9 Essential Silent Auction Rules + Free Printable Template

Picture this: You're hosting a silent auction, and everything is running smoothly... until you let your guests know they have ten minutes left to bid. After the announcement, one guest approaches your team and asks to remove their bid on a high-value item. What do you do?

With a good understanding of silent auction rules and best practices, you can handle situations just like this. Sure, some rules may get pushback when you enforce them. But in the end, most of your bidders will appreciate your consistency and quick response and feel safer bidding as a result.

In this guide, we’ll help you prepare to run a successful silent auction by covering:

• State Silent Auction Laws
• 9 Silent Auction Rules for Fair Auctions
• Printable Silent Auction Rules Template
• How Handbid Can Help

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State Silent Auction Laws

There is a ton of gray area around legal compliance for auctions, since there aren't any major, consistent laws dictating how your auction should function. However, you may run into state-specific tax rules, and it’s essential to be aware of them before you start fundraising.

We can't provide the rules for each state here, but there are a few tax considerations that can be helpful to research before planning your auction. For example, you should find answers to questions like:

• Are silent auctions legal in your state?
• Does your state require you to register your silent auction in advance?
• Will you be required to charge sales tax?
• Is sales tax charged for all items or only some?
• How is sales tax handled for bundled items?
• Are items purchased by bidders tax-deductible in your state?

Since these answers aren’t always straightforward, it’s a best practice to tell bidders that their purchases may not be tax-deductible. Instead, specify that any purchases above the fair market value (FMV) of items may be deductible and advise the bidder to consult with a tax advisor.

9 Silent Auction Rules for Fair Auctions

Beyond state regulations, there aren't any standardized rules about how nonprofit auctions should be run. However, setting the following silent auction rules will help all bidders participate on equal footing and feel comfortable placing bids.

1. All bids and sales are final.

Clarify at the beginning of your auction that bidders must pay for the items they win—they can’t revoke a winning bid or return an item two weeks later.

Even with this rule, you may run into a situation from time to time when a nervous bidder accidentally bids $1,000 and wants it removed. Your nonprofit should have a plan for addressing these situations. Typically, you have three options for how you respond:

1. Remind them that bids are final. Emphasize that a bid is a binding agreement to purchase the item at that price.
2. Encourage them to wait it out and hopefully get outbid. In many cases, someone will outbid them, and the problem is solved on its own.
3. Remove the bid (but avoid this when possible). Ultimately, it is up to you, and you don't want an unhappy bidder. Feel free to remove the bid if you can get the second-place bidder to agree to be the current winner.

Most silent auction platforms make bidders confirm their bids before they place them, so the situation where a user "accidentally bid” on the wrong item should not happen often.

2. Guests must have a credit card on file to bid.

Require payment information before bidding to prevent a runaway bidder. Ask for credit card details either during registration or check-in.

While guests may have resisted this in the past, pushback is rare today. Most guests realize that adding a card lets them pay from their phone and skip checkout lines altogether. They are more than happy to put a card on file to avoid the post-auction wait.

3. Bidders must provide accurate payment details and contact information.

Along with a credit card, make sure you get every bidder’s contact information for item distribution and follow-up. This is much easier when done ahead of time, so encourage guests to register in advance!

If your organization hosts a lot of auctions, guests might get tired of entering their information every time they sign up. Fortunately, you can speed up the registration process for regular auction attendees by using a platform with universal accounts (like Handbid!). Then, when previous guests sign up for future events, they won't need to re-enter their personal or financial information and can get straight to bidding.

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4. All items must be priced based on their fair market value (FMV).

While bidders are contributing to a charitable cause, there's still a monetary exchange involved. This means your guests aren't the only ones who need to follow silent auction rules! Your nonprofit should also establish seller guidelines to maintain transparency and earn your bidders' trust.

Most importantly, this means that auction item donors must:

• Provide true, accurate item descriptions. This includes both descriptions and photos. Report any flaws, alterations, or damages to bidders. ‍
• Establish the fair market value of donated items to the best of their ability. Do your research to verify FMVs after donors report them.

Additionally, your nonprofit should provide a receipt of purchase to every bidder, listing the fair market value of each item won vs. the final purchase price. The receipt should also identify your nonprofit as the seller.

5. Bids must follow the minimum starting bid and bidding increments.

Setting strict starting bids and bid increments will help you boost engagement and ensure auction items are sold at or above their fair market value.

