number that I want out of the whole pile.  So when the first 2 go $2,000 over what I thought they would bring (need them to bring), the next 8 just got cheaper.  So in some ways, I believe it is actually beneficial to the buyers when the seller is controlling the reserve themselves.

Bidder identity is far and away the thing that bothers me the most about any on line auction.  I just hate that fact that when I am bidding, the seller knows that I am bidding.  They know I am bidding, they know I have been out and looked at the calves, how many times I have looked at the calves, which calves I have looked at, what questions I have asked, etc... 

But it goes farther than that......they know how much money I am willing to spend, or how much I have.  If I chase a steer to $5,000 and don't get him, and move to my second choice and chase him to $5,000 and don't get HIM, how much do you think I am going to end up paying for my third choice when/if I chase him? 

I believe the auction company knowing who the bidders are and their bid history costs way more than any kind of a reserve system.  A reserve system is based upon what an owner believes their property to be worth.  The identity issue is based upon actual data and PRIVATE information that gives the people that have that data a significant upper hand.

 

[rmbcows]

Tallcool, how do the sellers know who is bidding on their calves?  The cattle auctions I've watched only identify the bidders by a number, so unless I'm privy to the auction companies information, I have no way of knowing who is bidding.  Am I wrong? 
The auction company has to be able to identify the bidders.  If bidders identity was hidden from them, there'd be nothing stopping someone from setting up an account, buying all the calves and then skipping out.  They must be able to be sure that if I am the winning bidder, I am going to be the paying bidder.  The sales I have signed up for, I have had to either have a credit card or letter from my banker stating I had enough money to spend. 
If a seller knew who I was, and what calves I liked, and I'd run 2 previous calves to $5000, they'd still be a fool to assume I'd run calf #3 to $5000.  They should be ready to take the calf home if I decide it's only worth $3000 and they are bumping my bids and no one else is bidding. 
This is a really good thread, lots of food for thought.  Here's one...  I have a really good calf I put in a sale... Joe Blow is bidding on him like crazy, but Joe Blow is infamous for never feeding well, never working hair and bad mouthing the breeders because the $5000 calf he bought from them never won anything.  What would you do?    Personally, I'd rather sell a calf for $2500 and have it in good hands than pocket $5000 and have a Joe Blow buy it.  I only have a few calves, so if JB messes one up, that's a huge fail  %  for my calf crop.  Any ideas?  Would you consider trying to stop the sale of your calf to JB unethical?  I guess maybe if you're that picky about who owns your calves, auctions might not be the way to sell your calves.

 

[ZNT]

A lot has been said, and maybe someone has already said this, but here are my thoughts.  First off, the reserve prices are a good thing just to deal with human nature.  If 10 calves are in a sale, and 2 are started $1000 higher than the rest, the public will think the other 8 are not good (as good), no matter the reason the seller is starting them higher.

My solution to the reserve issue is that if someone bids the starting bid of $1500 on a heifer that has a reserve of $2000, they should first get a notice that their bid does not meet the reserve price of $2000, and if they would like to bump their bid to the reserve price.  If they choose not to bump the bid, then the bid will be recorded at $1500, but the lot will continue to say that the reserve has not been met. 

On a side note, I feel that the service Jason is providing is not only more than fair, but will be a game changer in the long run.  SteerPlanet is way more economical per lot vs. paying commision, plus the advertising makes it significantly cheaper.  The only drawback I can see for some people is the fact that you have to take care of your own collection of proceeds.  SteerPlanet is not bonded, so there is some risk, but so is selling on craigslist, or any private treaty deal.  I was completely satisfied with the service and ease that SteerPlanet provided in putting on an online sale.  Definitely would use them again.

 

[jason]

I am working a bit on the pricing now and I think we *might* end up offering the ability to have a full service auction, where we collect the money and list your lots.

But, we will still have the ability to have your own auction, at a very reasonable per lot rate and I believe this will be the majority of auctions on SP.

