Auction Best Practices

[Jim Mead]

We recently re-started our Family Live Auction practice. My Dad started in 1946. I was born in 1952, began delivering sold goods to successful bidders and collecting payment at age 6. I was big for my age. Began selling lesser goods at age 11. Worked hand in hand with my Dad until his death in 1986. Have had sales off and on ever since, but slowed dramatically while building our current business, the Early Owego Antique Center, now 10 years old.  

 

Since most of the Auction firms around us went all online during Covid and show no real desire to return to live auctions, and because our Store lower level was unused, we have begun Commission sales just recently. 
 

My question is, what do you all consider to be some best practices regarding Automobilia Auctions ?

Do they differ for full size Automobiles?

 

What about online vs. absentee bidding, or return phone call bidding ?

Buyers Premium levels ?  Storage and handling ?  What features do like best, worst ?

 

This isn’t an ad for our business (much, anyway) but a genuine call for your opinions.  As a fellow collector, it is important to me that we always maintain ethical practices, accurate descriptions as best we know them and perhaps most importantly, that yes, it’s fun.  Getting too old to battle stereotypes or suppositions of bad behavior by glad flies. Any and all insight appreciated. 
 

All best,

Col.Jim Mead

Owego, NY

 

Owner:

Mead & Sons

“Everybodys Auctioneers”

Auctionzip  #52476

Early Owego Antique Center

earlyowego.com

[alsancle]

Some comments:

 

1.  Online is going to be crtital.  You can probably use a service like Live Auctioneers which seems to be popular with smaller houses.

 

2. Decent pictures with a ruler is a good idea.  Both sides of the item.   For example, I'll spend real money on a photo but not if I can't see the back.

 

3.  You will have to ship and giving some rough estimates on what that will be.   An ebay auction will enumerate the shipping costs exactly.   

 

4.  Marketing will be important.  Some obscure items are valuable to three people in the world.  If they don't know about then the item has zero value.

[Jim Mead]

Thanks for getting us started Al. Hope some more jump in, perhaps with stories Good and Bad……

Jim

[3macboys]

Just to add to the above:

 

Ebay recently expanded the photo gallery from 12 to 24 pictures- let the pictures tell the story and highlight any faults 

 

As much as I dislike any buyer's premium the more it rises above 10% the less interest I have - around here between the premium and sales tax that's the point where you are adding 25% to your final bid.   An auctioneer local to us, who is back doing live auctions has no buyer's premium and only takes cash, cheques and e-transfers - no credit cards

 

[RansomEli]

Jim,

The ability to ship auction items at a fair price is critical. Some auction firms look on shipping as a profit center. Ship for cost plus handling. Your buyer's premium should cover the rest.

 

One auction firm I dealt with subcontracted the shipping to another firm in the city. That firm was very fair and I ended up buying many items.

[Steve_Mack_CT]

Automobilia is a fairly broad term.  Specific to gas and oil, signs and other what I would call mainstream collectibles I will say from a collector's perspective the #1 concern I have is authenticity followed by condition followed by rarity/desireability.  Concerns 2 & 3 are on me 100%, but the plethora of high quality fakes continues to grow making me much more hesitant to pull the trigger on pricier items like signs in that not too big, not too small sweetspot.  Oil bottles, tag toppers, war jars, banks, all have been faked as well. 

I know this is a tough one for any auction house but how do you ease the mind of a distance buyer here?

[pkhammer]

 My favorite auctioneer in this area charges no buyers premium for cash and 5% if a CC is used to pay. He charges his consignors 15%-25% depending on the work he has to do. If the consignor takes the photos and brings the items to him they get charged the lower percent. If he has to do all the photography and hauling, the consignor gets charged the higher commission. Cars I think are only a 10% commission.

  He represents items as accurately as possible and if an item is a reproduction it is clearly stated. if there is any question about authenticity then that needs to be clearly stated as well.

