By Anson Brown
As an auction professional, there is nothing worse in this business than disappointing consignors. It would seem, there is nothing we can say or do to really prepare a consignor for what to expect at auction. Disappointment happens when you bring your treasures to auction that you think are valuable only to find that 200 bidders sitting in a room think your stuff is worth much less than you do. Hopefully, the wise seller will do a little due diligence online prior to send all her possessions to auction and have realistic expectations.
With the Baby Boomers retiring in mass, the United States is about to see the biggest transfer of wealth in history. This means downsizing, liquidating a lifetime of acquired durable goods and moving to The Villages in Florida. If this sounds like you or someone you know, read on and learn what to expect.
Rule #1: Auction is a Gamble
The sooner you understand this the easier it will be to put things into their proper perspective before you send your stuff to auction. A good auction house does two things: 1) supplies bidders for your merchandise; 2) appropriately markets your items. It is almost completely up to the bidders to supply the price. These two auction house functions have never been easier with the advent of the computer age. With as much as a photograph on the internet, any auction house can get your fair market value for your goods. Today an auction house in Ohio can compete with an auction house in New York, because people are looking online for items world wide. In fact, the 3rd largest auction house in the world is Heritage Auctions in Dallas, Texas and is strong competition for world leaders Sotheby’s and Christie’s. Both Sotheby’s and Christie’s are well over 100 years old while Heritage was founded in 1976 and is doing nearly $1 billion in business annually.
Expect to get Fair Market Value
Now when we say fair market value in the auction business, we do not mean retail value. When you walk into a gallery to buy an original painting, they may charge you thousands of dollars. Years later, you try to resell the painting at auction only to find that it’s worth a mere hundreds. Why the disparity? Much like the stock market, your durable goods are subject to the laws of supply and demand. Demand being the most important factor, if what you bring to sell is not in high demand and short supply today you will only get a fraction of what it was once worth. The way we explain these key factors to perspective consignors is desirability; what do people want to buy NOW? For example, for antique furniture Victorian and Rococo are out of style and not highly desirable. You would be giving these away at auction for next to nothing. Conversely, Danish Modern and Federal Style are en vogue and will bring a much greater price. The vast majority of items sold at auction will sell for 10-20% of retail value. So, if you look up your artist print being sold by a gallery and find a retail value at $1000, you can typically expect it to bring $200-400 at auction and sometimes less. If you want to avoid sticker shock, the best thing you can so is research auction values by looking at sales records for your items on a live auction site, such as LiveAuctioneers.com. The account is free!
Don’t send anything to auction unless you are ready to let it go!
This scenario happens all too often. A seller out of necessity is liquidating assets will send 50 items to auction that they really don’t care about, and the one thing that they hold dear. This could be something with strong sentimental value, that has been in the family a long time or has been thought to be very valuable for years. The 50 items may do as expected at auction, but the 1 item you really thought was great sells for next to nothing and you’re incredibly upset. What’s worse, there is no getting it back. Don’t bring anything to auction unless you’re ready to see it go! When you sell at auction, you are agreeing to sell to the highest bidder, not necessarily at a set price. Most auction houses will allow you to place a reserve on items which is a set price which an item must achieve if it is to be sold. Usually, reserves have to be approved by the auctioneer and carry a fee in the event of non-sale. The auctioneer gets paid either way, so it behooves the seller to find a realistic price prior to setting a reserve.
Gold is where you find it…
I had a lady with a Thomas Kinkade “painting” that she purchased for in excess of $1600. It graced her home for some years, but would not fit the decor of her new condo in Florida. She wanted to sell it. I informed her that it was not actually an original painting, but a print on canvas which is what Kinkade does to make his art available to the masses. Although a gallery may sell it for $1600, at auction you can buy them all day long for under $200. She refused to believe me and insisted I try to sell. I couldn’t offer her a reserve on this item because bidders and other auction houses would think me mad. Even after telling her my estimate, ($100-200), showing her comparable auction data she went ahead and demanded I sell it for her affirming that I was completely wrong and that I would be surprised. Conversely, she had a box of old pre-Civil War Virginia currency, many uncut notes. She thought this box was worthless. Long story short, her Kinkade painting sold for $180 while her box of currency sold for $6500. Lesson here, be receptive to the reality of the market and leave your preconceived notions at home. You may have something in your collection that you never realized was valuable. Don’t place too much emotional stock and expectation in things that are widely available. And when in doubt, keep it!
Those of us in the auction industry want to make your selling experience a good one; this is our responsibility. Often times, we are putting a price on emotions and memories which are always priceless to their possessor. As a seller it behooves you to approach auction with understanding of the process and realistic expectations of the market. Understanding is the best remedy to make parting with your treasures a positive memory. And if you don’t like what things are selling for at auction, you can always buy! In today’s down economy, it is after all a buyer’s market!