 

[rmbcows]

I'd like to use my 150th post to say thanks to ZNT for explaining how a SP auction works.  I assumed all online auctions collected the money etc..  I learn something new everyday!  (thank goodness)    Hope everyone has a fantastic holiday weekend!!  <beer>

 

[jason]

I'd like to use my 150th post to say thanks to ZNT for explaining how a SP auction works.  I assumed all online auctions collected the money etc..  I learn something new everyday!  (thank goodness)    Hope everyone has a fantastic holiday weekend!!  <beer>

Yeah, basically that is one of the reasons I am offering a very low lot fee.  I also include a side banner advertisement on Steer Planet, which is a $200 value.  We also do the facebook, twitter, newsletter at no cost too.

Here is a good scenario, as money goes up on, my discount grows greater.
15 Lots and Avg. $1500/Lot - $22,500 Gross Total

Standard Auction 7% to 10% - $1575 to $2250
Steer Planet - $25 per lot -  $375

Take Home Money
Standard Auction  -  $20250 to $20,925
Steer Planet - $22,125


So you savings from using SP would be up to 76% to 84% versus using typical online auction.

 

[Tallcool1]

Tallcool, how do the sellers know who is bidding on their calves?  The cattle auctions I've watched only identify the bidders by a number, so unless I'm privy to the auction companies information, I have no way of knowing who is bidding.  Am I wrong? 
The auction company has to be able to identify the bidders.  If bidders identity was hidden from them, there'd be nothing stopping someone from setting up an account, buying all the calves and then skipping out.  They must be able to be sure that if I am the winning bidder, I am going to be the paying bidder.  The sales I have signed up for, I have had to either have a credit card or letter from my banker stating I had enough money to spend. 
If a seller knew who I was, and what calves I liked, and I'd run 2 previous calves to $5000, they'd still be a fool to assume I'd run calf #3 to $5000.  They should be ready to take the calf home if I decide it's only worth $3000 and they are bumping my bids and no one else is bidding. 
This is a really good thread, lots of food for thought.  Here's one...  I have a really good calf I put in a sale... Joe Blow is bidding on him like crazy, but Joe Blow is infamous for never feeding well, never working hair and bad mouthing the breeders because the $5000 calf he bought from them never won anything.  What would you do?    Personally, I'd rather sell a calf for $2500 and have it in good hands than pocket $5000 and have a Joe Blow buy it.  I only have a few calves, so if JB messes one up, that's a huge fail  %  for my calf crop.  Any ideas?  Would you consider trying to stop the sale of your calf to JB unethical?  I guess maybe if you're that picky about who owns your calves, auctions might not be the way to sell your calves.

Yep, you're wrong.  The auction company knows who's bidding, and they can tell the owner of the cattle who is bidding.  As the owner of the cattle, it is your right to know......maybe?

A lot of these kids that are buying club calves are spending what they CAN spend...not what they feel a calf is worth.  They have $2500 or $5000 or whatever, and that is what they have.  They go through a set of calves and they mark down every calf that they are willing to spend their budget on, and then they rank them.  What they are WORTH is never factored into the equation.  I realize that this is basically a Sellers Thread, and it is very interesting.  As sellers, you guys consider things like what you feel a calf is worth.  A large percentage of your buyers are making their decisions based upon budget, not value.  Maybe it is foolish to assume that a bidder will bid to $5,000 again............OR maybe you could log on and check out Shike's on line sale that is going on RIGHT NOW and tell me what is going on with bidder #5166.  Tell me how much money bidder #5166 has to spend.  Or tell me if #5166 is "real money".  Look at every lot in this sale and look at how much action this bidder has in this sale, and where the action is.  I am probably way off.

My point is this.  IF #5166 is real $, and Lot #9 is sitting at 1 bid, and bidder #5166 has not bought anything yet, are you going to let that calf go for $1,200?

Joe Blow is everywhere in this business.  My friends that sell club calves constantly talk of this customer and the challenges that they present.  This customer has all the cash and none of the work ethic or knowledge.  They don't listen, and many times their kids don't really have near as much interest in the hobby as the parent.  No I do not think it is unethical to see to it that Joe Blow gets "outbid" and the right family gets your calf.  We have a steer in our cooler right now that we got for that reason......the guy that was outbidding us couldn't manage him and I got a call in the middle of the auction......I was asked what I could spend, I gave the owner my price, and I was told that we owned the steer at that number and to not pay any attention to the bid price. 