[John_S_in_Penna]

2 hours ago, Jim Mead said:

...a genuine call for your opinions.  As a fellow collector, it is important to me that we always maintain ethical practices, accurate descriptions as best we know them and perhaps most importantly, that yes, it’s fun.  

With such a good ethical foundation, you should

do well!  And I hope you succeed tremendously.

 

In another thread, we were discussing buyers' commissions.

Intelligent bidders will factor in all costs before bidding,

but you will stand out in a positive light if you can advertise,

"No buyers' fees!"  It will set you apart from others.

 

Be sure to have accurate descriptions, whether written

or on the auction platform, that state the good and bad.

Glowing over the positives without telling anything else

is like telling half-truths.  I like an in-person auction,

but an internet presence also will expand your market.

 

Let your good reputation sell your business!

[60FlatTop]

I am just out RT 104 less than 3 hours from you. You need a digital location. No one, like a transport company, gets up into our area without a mission.

 

Money, cars, and good weather are key to survival. That's not Oswego. If you don't go digital consider relocating.

[John_S_in_Penna]

11 minutes ago, 60FlatTop said:

Money, cars, and good weather are key to survival.  That's not Oswego. 

Actually, he said he is in Owego, which is in the southernmost

part of the state.  (Oswego is north, on Lake Ontario.)  For those

unacquainted, New York has towns with interestingly similar names,

a lot of them beginning with "O."

 

Pennsylvania is similar, with, for example, TWO towns named

Wrightsville--more than 200 miles apart!

 

2 hours ago, Jim Mead said:

...our current business, the Early Owego Antique Center, now 10 years old.  

 

Edited April 10, 2023 by John_S_in_Penna (see edit history)

[Jim Mead]

Draw a triangle between Ithaca (Cornell, my Alma Mater), Elmira (Mark Twain’s writing haven and burial place and Binghamton ( Endicott Johnson shoes and IBM) and Owego, County seat of Tioga County (birthplace of John D. Rockefeller) is in the middle. 
 

The confusion between Oswego and Owego has been forever. Even in the 19th Century, the Erie RR, which was organized at a “convention” held at Owego in the 1850’s, had a Branch Line that wound all the way North to Oswego. So the telegraph operators and Express Companies were constantly making mistakes……

[60FlatTop]

Bifocals.

 

Well, shedding that light just takes snow of the snow away. That is the old Iroquois Forbidden Trail area.

 

Seems like that was an old Grants or J. J. Newberry store. Lots of old books in that town.

 

Relocate.

 

I figured it out. I saw Col. and connected to Camp Drum in Oswego. That's where the military schedules arctic training maneuvers because arctic conditions are more likely to exist there.

Edited April 10, 2023 by 60FlatTop (see edit history)

[Scooter Guy]

There's lots of competition in that space: Morphy, Mecum, Richmond seem to get the bulk of the "premium" items and a handful of smaller outfits get the rest and are able to occasionally assemble enough consignments to have a nice auction. Every once in a while someone like Bonhams will auction automobilia as well, though it doesn't seem to be at a consistently high volume like Morphy, Mecum, etc. 

Look at what those auction houses are doing in terms of fees for buyers and consignors, shipping, advertising, catalogs, online bidding, and so on. They have long established themselves as places that shoppers look for top drawer items, too, which is another challenge for a new company entering that market. That isn't to say you can't do it, but that you should look to these outfits for your best practices and then figure out if you want to do things the same way or have a different or better way to do business. 

 

I agree with previous comments that an online presence with online bidding available is critical in a niche market like this. And you need a reasonable shipping partner available for those that buy online and need items shipped. If I were running an auction company, I would ensure that I'd have as many ways as possible for customers to do business with me, so I'd get myself setup for every kind of bidding there is: online,  proxy/absentee, phone and live. Have policies for storage and plans for shipping. 

