Selling Your Collectibles Through an Agent

"A good agent is a true blessing."

It may be practical for you or your heirs to use the services of an agent to sell your collection. The objective in choosing this method is to get more money than you would through direct sale. The trade-off (again) is that it will take more time. That said, you might even wish to enlist the services of several agents to sell different parts of your collection.

Many people employ an agent to assist them in selling real estate. The agent knows real estate values, has ways to contact qualified customers, and understands how to deal with them. A good dealer has the same qualifications and contacts in his field, but you rarely hear the term 'agent' used in that context. Dealers would generally prefer to purchase collections outright (at the lower price), and then have a free hand to resell them without customer consultation. They may, however, take a collection on consignment rather than let it walk out the door.

A client/agent relationship is a relatively long one. As the owner of multiple properties may commission the real estate agent to dispose of one at a time, so may the owner of a collection turn over its elements in groups. This gives the agent a more narrow focus to concentrate on and allows you to maintain control. The key in any case is regular communication and interaction between you and the agent. Items that the agent has been given may not sell and must be returned. The asking price may need to be adjusted downward. There may be a change in market conditions. While the agent may be doing most of the work, you, the seller, will need to stay involved. As real estate agents and sellers work together as partners to their mutual benefit, so must you and your agent. The agent should be expected to inform you of market conditions and help set prices. Above all, you must be able to trust the agent; to have faith in his ability; and be confident that he is looking after your best interests. One way to gauge this is to test the agent's overall performance with a few collectibles prior to making any major commitment.

An agent is not worth the trouble unless he can get 10% to 25% more than you could get in a direct sale. Remember, the agent's role is not just to know the collectibles, but also the markets and the players.

The first step in seeking an agent is to determine the nature of what you plan to sell, then try to match the agent with the product. This may seem obvious, but a common mistake among sellers is to retain unqualified agents. If your pieces are specialized, seek a specialist. If they are mainstream, look for the following kinds of qualifications:

• Scope of Company
  The agent (or his company) routinely handles articles of the same type, condition and values as those in your collection, and has strong customer demand for them.

• Grading Service Experience
  In the case of coins, the agent (or his company) routinely submits coins to the grading services and has a strong feel for where the "standard lines" of the grades are. Ideally, the agent or other personnel in his company will have worked for a grading service and understand both the process and "looks" that are most often rewarded on marginal decisions.

• Regular Show Attendance
  The agent (or his company) attends shows on a regular basis where routine contact with other collectors and dealers provides a feel for the market and provides a wide range of business contacts. Taken a step further, attendance at national shows would give even more insight and opportunity.

• Mailing List
  The agent (or his company) has an extensive mailing list and will present your collection to the maximum number of potential buyers.

These qualifications promise the potential of significantly higher returns, but you also want to pick an agent who genuinely wants the role. A lot of dealers only want to buy and sell collectibles, and really don't have the time or inclination to work with you as an agent. You should not be upset if someone you approach turns you down, nor do you want to enlist a reluctant ally. The last thing you need is a dealer who thinks he's doing you a favor by selling your pieces for you.

Many variables can influence the arrangement you make; however, five important elements should be negotiated in any event:

• The agent's fees should be discussed and agreed upon in advance. Generally, the agent should receive a percentage of the selling price. This fee is usually graduated and predicated on the value of the collectibles. You could hardly expect an agent to go to the trouble and expense of selling a $100 item for a 5% commission. A more equitable arrangement might be a 15% commission on pieces valued under $1000 and 10% on articles valued over that amount. That, of course, is a matter of negotiation. A firm minimum price for each item or group of items to be sold should be agreed upon in advance with the understanding that the seller be advised before any articles are sold for less than this fixed price. Turning a collection over to an agent and accepting a promise to do his best is not acceptable. It could also be expected that the agent might do some research and make a few phone calls prior to suggesting a minimum price. Agents should be prepared to substantiate the values they suggest. Conversely, you should not demand unreasonable minimums. No agent is going to waste his time and energy trying to sell articles that are obviously overpriced. Negotiating the minimums is a critical component of this kind of arrangement. If you are not comfortable with the value range of your individual collectibles, it may be best to get a written offer first. Then you'll know what you're trying to improve upon before negotiating with an agent.

The agent should be given the exclusive right to sell the collection for a specific period of time. Depending on the nature of the collection, the agent may have standard practices he wishes to follow. Allowing the agent a set length of time to sell the collection should be separated from the payment schedule. Within reason, the owner should be paid as the items are sold. A good method to use is to make periodic settlements based on time or dollar amount. If the agent is given 90 days to sell the collection, it would seem fair to request that he makes payments at thirty and sixty day intervals, or when the amount collected reaches $5000 or more. We would be wary of an agent who didn't agree to this proposal. Requesting periodic payments is also a simple and positive way to measure the agent's performance.

• The agent must agree to be totally responsible for the collection while it is in his possession. The agent you select may be the most honorable person on earth, but he would still not be immune to theft or natural disaster. Proof of sufficient insurance coverage is mandatory. In many cases, the most prudent plan would still be to give the agent a limited number of your collectibles to sell at any one time.

• Put the agreement in writing. Good contracts make good trading partners, and this is a business arrangement between two parties. All terms must be spelled out and the document signed by both parties in whatever manner creates a binding contract in your state.

One other area where agents can be used is in moving "bulk" coins. Bulk is the bane of most coin dealers' existences. Some coin collectors accumulated ten proof and mint sets a year for forty years and can't understand why the dealer is not enthused when the three wheel barrows full of sets roll through the door. The answers are low price and low margin plus high (relative) weight. We can virtually guarantee you that if you have a lot of this material in your collection, it will generally be bid very low as part of any outright purchase offer— probably 70% to 85% of "sheet." From the dealer's perspective, it is cumbersome, difficult to process and likely to sit gathering dust while more lucrative sales of products are prioritized. Nonetheless, there are a few dealers who specialize in the sale of this kind of material and are the "high buyers." Your agent for this kind of material should know who those high buyers are and be willing to handle the administrative functions of arranging and completing the transactions. In return, he should either receive a mutually agreed fixed fee or perhaps 5% - 10% and expenses. You should still come out ahead of the typical direct sale offer.

In summary, match the agent with the material, establish realistic minimums that make using this method worthwhile, qualify the agent, put the agreement in writing and communicate regularly with the agent throughout the agreement period.

TIPS FOR HEIRS: If you are a non-collector and wish to use this option, we recommend that you get an outright purchase offer first. Use extra diligence in qualifying potential agents, and pay close attention in having the agent(s) validate the established minimum prices. Use the direct offers as a comparison and make sure that the minimums offer a significant increase. It may be even more important here to offer small test groups to get comfortable with the process and the agent.