Saturday, September 26, 2009

Practical Advice: Auctions, Part II: Consigning and Selling

From the perspective of the consignor, the four types of auctions described in the earlier article on buying at auction (Practical Advice: Auctions, Part I - Bidding and Buying) are useful for liquidating different types of material. A few general questions regarding terms for consignors apply to all four, however:

  • What is the seller's commission? Most stamp auctions charge a 10%-15% commission of the gross realization from sellers, but some charge as much as 25%. If a consignment is large enough, many an auctioneer will reduce or even eliminate the seller's commission, because he is in competetion with other auctioneers who also may wish obtain the consignment.
  • What is the buyer's commission? Most stamp auctions charge a commission to the buyer as well as to the seller. While the seller doesn't pay this commission directly, it does affect how much prospective buyers are willing to bid for his lots.
  • Does the auctioneer allow consignors to set minimum reserves on their lots? This is important because reserves eliminate the possibility of the consignor's lots selling for too little.

  • What are the minimum consignment values and minimum lot values?

  • Must the consignor pay lotting fees for unsold lots? Are there any other fees for which the consignor is responsible?

  • How many catalogs are sent out and how many are sent overseas?

  • What is the auctioneer's record when he has sold similar material in the past? It's always prudent to request the records of realizations from recent auctions in which the auctioneer has offered material similar to the consignor's. Many of the same bidders who have purchased this material will probably bid on yours.

  • How soon after the auction does the consignor get paid?

  • Is the auctioneer reputable? This can be determined by checking with the membership department of the philatelic society to which he belongs.

Each of the four types of auctions is appropriate for different types of consignment, and a fifth, auctions which specialize in a particular collecting area, can also be useful.

  • Premier Auctions require the highest minimum consignment and lot values. Lately, they've been trending towards charging high consignor's and buyer's commissions of 15% to 20%. Unless your consignment is extremely valuable, the premier auctioneer will be inflexible in maintaining his terms. On the positive side, premier auctions tend to achieve high realizations for better material, because their clientele tends to be very affluent.

  • Specialty Auctions focus on stamps of a particular collecting area. They're generally similar to premier auctions, and also tend to achieve high realizations, because their clientele specializes in the stamps which they're offering.

  • "Second Tier" U.S. and Worldwide Auctions neither specialize nor do they publish expensive catalogs. Commissions tend to be more reasonable at such auctions, and minimum consignment and lot values are lower. Frequently, the auctioneer will be more flexible as to terms if the consignment is of medium value or greater, or the consignor has established a relationship with the auctioneer. Realizations are across the board, and at most such auctions, there will be both bargains and gross overbidding.

  • Ebay reaches the widest possible audience, and is useful for selling inexpensive and medium-value single items, and low-grade collections or accumulations.Its main disadvantages are that it charges the seller an insertion fee whether a lot sells or not, and bidders don't tend to bid as much for individual high-value items as they would at a regular stamp auction, because they cannot physically inspect the lots. On the plus side, its total commissions (including Paypal fees) for lots that actually sell are considerably lower than those of regular stamp auctions, and payment is received much faster.

  • Local Antique Auctions are the best venues for dumping worthless junk. They are often attended by bidders who know very little or nothing about the stamp market, and who will pay real money for stamps that seem impressive to them because the stamps are beautiful, old, or from "exotic" countries. I do not condone blatant dishonesty when writing descriptions for lots for sale at an antique auction, but I see nothing wrong with presenting them in an attractive manner. A common tactic for antique auction sellers is to create a stamp "mystery box," a box of all of the common stamps, recently received covers with interesting stamps attached, unwanted supplies, old auction catalogs, and other miscellaneous rubbish all thrown together in a lot for which the only true "mystery" is why anyone would want to bid on it. Antique auctioneers tend to charge a high seller's commission (usually 20%-25%), but they usually pay within 2 weeks after the auction. Local antique auctions are a great way to play the "ignorance market," converting garbage into real money which can then be re-invested in something of value. They are hit or miss opportunities, however, as sometimes sufficiently ignorant buyers do not show up to bid. Nevertheless, the risk is minimal or non-existent, given the quality of the material being unloaded.


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