Although the auction world lives and dies by "as is, where is" and "let the buyer beware" it seems to me that you should take reasonable measures to authenticate the items you are selling and  openly call out items that are known to be reproduction or cannot otherwise be guaranteed to be original. There are many, many, many fake/repro items out there and some of them are extremely well done. 

Edited April 10, 2023 by Scooter Guy (see edit history)

[Jim Mead]

Relocating would be hard. We have been here since at least the 1830’s. 
My Great Great Grandfather, a scoundrel, used to fence stolen horses

for Big or “Devil” Bill Rockefeller, John D’s Father. Bill, or his alias, Dr. Livingstone, would have received them from the Loomis Gang of the Nine Mile Swamp in Madison County. 

[bryankazmer]

Use an appropriate balance between marketing and accuracy in car descriptions.  "Restored" cars do not have later engines, custom interiors, etc.  If part of a larger auction, informing when cars will be auctioned is very helpful in planning travel.  Chandelier bids and plants may be legal in your state, but a big turn-off to bidders when detected.

[Jim Mead]

We would have absolutely nothing to do with shill bids……

[John_S_in_Penna]

For your reference, Jim, here is the other thread

that discusses, in part, buyers' premiums.  They

tend not to be popular, especially when high:

 

 

[3macboys]

Someone smarter than me has likely already studied this but since the Buyer's premium thing started I can't help but wonder if that has impacted the final sold price.  Would the house not be better off getting a higher bid and collecting an extra 20 to 30% from the seller on that price difference, instead of 10% from the buyer - basically they would get 2 to 3 dollars more from the seller for every $1 potential from the buyer.  I'm told around here that is the typical seller's fees.  

[alsancle]

3 minutes ago, 3macboys said:

Someone smarter than me has likely already studied this but since the Buyer's premium thing started I can't help but wonder if that has impacted the final sold price.  Would the house not be better off getting a higher bid and collecting an extra 20 to 30% from the seller on that price difference, instead of 10% from the buyer - basically they would get 2 to 3 dollars more from the seller for every $1 potential from the buyer.  I'm told around here that is the typical seller's fees.  

 

Theoretically, no matter which route the money takes,  the seller is still paying for it.    Unless you agree with the theory that the buyers are all boobs and they are not doing the math.  I believe most buyers understand all the costs associated with their bids,  so any premiums impact the amount of money the buyer will spend which means the seller is really paying.

[alsancle]

1 hour ago, alsancle said:

 

Theoretically, no matter which route the money takes,  the seller is still paying for it.    Unless you agree with the theory that the buyers are all boobs and they are not doing the math.  I believe most buyers understand all the costs associated with their bids,  so any premiums impact the amount of money the buyer will spend which means the seller is really paying.

 

To quote myself and elaborate even further,  I think buyers premiums are really designed to fool the seller.    How many sellers would react negatively to a 17% fee vs the typical 5% sellers fee plus some buyers fee?  The total frictional cost to the seller is the 17%.  Also, by splitting it the auction company can wave the seller side for special customers while still making the 12% off the seller in the form of the buyers premium.   The seller thinks he is getting a great deal.

[Terry Bond]

I started the other thread, which touched on multiple issues. Buyers premium though seems to have struck a nerve. Somehow, they seem punitive. Auction houses should be doing everything possible to encourage bidding rather than stiffle it. Sure, there is a cost of doing business, and sliding scale commissions to encourage sellers is often needed to attract business from the competition - but realize auctions are not what they used to be. At one time, for sellers it was about getting rid of stuff. For buyers it was getting a bargain. Now, it's about sellers flipping for profit,  making lots of money, auction houses setting records and buyers paying for it all. Whatever you do, just don't forget where the money comes from, and allocate the cost of doing business appropriately. 

Terry

[Mark Gregush]

You might need to look into how the Wayfair act would affect your operation. How the Wayfair Act May Impact E-Commerce Business (transactcc.com) 

The law now covers collection and distribution of sales tax to all but 4 states for items sold online. I do not have any information how it would work in your case. 

