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Auction Technology- Multiple Liquidation Strategies


Author Bio: Darron Meares is an experienced bankruptcy auctioneer, auction school instructor and co-owner of a full-service auction firm that serves the Southeast.

The wave of bankruptcy and foreclosure filings is gaining momentum with each passing month as banks, attorneys and debt collection agencies have cases quickly stacking up.  Over the past five to ten years liquidation strategies have taken on differing forms as insolvency professionals had to come up with solutions to complex and challenging situations.  What was once an easy liquidation has taken different turns as more creditors are involved in the overall collection process.

The traditional methods of liquidation are still in use and are the basic building blocks of the strategies in play today.  These methods include private sale, sealed bid, sealed bid with fax back option and traditional outcry auction.  Each has their place in the liquidation strategy and can be accentuated by technology in today’s market.  The auction professional conducting the liquidation may employ one or more of these methods in addition to adding the technology element into the overall strategy.

Auctioneers have been the go-to source of liquidation as they can move more expeditiously through assets once they have been identified and located.  Auctioneers today have more weapons in their arsenal than in the past since the Internet has come into its own as a way to bring buyer and seller together.  In the past, monies would be spent to advertise a liquidation to bring potential buyers to the location, seeing as though this was one of the few ways to view the actual assets being sold.  Now, with the Internet, liquidators can utilize the cheaper, wider-reaching advertising of cyberspace in conjunction with the traditional print methods.  Thus, leaving more revenue for the creditors and the bottom line.

In addition to saving money advertising the liquidation, auctioneers utilize the Internet for various liquidation strategies.  These include the traditional live auction, a timed online auction much like eBay-style bidding or a hybrid auction that combines the live online and timed online facets to hit the most potential bidders.  The traditional auction method of outcry bidding is the tried-and-true method used for ages; however, add in the Internet component and the number of potential bidders at the event multiplies.  Think of a traditional auction where the items for sale are located in a warehouse used to store the items.  The bidders must be notified and attracted to the event through traditional marketing methods (i.e. newspaper, brochures, postcards) or through the use of a purchased mailing list.  For the auction professional to cover the gamut of potential bidders would take thousands of dollars- thousands of dollars out of the proceeds of the auction.  Now factor in a specializing textile or manufacturing business that needs international attention… you get the picture!

Through the use of Internet auctions and Internet advertising, the auction professional now has the world at his/her fingertips.  Literally.  Our firm conducted a liquidation of a textile facility in 2009 and knew the bidders would have to be attracted from overseas to compete with the US bidders in attendance.  Through the use of Internet banner ads on international textile websites we were able to bring them into the mix and take “deals” out of the room.  By utilizing the hybrid auction (timed and real-time live) we were able to bring in bidders before and during the auction and exceed the appraised value of the assets.

The methods of Internet bidding build upon each other as you progress from traditional live, outcry bidding through live, real-time online bidding.  The traditional auction method of marketing assets brings forth images of someone standing in front of an audience, with a microphone in hand, talking fast.  Auction professionals are versed in this method, as it is the basic building block of auctioneering.  Moving forward into the 20th and 21st centuries professionals began to tweak that image by bringing the Internet to the auction world- thanks, in part to eBay and the bidding juggernaut they created.  Auction professionals saw the Internet as a cost-effective way to move items and, in addition, break the geographical borders they had served for so long.  Many auction professionals utilize a timed, online auction method similar to eBay’s model when an onsite or live online auction cannot be facilitated.  The timed, online model allows bidders to place proxy bids on items listed in the auction catalog, which is usually on the Internet for days up to weeks prior to the close of the liquidation.  The online, real-time auction uses the Internet to broadcast the bidding to those registered for the auction that choose to stay at their home or office during the live event.  Finally, bringing the two methods together is the hybrid online auction that allows “pre-bidding” in a timed format prior to the live auction, which is simulcast on the Internet.  This method allows three types of bidders to participate:  timed bidding for those that cannot be in attendance at the live or live online event, live online bidding for those that would like to bid but cannot make the trip to the auction site and finally, live onsite bidders who do make the onsite auction.  The hybrid auction ties all three together and gives the liquidator the greatest chance to expose the auction to the greatest number of potential bidders.

