What Is Collusion At An Auction

What Is Collusion At An Auction

If you’ve never been to​ a​ live auction, then you may not have ever heard of​ the​ term “collusion.” Not all auctioneers mention it, so even if​ you have been to​ an​ auction or​ two, you may never have heard of​ the​ term.

Collusion can be defined as​ “The unlawful practice whereby two or​ more people agree not to​ bid against one another so as​ to​ deflate value or​ when the​ auctioneer accepts a​ fictitious bid on behalf of​ the​ seller so as​ to​ manipulate or​ inflate the​ price of​ the​ property.”

Despite the​ fact that it’s illegal, it’s still a​ pretty common event live auctions.

Here’s a​ typical scenario. You’re at​ an​ auction and​ let’s say you’re looking at​ a​ pallet of​ computers. You see a​ lot of​ items on there that you could use and​ say to​ yourself that you’ll be bidding on that. You notice there are some printers on the​ pallet that you don’t need, but will still bid on the​ pallet when the​ time comes. Now, while you’re looking at​ this pallet of​ computers, another bidder has noticed your interest and​ approaches you. He asks you if​ you’re interested in​ the​ computers or​ the​ printers. You tell him you’re only interested in​ the​ computers. He says he’s only interested in​ the​ printers and​ wants to​ make an​ agreement with you. He says he wants to​ bid on the​ pallet, but will not bid if​ you agree to​ sell him the​ printers for​ half the​ bid price. Now if​ you agree, that’s collusion.

It may sound tempting, but as​ enticing as​ it​ may be, don’t do it. it​ hurts the​ seller at​ the​ auction because now there’s less competition than there should be for​ the​ items and​ makes it​ likely that the​ item will sell for​ less than it​ would have.

Some auctioneers have even been known to​ plant people to​ try to​ get people to​ agree to​ collusion, and​ if​ you do…well, it’s not good.

Now let’s look at​ collusion from the​ other side where the​ seller uses it​ to​ his advantage. in​ this case, the​ seller would plant a​ person to​ bid on an​ auction in​ order to​ artificially run up the​ price on the​ auction. This person has no interest in​ buying the​ item. They just want to​ make you pay more than you would have had to.

Next time you’re at​ an​ auction, just keep in​ mind what collusion is​ and​ avoid it. Keep the​ game fair. an​ auction is​ already a​ place where you can get a​ great deal.

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