 

[JV Puleo]

I've been hesitant to comment on this since I have never participated in an auto-related auction although I do most of my buying in my main area of interest through auction houses. I think that, in the long run, reputation is the critical element...not buyers/sellers premiums. Basing policy on the premise that the world is full of idiots with more money than brains is a loser. Yes, there are some but I'll bet that most serious auction buyers understand the costs involved.

 

The main problem I see, going forward, is that you have chosen an area where the fakes may outnumber the real items. Unless you have the necessary expertise to vet the material, or have the services of someone who does, it's a trap. You cannot rely on the seller to know...in fact I know of several instances where a dealer has made a mistake and rather than admit it he consigns the bad buy to an auction to get rid of it and put some distance between himself and the item.

 

As a reputable house you do not want to deal with the sort of absurd descriptions that characterize ebay. Most of my best buys have been the result of bad pictures and stupid descriptions but I don't expect more. I'm thinking of the sale (years ago) of a very prominent collection. The auction house (one of the most famous) took the sale on the reputation of the collector. When knowledgeable buyer's looked at the material, so much of it was fake that the sale itself was a disaster and the small number of really good items went cheap. I bought two or three things and a friend several others but you have to rely on your knowledge, not what the auctioneer says something is. That was in pre-internet days. With the internet as an element the pressure on the auction house to vet the material is even greater.

Edited April 11, 2023 by JV Puleo (see edit history)

[Jim Mead]

Thanks to everyone for your honest and well considered comments. Interestingly, they dovetail quite closely with my own thoughts if not our current policies. 
 

It’s very difficult to offer all manner of bidding platforms, numerous color photos, massive marketing, impeccable shipping arrangements , intense research etc. without contriving an adequate and equitable income scheme for the Agent (read Auctioneer)

 

The law treats the Auctioneer as a double agency. We work both for the seller and the buyer. It entails scrupulous fiduciary responsibilities and no small amount of ethical soul searching if done correctly. 
 

My Dad impressed these responsibilities upon me from an early age. I still think about it and hope never to break the trust with any seller or buyer. I think that’s a good foundation to build upon. 

[trimacar]

On 4/10/2023 at 3:42 PM, alsancle said:

 

Theoretically, no matter which route the money takes,  the seller is still paying for it.    Unless you agree with the theory that the buyers are all boobs and they are not doing the math.  I believe most buyers understand all the costs associated with their bids,  so any premiums impact the amount of money the buyer will spend which means the seller is really paying.

Well, yes, but be sure to ask questions first and not assume anything.  I bid on an item, yes, I knew buyer’s  premium but it also had to be “handled and shipped” to me, a cost I didn’t question. A bargain at $400 winning bid, not so much when purchase price, premium, handling, and shipping totaled $700.  Shame on me for not understanding how online works.

[1937McBuick]

Who is the Auction House really providing the service to?  The Seller or the Buyer?   Buyers can't buy something that isn't for sale.   Maybe the person making the money should pay the biggest part of the commission.

Other than taxes,  when you buy something retail extra fees aren't added to the price,  margins(aka commissions) are already included.

I find Buyer's fees punative and if the Buyer adjusts his buy price lower to accommodate the added fees,  in essence the Seller is receiving less.

At least fees are capped on higher value items in most cases. 

If the Auction House wants to recoup credit card payment transaction fees,  fine.

I wouldn't expect the Auction House to pack and handle an item that will be shipped for free.

 

I don't know what is "fair",  all I know is I detest Buyer's fees.

[hidden_hunter]

On 4/10/2023 at 11:46 PM, pkhammer said:

My favorite auctioneer in this area charges no buyers premium for cash and 5% if a CC is used to pay

Is that still legal in the US? It’s been illegal here for nearly 10 years to charge above cost for CC fees (generally bank fee + small handling fee, never above 2%)

[alsancle]

5 hours ago, 1937McBuick said:

Who is the Auction House really providing the service to?  The Seller or the Buyer?   Buyers can't buy something that isn't for sale.   Maybe the person making the money should pay the biggest part of the commission.

