Etiquette & Tips

"Tact is the ability to insult someone in such a manner as to have them leave smiling."

The purpose of this book is to help you plan for the future and, if you wish, to help you dispose of your collection without getting taken advantage of by the government, dealers or other collectors.

It is reasonable to assume that you want to receive as much money for your collection as possible. Similar- ly, it's reasonable to believe that potential buyers would want to pay the least amount they can. The one thing that's absolutely certain is that everyone else will prioritize his or her own interests. You should too. In plain language, it is your ultimate responsibility to make your best deal at some level. Once that's understood, a combination of business and common sense along with a little diplomacy will usually result in an acceptable compromise.

There are certain rules of etiquette within any collectibles community. The first premise is the division of roles. If you present yourself as a dealer, you are automatically responsible for all your actions and decisions in the arena of that collectible. That means if you make a mistake, you live with it. It also imparts a certain level of responsibility toward those who are not dealers. Dealers trade with each other at wholesale levels, in part because they speak a sort of verbal shorthand that assumes a level of expertise. A collectible is presented, offered, inspected and purchased (or not) without fanfare, and the principals move on to the next deal.

Conversely, many collectors ask a lot of questions (and rightly so), are nervous about their acquisitions, and return a portion of those purchases after the sale. In return for this extra "maintenance," dealers charge collectors more and pay them less than they would another dealer. It is the way of things, and perfectly justifiable, as there have to be both retail and wholesale levels for any market to function. Naturally, most collectors would like to purchase at wholesale, and occasionally, they get that opportunity. Usually, the key to this is demonstrating a familiarity with wholesale market levels, negotiating pleasantly and well, and asking only pertinent questions.

The same is true on the selling end. If you give the impression that you know what you are doing—are organized, prepared and unlikely to waste the dealer's time—you will get the best bid or options the first time out. We recommend, however, that you do not represent yourself as a dealer. Some collectors claim to be "vest pocket" dealers in hopes of receiving higher offers. Usually, this backfires as the dealer then feels relieved from any obligation to point out unrecognized rarities, or other possible advantages. Be who you are, be up front, and be positive.

Any dealer bidding your collection is being offered a valued opportunity to conduct his business. As a non-professional, you should be able to expect:

• An appointment with sufficient time to evaluate your collection.

• Financial and industry references at your request (and you should request them).

• Professional treatment of you and your collection with a mind to both care and security.

• You should ask (prior) that any items bid at $1,000 or more be identified singly, also that any article that would benefit from certification be listed.

• A written offer presented in a timely manner. The offer should be dated and any deadline noted.

• If the company has an auction house as well and you request it, recommendations on which collectibles are better suited for auction or direct sale should also be listed.

• Prompt payment in good funds if the offer is accepted. If the collection is sold at auction, payment in good funds on the settlement date as promised.

The dealer has a right to expect certain conduct from you as well:

• That you keep any scheduled appointment and are prompt. This applies to the dealer and his staff as well.

• The collection should be as organized as possible to minimize the time necessary to evaluate and bid it. Even a basic inventory indicating the location of each item is helpful. If the collection lends itself to grouping, this should be done beforehand. If one group out of the collection contains most of the "value," it can be presented separately.

• You should not "shop" the dealer's offer to other dealers. It's OK to tell each bidder that other bids are being sought, but you should neither reveal what the other bids are nor the details of who is bidding. Shopping an offer for a few more bucks is strictly "bush league" and it can definitely backfire. For example, if your first bidder did not make a strong bid and you reveal the number, the second bidder may play the competition instead of the real value and you'll come up short. Similarly, if you reveal the identity of those you plan to see, the bidders could collude to your disadvantage. Remember, the aura of unknown competition is the strongest leverage you have to inspire dealers to figure the deal closely and give their best bids.

• You should tell the dealer "yes" or "no" in a reasonable amount of time, and that applies even if you accept another bid. It would be considerate for you to let him know the winning bid. He can learn from the experience and not feel that his time was wasted. That can be to your advantage as well, because if you bring back more collectibles for him to bid, he should both appreciate your professionalism and bid higher the next time.

Above all, you should both expect and extend courtesy. Neither waste time with a dealer who is discourteous, nor waste time responding. Ask and answer questions, but beware of becoming agitated, even if you disagree with something you hear. Your mission is to get the greatest possible price for your collection, and to accomplish that, it's usually best to reserve judgment until all the information is in. The very person you disagreed with may be the highest overall bidder.