 

[jason]

It won't be for everyone, you have to be a little bit of more of a DIYer, but the savings make it very attractive. 

 

[rmbcows]

Joe Blow is everywhere in this business.  My friends that sell club calves constantly talk of this customer and the challenges that they present.  This customer has all the cash and none of the work ethic or knowledge.  They don't listen, and many times their kids don't really have near as much interest in the hobby as the parent.  No I do not think it is unethical to see to it that Joe Blow gets "outbid" and the right family gets your calf.  We have a steer in our cooler right now that we got for that reason......the guy that was outbidding us couldn't manage him and I got a call in the middle of the auction......I was asked what I could spend, I gave the owner my price, and I was told that we owned the steer at that number and to not pay any attention to the bid price. 

Tallcool... I think that is awesome!  Congrats for being the kind of person that breeders want to own their cattle.  But my guess is Joe Blow would be furious and accuse you and the seller of being unethical.  So my take is on this subject is.. selling cattle is alot like showing cattle, not everyone is happy with the outcome, and if you are the winner, people are going to accuse you..whether you deserve it or not. 
Personally, I'm looking forward to trying a SP auction in the not so distant future!  I hope this adventure turns out as well as the website itself has! 

 

[sackshowcattle]

I don't know if it could be applied online or not, but my favorite auction was set up in 2 parts. There was a silent auction in the morning to set the floor for the calves(they all started at the same price). The reserve was not shown until they started the auction in the afternoon. Calves that were above the reserve, only people that bid in the morning could have a last chance to bid on. Calves below the reserve anyone could bid on to get them to the reserve. It really helped push the floor up on the calves cause it pushed people to at least bid once on everything they liked to be sure they were able to bid in the afternoon. I don't know if they still run it that way or not it has been a long time since I haven't shown home raised calves.

 

[Limiman12]

Tallcool, how do the sellers know who is bidding on their calves?  The cattle auctions I've watched only identify the bidders by a number, so unless I'm privy to the auction companies information, I have no way of knowing who is bidding.  Am I wrong? 
The auction company has to be able to identify the bidders.  If bidders identity was hidden from them, there'd be nothing stopping someone from setting up an account, buying all the calves and then skipping out.  They must be able to be sure that if I am the winning bidder, I am going to be the paying bidder.  The sales I have signed up for, I have had to either have a credit card or letter from my banker stating I had enough money to spend. 
If a seller knew who I was, and what calves I liked, and I'd run 2 previous calves to $5000, they'd still be a fool to assume I'd run calf #3 to $5000.  They should be ready to take the calf home if I decide it's only worth $3000 and they are bumping my bids and no one else is bidding. 
This is a really good thread, lots of food for thought.  Here's one...  I have a really good calf I put in a sale... Joe Blow is bidding on him like crazy, but Joe Blow is infamous for never feeding well, never working hair and bad mouthing the breeders because the $5000 calf he bought from them never won anything.  What would you do?    Personally, I'd rather sell a calf for $2500 and have it in good hands than pocket $5000 and have a Joe Blow buy it.  I only have a few calves, so if JB messes one up, that's a huge fail  %  for my calf crop.  Any ideas?  Would you consider trying to stop the sale of your calf to JB unethical?  I guess maybe if you're that picky about who owns your calves, auctions might not be the way to sell your calves.

Yep, you're wrong.  The auction company knows who's bidding, and they can tell the owner of the cattle who is bidding.  As the owner of the cattle, it is your right to know......maybe?

A lot of these kids that are buying club calves are spending what they CAN spend...not what they feel a calf is worth.  They have $2500 or $5000 or whatever, and that is what they have.  They go through a set of calves and they mark down every calf that they are willing to spend their budget on, and then they rank them.  What they are WORTH is never factored into the equation.  I realize that this is basically a Sellers Thread, and it is very interesting.  As sellers, you guys consider things like what you feel a calf is worth.  A large percentage of your buyers are making their decisions based upon budget, not value.  Maybe it is foolish to assume that a bidder will bid to $5,000 again............OR maybe you could log on and check out Shike's on line sale that is going on RIGHT NOW and tell me what is going on with bidder #5166.  Tell me how much money bidder #5166 has to spend.  Or tell me if #5166 is "real money".  Look at every lot in this sale and look at how much action this bidder has in this sale, and where the action is.  I am probably way off.