Other than taxes,  when you buy something retail extra fees aren't added to the price,  margins(aka commissions) are already included.

I find Buyer's fees punative and if the Buyer adjusts his buy price lower to accommodate the added fees,  in essence the Seller is receiving less.

At least fees are capped on higher value items in most cases. 

If the Auction House wants to recoup credit card payment transaction fees,  fine.

I wouldn't expect the Auction House to pack and handle an item that will be shipped for free.

 

I don't know what is "fair",  all I know is I detest Buyer's fees.

 

Nobody responded to my post that all fees are really paid by the seller regardless of what they call them and the route they take.

 

The auction company is like a real estate agent,  they are working for the seller.

[John_S_in_Penna]

36 minutes ago, hidden_hunter said:

Is that still legal in the US? It’s been illegal here for nearly 10 years to charge above cost for CC fees...

Yes, it's legal, and it is getting a bit more common.

Here, a credit card company may charge a retailer, I understand,

anywhere from 1% to 3%.  The bigger the "reward"

the card company gives to the purchaser, the higher

their fees to the retailer, to recoup the reward they pay out.

 

Occasionally gas stations will charge a few cents more

for credit card purchases--2 to 3 cents per gallon,

out of $2 to $4 per gallon.  However, I've not seen any

stores charge a premium.  But even large and venerable

auction  houses commonly charge more:  I've seen 3 per cent.

[John_S_in_Penna]

1 minute ago, alsancle said:

Nobody responded to my post that all fees are really paid by the seller regardless of what they call them and the route they take.

That's true and insightful, Al.

 

To illustrate:  Suppose a car being auctioned has a true value of $10,000.

If there is a 10% buyer's premium and a 10% seller's premium, I'll naturally

bid only up to $9000.  The seller will receive that $9000 "hammer price"

less 10%, or only $8100.  So whatever the percentages are--small or large--

the seller is paying, naturally, for the auctoneer's services.

[Littlestown Mike]

On 4/10/2023 at 10:32 AM, John_S_in_Penna said:

 

 

Pennsylvania is similar, with, for example, TWO towns named

Wrightsville--more than 200 miles apart!

 

 

Only one of which has a Battle of Gettysburg connection.

 

[TAKerry]

I dont do a lot of auctions. I have never looked at the premiums as punitive. I look at them as the cost to do business, cost to play in that game etc. I have no problem with anyone trying to make as much money as possible, whether its the auction house, the seller, or the buyer wanting to get something on the cheap so they can re-sell or make a profit in the future. I think its an issue that will correct itself. If the cost of auctions gets out of hand then people will stop attending. Thus creating a correction in the process. As long as  they get a crowd then something must be going ok. 

 

As for place names in PA, yes they are crazy. For every one that ends in 'town, there seems to be an equal that ends with 'ville.

[Bryan G]

I follow a few local auction houses (there are many.) Most have an online presence these days; I might only participate once a year. Why not more often? Limited pickup options. One house, you have to pick up between something like 10am-2pm on Tuesday! Hey, I work for a living! Of course, this is a benefit for local bidders only, but they can make up a lot of your sales...I also think of one of my favorite auctioneers who would always say to the low bidder "thanks for your help!" You want as many bidders as possible, right? Make it as easy as possible for as many people as possible.

 

Other thoughts: show you care, in your listings, and that you know what you're talking about. Example: local auction company, second or third generation, in business since before I was born. Advertised on-line and in the paper a month ahead of time. They never did fix that description, the one that read "1929 Model T." That, and the fact the a subsequent auction listing failed to mention that half the cars were being sold sans title, have taken them off my radar. One less bidder, even if never a buyer.