Briefly, I am an avid auction buyer. Every Monday I scope out the upcoming industrial auctions that incorporate online bidding. If the auctioneer provides good photos and I like what I see, I will register to bid. Between Proxibid, Bidspotter and Market Alliance, I register for at least 3-5 auctions per week.
I consider myself an ideal buyer: I want to bid, I want to buy, and I have cash ready. As a reseller I am not the best bidder in terms of the highest possible price, but I do bid on a lot of items. I have noticed in my years of buying that for every item I win I am the backup bidder for at least three other items. I provide a baseline to prevent anything from being given away and I add value to the auctioneer. With all of this being true, I sometimes shake my head and wonder “why are you making it so hard for me to bid?”
One big hurdle buyers encounter prior to bidding is the requirement to provide the auctioneer with a Bank Letter of Guarantee (“BLG”) simply to bid. A BLG is an agreement between a lending institution and auctioneer which guarantees a personal or business check. If there are insufficient funds at the time the check is cashed the bank is obligated to pay the funds from their reserves. It has the effect of making business or personal checks certifiable funds like a cashier’s check. This is great security for an auctioneer who is afraid of bad checks. But why require one just to register to bid? I pay with wire transfers and cashier’s checks, but never a business check. I bank at Wells Fargo. If I go to my friendly (fee-based) branch and ask for a BLG, I will get laughed out of the place. Wells Fargo is not about to guarantee my checkbook regardless of the money in my account.
Auctioneers are, or at least should be, salespeople. Their goal is to attract as many qualified bidders as possible in order to get the highest prices for any given auction. Why put up barriers and blocks that keep bidders from bidding? A BLG only means that if a bidder writes the check the bank has to honor it. A BLG does not force anyone to pay for their items. Ultimately, the BLG is a cumbersome hurdle for the buyer and not the steadfast guarantee the auctioneer is looking for.
Instead of requiring that potential bidders (the people who just want to see the items and bid on them) to provide a BLG, it makes more sense for auctioneers to require a BLG only when someone pays with a personal or business check.
Obtaining a BLG as a bidder is just one more barrier an auctioneer puts in between the buyer and the item. Auctioneers really must ask themselves, what more does a BLG get you? My answer is NOTHING. A BLG is an inconvenience and a waste of my time as a buyer, and can easily prevent big sales as a seller. If Amazon or half.com treated online customers like many auctioneers they would be long gone, not the industry giants that they are today.
As I write this, I am stuck watching machinery sell for less than I would have paid because the auctioneer has put up road blocks to keep me from bidding. Today, I’m just glad I’m not the seller. If you require a BLG at your auctions please let me know why. Explain your reasoning and whether you think the BLG helps or hinders your business. I look forward to your comments.