My point is this.  IF #5166 is real $, and Lot #9 is sitting at 1 bid, and bidder #5166 has not bought anything yet, are you going to let that calf go for $1,200?

Joe Blow is everywhere in this business.  My friends that sell club calves constantly talk of this customer and the challenges that they present.  This customer has all the cash and none of the work ethic or knowledge.  They don't listen, and many times their kids don't really have near as much interest in the hobby as the parent.  No I do not think it is unethical to see to it that Joe Blow gets "outbid" and the right family gets your calf.  We have a steer in our cooler right now that we got for that reason......the guy that was outbidding us couldn't manage him and I got a call in the middle of the auction......I was asked what I could spend, I gave the owner my price, and I was told that we owned the steer at that number and to not pay any attention to the bid price.

Two things, I completely understand a seller wanting a calf in the "right hands".  I am contemplating a first breeding for my soon to be three year old "competitive" pointing lab female.    I will make significant effort, including cash incentives to get puppies in homes that will train and title the pups.  I see it as an investment in marketing of any future litters that she has or that I breed.  I also have a paternal attitude towards these pups and want to see them in good homes.  And there is a wide definition of what constitutes a good home for a pup.  If there is a superstar in the litter, I am going to do what I can to get them in a hunt test home, that is the best home for that pup.  But that doesn't mean there is not a pup inthe litter that a great home would be a family that hunts some on the weekend but wants a dog for their eight year old.......  I get the idea of wanting to put calves into good homes.

On the other side, I think as a seller, you should be giving up that right to some degree when you. Put things on an auction.....  At least one that has the appearance of high bid wins.    I have two kids, one of which is almost six, and already shows a lot of interest in cattle, she is also interested in softball, swimming and tumbling.    I encourage he diverse interests, and because of such, I doubt we will ever really campaign a calf all over the Midwest.  Not enough weekends, but we will do right by the calves we have at the show or shows we go to.  If I were to think I was bidding on a calf, only to find out I wasn't.......  All parties involved would likely not see any future bids from my household.......  It's an auction or it isn't,  Don't advertise it as one if it is really a private treaty sale in which bids are accepted or rejected.

Jmho

 

[Limiman12]

I don't know if it could be applied online or not, but my favorite auction was set up in 2 parts. There was a silent auction in the morning to set the floor for the calves(they all started at the same price). The reserve was not shown until they started the auction in the afternoon. Calves that were above the reserve, only people that bid in the morning could have a last chance to bid on. Calves below the reserve anyone could bid on to get them to the reserve. It really helped push the floor up on the calves cause it pushed people to at least bid once on everything they liked to be sure they were able to bid in the afternoon. I don't know if they still run it that way or not it has been a long time since I haven't shown home raised calves.

This is how our seed stock supplier does it.....  Though he states the reserve up front.  He retains anything that does not get a base bid at the reserve.  But, if you get outbid on a high priced bull or heifer, you can then bid on a lower priced one that has not had the live auction part.    We have been good buyers over the years, and he makes it pretty clear o is which bulls or heifers he thinks we should have.....  Talked us out of one because of its mothers disposition (the calf was normal calm, but not puppy dog calm) knowing that my daughter is around our cattle..... 

 

[GONEWEST]

Definitely interesting, although you would think the most straight shot way of going about it would be to set your minimum at ur real minimum.

However I do believe in the ability to p.o. Your cattle. Auction style selling takes the control completely away from the seller. And until bids are closed I feel the seller has the rt to buy his animal back if it does not bring what he/she feels it is worth.

I do understand that some would feel like they were just being "ran up" and that could easily leave a bad taste in their mouth, however u r still bidding against another individual willing to have ownership of the animal at that price.

Definitely most bullet proof way is starting at ur minimum but I guess that's just not how most auctions r ran. I guess for psychological reasons. My grandfather starts the cattle at our sale barn and he was always started them fairly low and let the bidders make the market. Many ways to do it, no matter how its done it is never going to please everyone. But honesty should always be number one in business dealings to me.