As stated before, auction is often the most compelling option for collection disposition. A successful auction achieves the highest gross result for each lot when presented to a wide number of knowledgeable bidders, and especially when your collectibles are of choice quality. Still, there may be some items where your net result would have been better served in another venue. There is also the fact that many portions of an auction agreement are flexible and should be negotiated. Here are some of the issues and options:

• Ask the auctioneer's consignment coordinator to evaluate your collection and make recommendations on which articles should be auctioned and which would be better sold by another method. Ask him to explain why.

• Do you wish to be recognized for your collecting achievements? Some consignors prefer anonymity, but if you wish the recognition, becoming a signature consignor involves three factors:

  1. Your overall collection must be of general significant value. This could vary from auction to auction, but for a rough figure, let's use $250,000.

  2. Alternatively, you may have an interesting collection of a more specific focus—possibly all items are in one group or category. Don't hesitate to ask, particularly if there's a good story behind the collection!

• Auction companies charge a seller's commission rate and a buyer's fee to make their expenses and earn a profit. They are motivated to get as much for your collectibles as possible because they, in turn, will realize greater commissions. With that philosophy in mind, it is then a matter of resources expended on presenting and selling lots. If you have high-dollar, highly desirable single pieces, the auctioneer is much better off than if you have more inexpensive items, even if the total dollar value is the same. Therefore, you might be able to negotiate a lower seller's commission rates if you have the "right" kind of material. Other factors also apply. You should, for example, keep in mind that the lowest commission rate is not necessarily the best deal. The first consideration should be the auctioneer's capability to give your collection maximum exposure and promotion. Saving an extra percentage point or two is meaningless if another auctioneer could get an extra 20% for your collection.

• Some people sell their collectibles unrestricted and others place a "reserve" bid to protect them from bringing what they perceive to be "too little." We believe you should place reserve bids only if you are very familiar with current markets and have good reason to believe that you will easily realize more than the reserve elsewhere if you "buy-back" the lot. Auctioneers also have "reserve" fees, a percentage that you will pay if you do not let the item sell. These are necessary because the auctioneers must make money for their services and a lot that does not sell is a lost opportunity otherwise. Generally, the percentage is based on the overall terms of your consignment and how realistic the auctioneer perceives your reserves to be. You should expect the reserve fee to be 5%-10%. If the amount is more than that, ask for an explanation. If the consignment coordinator says your reserve is too high, you should discuss the rationale carefully. Consignment coordinators are usually very savvy about what works at what levels. If you don't heed their advice, you are gambling at best. Unless you're right, the auctioneer will still earn the reserve fee. You, on the other hand, will still have the article, but at a higher cost basis. Depending on the overall quality of your consignment, you may be able to negotiate better reserve terms on some or all of your collectibles.

• Ask the consignment coordinator for the cost of photography and lotting in the auctions you are considering. You want the maximum number of photographs and as much descriptive cataloging as possible, and this may vary depending on how much the auctioneer has to pay for the auction venue rights. For example, in some sales, the minimum value for a catalog photograph may be $1,500 and in others, $2,500. The latter sale, while possibly a better venue overall, might not be as good for your pieces valued $1,500 - $2,400. Similarly, each sale will have a minimum lot value. In some cases, it's $250, some $500, and in the very best of sales, it may be $1,000. Most auction companies will allow you to combine items to reach the minimum, but there is a limit to the number that may be used and still get individual, mainstream placement. The key point for you to remember here is that if your overall consignment is a good one, you may be able to negotiate a more lenient lot and photography standard.

• If you have "Large Lots" of coins, you need to work out the best arrangement to sell your coins to them profitably. Remember the rolls of "Wheat pennies" you accumulated by date and mintmark over the years? How about the five proof sets you ordered from the Mint each year for the last three decades? Or the cheaper coins that you religiously stapled into 2 by 2s and stored in fourteen different stock boxes—sound familiar? We understand that all of these purchases contributed to your collecting pleasure, but we have one question to ask: would you travel somewhere else in the country to buy them today? The answer is almost certainly, "no," and that answer applies to others as well. As discussed previously, it is the "cream" of a collection that is most likely to "over-perform" at a major auction. Large lots are at the other end of the spectrum. It's a matter of logistics. By their very nature, large lots are bulky, cumbersome to carry to auction sites and heavy to ship once sold. They are time-consuming to catalog and require a lot of extra effort to earn the same percentage as a single coin of comparable lot value. Auction company personnel are not very fond of the large lots in major auctions and neither are most bidders, because their focus is on the more "high-powered" lots. Auctioneers will take your large lots for a big sale, but you have absolutely no leverage, and that's not what auctions are all about. In most cases, you would be better off asking the auctioneer to bid the large lots straight up. You will probably realize greater net proceeds and get paid immediately.

