By Austin Snedden, Ranching Contributor, Valley Ag Voice
Live auctions with a good auctioneer are exciting and usually the best way to reveal true market value and price discovery. Auctioneers and sale consultants are hired to bring in top-dollar on behalf of the seller. This free-market principle is vital to price discovery in the livestock industry but can sometimes result in inexperienced bidders paying more than they need to. Most auctioneers and sale staff run a tight ship and won’t lead you down a road in which you are taken advantage. However, there are instances where you can learn to observe things to guide you in your shopping and bidding process. I write this not to cast shade on the live auction process, as I think it is important and I really appreciate it. Rather, I write this from the perspective of a buyer who has bid and purchased bulls from many sales and auctioneers across the west and beyond. These are purely anecdotal observations from a potential buyer with a limited budget and specific criteria for what bulls to bid on. Although this is written from the perspective of someone shopping for bulls, I think the concepts apply to shopping horses, commercial females, commercial stockers, etc.
The specific criteria for the critter you are shopping for is not important in this case, but it is assumed you have a specific criterion. Getting to know the breeder/seller is extremely important to determine if the breeders’ philosophy for cattle selection matches yours. If you get the opportunity to discuss or even look through a sellers’ cattle, you will learn a lot about their philosophy, but also about how much of an aggressive salesman they are. Discussing the sale of cattle or even the cow herd of a seller will give you great insight. There is no perfect animal out there, and every astute breeder knows the shortcomings of every animal they are offering. If you don’t hear a seller discuss the weaknesses of any animals, or a seller never steers you away from an animal because it doesn’t match your needs, recognize you are dealing with an aggressive salesman first and a stockman second. There are opportunities to find something that will fit from the aggressive salesman, but you will need to do the digging yourself to find possible red flags in the potential purchase. The aggressive salesman/breeder will most likely hire an aggressive auctioneer/sales consultant. This creates a situation where the potential buyer needs to be cautious and sit tight on their wallet.
The best-case scenario for a buyer is to find a breeder that is forthcoming about the strengths and weaknesses of the offering. They listen to your breeding goals and direct you towards the absolute best fit, and away from ones that aren’t necessarily bad cattle, but are better suited for someone with different goals. Often these forthcoming sellers hire auctioneers and sales staff that run the sale more transparently, allowing you to be more confident in the process. Occasionally it doesn’t match. Sometimes very transparent breeders hire aggressive auctioneers and staff, and while you can be confident in the offering, you need to be cautious come sale time. There is always a time for new blood and the next generation when it comes to auctioneers and ring men, but the best auctioneers and ring men are going to be the ones you see a lot in that region. They are going to treat you right because they may have taken bids from you before or may look to have your trust to take bids from you in the future.
Prior to sale day, if you are dealing with an aggressive salesman/breeder, don’t tip your hand too much when inquiring about specific sale lots. If you have narrowed your choices down to one or two lots before visiting with the breeder, ask the breeder about three or four lots. Don’t unnecessarily waste the breeders’ time, but also don’t let them think you have all your eggs in one basket. When dealing with the seller that looks to see you pay the most amount possible, don’t give them the impression you are desperate to have what they are selling, especially a specific lot.
When it comes to sale day and you have your budget and list narrowed down to one or several, sale order can be your friend or a big challenge. For clarity, most would prefer to have their number one choice be higher in the sale order than their second or third choice, but even if the sale order doesn’t fall this way, you can use it to establish your position with the auction staff. If a lot enters the ring that is on your list but being sold before your higher choices, use it as an opportunity to participate early and feel the flow of the auction, and not having the winning bid on a lot establishes to the ring man and auctioneer that you have a ceiling. (Caution: never bid on a lot you cannot live with based on the bids you are casting, no matter how low.) If you are calm and thoughtful in your bidding, and sales staff know you aren’t afraid to lose on some lots, you are less likely to bid against phantom bidders on future lots. Phantom bids are fake bids initiated by an auctioneer or ring men to bump the price and often happen to start the lot and get the animal up to the sellers’ floor price (perfectly acceptable), occasionally they happen as a lot progresses into high dollar values when an auctioneer or sales staff have marked a bidder to have deep pockets and to be fully committed to a given lot. (Not all auctioneers or ring men will participate in this somewhat deceptive practice).
If you are bidding via phone, try to be on the line with someone you know or trust. This industry is a small world and someone in your circle should be able to direct you towards someone on the sales staff that will represent you well. If you are attending in person, try to sit in the section of a ring man that you know, and preferably knows you (not always possible). If you can watch some of the sale before the lots come up that you are looking to bid on, watch the flow of the sale. If the auctioneer and staff regularly lose track of where the bid is and have to drop back to a lower dollar value, be cautious of phantom bids when it comes to the lots you are looking to buy. When the lot you want to buy comes up, don’t be the first to bid but bid early so that your ring man will keep an eye on you, then don’t hesitate to take your time as the lot progresses. When the ring man or auctioneer calls for your next bid don’t hesitate to wait a beat or two, so they know you are thinking. When making your budget, stick to it, but remember that most budgets are made at a round number. For example, there may be three of you participating with a budget of $5,000 on a bull, and $5,250 might get him bought. If your budget is a round number, consider adding one bid on top, it might be all it takes.
This information is based on personal experience and mistakes I have made. My goal is not to degrade auctioneers, sales staff, or the live auction process, it is a great way to do business for the buyer and the seller and most folks have plenty of integrity. My goal in these tips is to help you get the most from this format and gain the confidence to participate.