Make sure to do this thoughtfully by considering what increments will attract the most attention. In most cases, this means setting bid increments as low as your nonprofit can bear. Here’s how you figure this out:

1. Set your starting bid to 30-40% of an item’s fair market value (FMV).
2. Decide how much revenue you need using this formula: [Bid Revenue] = [FMV] – [Starting Bid]
3. Divide your bid revenue by the number of bids you want: [Bid Increments] = [Bid Revenue]/[Number of Bids]

Don't be afraid to play around with this formula and adjust. Ideally, your bid increments should be low enough to drive additional bids while still making sense for the item's value.

6. Bids cannot be placed before X time or after the auction closes.

When guests first sign up for your auction, let them know exactly when bidding opens and closes. This helps guests organize their schedules and can be especially helpful for your virtual auction attendees.

To drive extra revenue from last-minute bids and give guests an extra heads-up, share reminders during the auction itself, too. At in-person auctions, make verbal announcements leading up to the auction’s close, like “We’re entering the final hour of bidding!” and “Only 30 minutes left to make your final bids.” Mobile bidding software will also help you provide guests with closing time warnings via text or push notifications.

7. Items must be paid for in full before distribution.

To receive an item, bidders must show that it has been paid in full. Simplify this process by using a mobile bidding app with automatic checkout and immediate purchase receipts.

Before you send a volunteer running for an item, ask guests to show you the PAID IN FULL invoice on their phone. Not only will this prove that the item has been purchased, but it'll give you the code for the item. The last thing you want to do is send a volunteer to grab a large grill and drag it up to the checkout, only to realize that the guest won a grilling gift card instead.

8. Items may be withdrawn before the auction closes.

Give guests a disclaimer that your organization has the right to withdraw auction items at any time during the event. For instance, if a volunteer realizes mid-auction that one of your raffle baskets has a hole in it, you should be able to remove it.

9. Limits and age restrictions may apply.

Another legal consideration to keep in mind is age restrictions for certain auction items, such as alcohol, overnight trips, tobacco products, etc. While these can be competitive items, you don’t want to get into any legal trouble by allowing a 17-year-old to win them.

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Printable Silent Auction Rules Template

Once your team decides on which rules to uphold, make sure your attendees receive the written rules prior to the event. We’ve got a template ready for you below, but feel free to make adjustments based on your nonprofit’s unique needs.

How Handbid Can Help

With today’s technology, many bidding challenges can be mitigated by simply choosing the right mobile bidding software. Top auction solutions help you enforce bidding rules automatically, making it impossible to:

• Place bids with bad handwriting, raising the wrong paddle, or writing down the wrong name. With auction software, guests can submit bids on their phones, computers, or tablets—no handwriting required.
• Bid in incorrect bid increments. Silent auction software won't allow guests to place a bid under an item's minimum bid increment.
• Steal bid sheets. This is one of many reasons that bid sheets, in general, should be avoided. When bidding happens digitally, you won’t have any bid sheets to steal!
• Cancel bids. Make it clear that all bids are final before the first bids are entered, and your silent auction software will enforce this by not allowing a bidder to remove their own bids.
• Be surprised by the auction’s close. Your platform might have a countdown timer to keep guests aware of closing times and drive participation until the final few moments.
• Get stuck in long checkout lines. Mobile bidding software like Handbid drastically improves the checkout experience, as guests can check out directly from their phones once the auction is over.

And that’s just the beginning! Check out our video to learn about all the exciting features that make bidding more secure, profitable, and fun:

Plus, all Handbid clients (including bidders!) are required to agree to our bidder terms and conditions when they register in our apps or online. These terms provide a detailed description of the mobile bidding company's role in a transaction, the charity's role and obligations as the seller, and the bidder's obligations as the buyer. Essentially, this means that if a bidder places a bid and wins, they are obligated to buy the item, while sellers must ensure they provide accurate and truthful descriptions of their items.

All of these guidelines are there to increase participation, maximize revenue for our customers, and minimize potential disputes. Just by using our app, you’ll simplify compliance with silent auction rules and improve the bidding experience for everyone.

Wrapping Up

Though silent auction rules are often more guidelines than anything else, they can help your event stay on track and form an agreement between you and your guests. These guidelines, partnered with a few silent auction best practices, can help take your next event to the next level.

For more help planning your next stand-out silent auction, check out these resources:

• 50+ Top Silent Auction Items & Ideas for Your Next Event. Need inspiration for bidding items? Look no further! These ideas are sure to be a hit at your next event. ‍
• Silent Auctions: The Complete Guide for Smarter Fundraising. Interested in running a silent auction? Learn the ins and outs of auction planning in this comprehensive guide.‍
• 15 Best Silent Auction Platforms & Apps for Nonprofits Today. Online and silent auction software can transform your auction for the better. Check out these top providers.