  Our company has an additional option, primarily for coin collectors; Heritage holds "large lot only" sales. They are not elaborate and the lots are not extensively written-up. What these auctions do get is a bidder base of the country's strongest buyers of large lot material. These are dealers who specialize in inexpensive (relatively) coins, sets and bulk. We know who they are and they are fiercely competitive. We actually invite them to our offices three to five times annually (for the last decade) to buy the remnants of our collection purchases. They are frequently amazed at the items we have in-house for upcoming auctions. Now, we are taking consignments and letting the public in on this "well kept" secret. You do have to wait a bit longer for auction and settlement than with an outright sale, but it can be well worth it.

Occasionally, people ask us why they shouldn't dispose of their collectibles to or through another collector. The premise, of course, is that the collector would pay more and the playing field would be more level. There is some general merit to those statements, but there are some caveats as well:

• A collector will pay more for some items, but will rarely pay more for all of them. Take care that you don't get a bit more for the best few pieces of your collection only to find that nobody wants what's left.

• Being a collector in and of itself is no guarantee that the individual you contact is any more or less knowledgeable or moral than a dealer. We think on average, dealers would be better informed on current market conditions, upgrade potential and the reputations of potential buyers. We know of at least one situation where a collector acquaintance sold a collection for heirs, only to take a bad check from the buyer. That individual was well known as a "bad egg" by the dealer community, but the collector/agent was totally unaware. It took more than a year and considerable expense for the heirs to collect a fraction of the amount owed.

• As an agent, the collector is less likely to have insurance coverage for your collection while in his care. If you use a collector, don't forget to verify this just as you would with a dealer.

The bottom line is that you should qualify a collector in the same manner as you would a dealer. While you may see some advantages in such a relationship, don't overlook dealer advantages that you may be taking for granted. Although collectors may have good intentions, a major collection should be sold only with the help of a qualified professional. It's unwise to rely on a part-time hobbyist to dispose of a major financial asset. In most cases you would be better off to let the collector bid at auction against tens of thousands of others.

The final issues of etiquette are the relationships between a collector and his heirs, and between the heirs themselves. The collector, as the owner, has all the rights and responsibilities for the collection in his lifetime, and can provide guidance (or not) to his heirs as he sees fit. That said, any guidance (as opposed to none) is often a blessing. Even if only one or a portion of the heirs has any interest in the collectibles, a general understanding by all where they fit into the picture goes a long way towards familial harmony. The collector should identify and detail specific bequests if that is desirable. "Dad split them up that way in the will" is a lot more powerful than "I'm sure Dad wanted me to have this one." Similarly, the collector should indicate who should be contacted to help dispose of the collection—and who should not. It's amazing how many "old friends" can appear after the death of a known collector. The Executor, whether he or she is a family member or not, should be advised of all these details.

Heirs should remember that the other heirs are also probably under a great deal of stress, so be considerate of each other. We like to think that family is the most important thing, so here are some tips to avoid controversy if the collection needs to be split or disposed of equitably when specific guidance was not provided.

Leave the division to a third party. If the collection is not to be sold, have the appraiser break the inventory into the appropriate number of groups by value. If one or more heirs want specific pieces, have the appraiser value those individually and if the remainder of the collection is sold, use those amounts to adjust shares accordingly. Finally, if the collection is to be disposed of, but each heir wants "something" to remember the deceased by, determine the dollar value you want set aside and have each heir "buy" the collectibles they want at the appraised price. In all cases, remember to keep things in perspective. The collection once provided a great deal of pleasure to your loved one, and if there is any sentiment to be attached to them, it should be a positive one.

This has been a difficult handbook to prepare. There are two main reader groups, neither of whom should be happy at the implications of needing to read it. If you are a collector, the thought of estate planning may make you look closer at your own mortality than you wanted to. If a current heir, you've probably read this because your loved one declined to face that reality and left you a burden along with the inheritance.

We would take more pleasure in relating a more upbeat subject, but will be satisfied if this handbook has made things a little easier for you in addressing a difficult task. In closing, we offer this final guidance regardless of your circumstance or role:

1. Determine your goal.

2. Know your options.

3. Analyze them and pick the best course of action for you.

4. Make a plan.

5. If you need assistance, choose it carefully.

6. Above all, remain flexible and don't be afraid to adjust your plan as you go along.

Good Luck!