Methods of Internet bidding will vary depending on several factors and auction professionals versed in utilizing the Internet for liquidation purposes should take these factors into consideration before proposing to use any type of strategy:

  1. Assets being liquidated
  2. Timeframe of the liquidation
  3. Availability of the Internet at the location
  4. Landlord or property restrictions.

When looking to use the Internet in a liquidation strategy, these items should be addressed during a survey of inventory and locational aspects.  At times, the Internet may not be the right approach to take due to constraints unearthed in this survey.  The timeframe of the liquidation is very important, as this will determine the feasibility of adding the Internet component.  Unlike traditional auctions where a catalog listing items for sale is sufficient, the Internet requires additional descriptive information of the inventory as well as pictures of the items.  The bidder on the other end of the Ethernet cable has to be able to “see and feel” the items in the auction to make an informed bid.  This is especially true when working with collectible items ranging from coins or firearms up to specialized equipment and Real Estate.

Location can be an issue for any auction or liquidation situation and each has its own pluses and minuses.  When using an Internet strategy it is vitally important to make sure there is a connection and, if not, the auction professional should check to see if there is a way to get a connection established.  At times, this can be a costly addition to the overhead costs associated with conducting the liquidation onsite and the auction professional may have to utilize a timed online auction where photos and descriptions are the basic need.  If this happens, the professional should make preparations with the landlord to secure the items in situ until the end of the auction and removal process.  There again, this could cause additional expenses if the landlord requests rent or storage expense in allowing the inventory to remain in place.  Our company has run into this situation in the past where we would have to pay a month’s rent to secure the inventory on location.  Other times the rent was cost-prohibitive and the items would be transported to a secure location resulting in less expense to the lender or creditor.  The auction professional should weigh the costs involved with any type of liquidation strategy to recoup the most revenue for their clients.

So now you have a business that needs to be liquidated and the landlord wants the inventory out of his building yesterday so he can rent the space and recoup lost revenue.  Sound familiar?  Auction professionals specializing in bankruptcy or Small Business Administration (SBA) liquidations can be found by using the yellow pages or most any Internet search.  But how do you know they are the right fix for your liquidation?  Interview them.  What types of liquidations have they conducted in the market?  Do they utilize the Internet as a viable liquidation strategy, use the traditional auction method of marketing or a combination of both?  Your search could begin with the American Bankruptcy Institute (ABI) member list, which, as of writing this article, contained 101 members listed with the search term auction.  To broaden the search, other places to look would be the National Auctioneers Association (NAA) member list (, the Industrial Auctioneers Association (IAA) member list ( or the individual state auctioneer association websites.  Most auctioneer associations maintain their own member websites containing the specialties of auctioneers in the respective organizations.  Be warned: specialties are listed on the NAA and state association websites based on the application submitted with membership information when the person becomes a member and this information is rarely updated.

Auction professionals have moved away from the traditional sense of the word auctioneer.  Over the past ten years, the auction profession has taken a huge leap forward by utilizing technology in many overlooked aspects of the industry.  Computerized accounting and bookkeeping, in addition to the Internet, have pushed traditional bid callers into the 21st century and have given the profession a more “business-like” appearance.  Many auction professionals are also personal property appraisers through the Graduate Personal Property Appraiser (GPPA) or Master Personal Property Appraiser (MPPA) designations offered through the NAA Education Institute.  The GPPA and MPPA both require evidence of Uniform Standards of Professional Appraisal Practice (USPAP) completion and testing prior to the issuance of either designation.  In addition, as evidenced by the number of auction practitioners listed online, many are already assisting insolvency professionals in bankruptcy and liquidation work through the ABI.  Additionally, the IAA maintains one of the most comprehensive lists of machinery and equipment appraisers, dealers and auctioneers worldwide.

In summation, the Internet is one of the most cost-effective, revenue producing items at the disposal of insolvency professionals looking to garner the most revenue from liquidations for their clients.  An auction professional knowledgeable in the use of Internet bidding is indispensable in today’s market where buyers are stretching their dollar to the limit.  The buyer that was once located across the county or state is now located in all parts of the globe and by using the technology in place today you can reach them right at their desktop!

Written by:
Darron Meares, MBA, CAI, MPPA, BAS
Chief Operating Officer, Meares Auction Group, Pelzer, S.C.

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