Interesting subject

I couldn't agree more.  I've always said that no matter how you are buying cattle - private treaty, live auction, phone bid off, online, whatever... - you need to decide what that animal is worth to you, and be willing to give that and not worry about if you were being ran or by whom (exactly as qb said - they're worth that to someone else or they wouldn't be bidding, even if it is the owner) or what kind of cut somebody in the middle is getting.  Bid to whatever you think is a fair price (or to what you can afford, whichever comes first) and walk away if you don't get them bought.  If you don't trust who you're trying to buy from, you prob'ly shouldn't be buying from them anyway, 'cause even if you do get one bought you'll always be worried about how they have (or will) get to you.

Interesting stuff though, Jason.  I agree that setting the starting bid at the reserve seems the most simple, but I know lots of people like to start 'em low and try to let everybody play, at least for awhile.

Totally, completely, 100% what David said. It should not matter if the animal is "ran up." If the seller priced the animal in the pasture at a certain price or he requires a certain price at auction, what does it matter. If you want it and can afford it buy it. Don't have bad feelings at the seller because he wouldn't sell you something that you want to pay. Thats like going to buy a new one tone pick up, offering the dealership $10,000 and being mad because they wouldn't sell it to you for that.

 

[RyanChandler]

The situation you describe with the truck is what's called private treaty sale. We re talking about an auction where the assumption is you're only breeding against real people.

 

[ZNT]

On the other side, I think as a seller, you should be giving up that right to some degree when you. Put things on an auction.....  At least one that has the appearance of high bid wins.   

I think Limiman12 hit it right on the head concerning sellers picking which families calves go to.  Just as the example of the hunting dogs, you would not put a litter of pups up for auction if you had very specific requirements of the type of homes each one should go too.  You would sell them "PRIVATE TREATY".  When you try to apply these same standards to an "AUCTION", then the lines, or even perceived lines, can get very blurry.  You forfeit the ability to have complete control when you put things in an auction.  There are much better avenues for selling cattle if you do want complete control.

I feel sellers should have the option to show the reserve to "active" bidders on a lot.  This transparency can go a long way in getting the buyer to trust the integrity of the auction.  And I think this should only apply to "active" bidders.  If a person was serious enough to put in a bid on an animal, then the seller should be serious enough to provide the needed information to the buyer to continue bidding.

 

[chambero]

Honestly, the whole club calf auction concept - whether its online or live - is highly corrupt.  Period.  Frankly, I consider it a big incondiderate time waste.  You can make all the excuses you want as to why its done the way it is, but that's not how business should be done. 

Most of the really expensive calves are sold private treaty in the end.  I've bid on a few, fairly seriously in online auctions.  When the seller will actually tell you who buys them, you find out its almost always another trader.  Who almost always sells them private treaty in the end.  I've also been to more than a couple of place 2-3 months after an online auction and I've asked about such and such calf that was invariably "bought be xx trader but he hasn't picked him up yet".  Which I would venture also means hasn't been paid for yet.  That's their business, but is also a clear violation of payment terms in the online auctions.  There's probably a lawsuit somewhere if somebody was ornery enough for selective enforcement of terms and conditions. 

I strongly suspect that the real purpose of most of these auctions is to give the perception of really high prices, which makes us all feel like we are just going to have to break down and pay that much if we want a chance to win.  Frankly, I much more appreciate the honesty of showing up somewhere, someone asking me a ton of money for a calf, and me having to make a decision whether to buy or not.

 

[shortdawg]

Good info ! Thanks for posting !

 

[jason]

I feel sellers should have the option to show the reserve to "active" bidders on a lot.  This transparency can go a long way in getting the buyer to trust the integrity of the auction.  And I think this should only apply to "active" bidders.  If a person was serious enough to put in a bid on an animal, then the seller should be serious enough to provide the needed information to the buyer to continue bidding.

I do like that idea and from a coding standpoint, it will be very easy to implement.  Also can entice people to be early bidders as placing a bid allows you to see the reserve.

 

[jason]

I just wanted to add, I appreciate the comments and discussion.  I am open to any input, as previous points mentioned, not going to be able to please everyone, but I sure want to put out there what the seller/buyer wants.