Selling Your Collection at Auction

The ideal situation for selling any product is to get it in front of as many potential customers as possible. When the product is rare competing customers are important, and an auction is frequently the best venue. There are many benefits to this method of disposition, but the primary one is that in a good auction (one with many bidders), each item should realize at least its true worth.

The auction is a true free market in which each article stands on its own merits. Every item is examined carefully by those people most interested in it and are willing to back their opinions with money. If you have a collectible that is rare enough that it trades infrequently, its current value would have to be described as uncertain. In an outright purchase of such an item, most dealers will factor that uncertainty into their price unless they absolutely know they have a buyer at a certain level. A well-advertised sale by an established auction house, on the other hand, will likely draw the attention of all the known buyers—and any others as well. The collector community is generally a small one, and most serious buyers are aware when something of interest is offered for sale, particularly at auction. When that condition exists, competitive demand will dictate the strongest result and produce the truest value for a given collectible.

Another competitive bidding factor is eye-appeal. All collectibles were not created equal and many people will pay a premium for pieces they consider superior.

Finally, if you have something esoteric — items that are not traded routinely— a good auction may again bring the very best price. If you have substantial holdings of such, choose an auctioneer with a strong track record for the particular genre — one who has the clientele (both mailing list and attendance) and auction locations to put the collection in front of the greatest number of potential buyers.

These factors are what make an auction the best venue for a wide spectrum of collectibles. Your task is to pick the auctioneer that can put your pieces in front of the right people, preferably in quantity. When looking for an auctioneer, you should consider the following qualifications:

• Financial Resources
  An auction consignment is first and foremost a business deal. As with using an agent, an auctioneer must demonstrate sufficient financial resources to ensure your comfort that they can both mount a sale and pay you at the stated settlement date. They must also accept liability and provide full insurance against the loss or damage of your collection.

• Longevity in the Business
  The auction is a multi-faceted business operation that requires a great deal of development before everything flows smoothly: consignor and bidder bases, cataloging references and expertise, site setup and physical security, auction flow and administrative efficiency and much, much more. Practice makes perfect is doubly applicable here, because it's your money that's involved. Go with a proven entity.

• Advertising Resources
  Success breeds success. You can't have the top sales without great advertising and vice versa. Look for the companies who are doing the major advertising in the trade papers and on the Internet. They put on the sales that justify the cost of full-page ads and, the bigger the sale, the more buyers to bid on your coins.

• Location
  A company that is limited to holding auctions in locations out of the mainstream is just not going to draw a large bidder base. Some companies hold auctions in major financial centers with good regional access, while others appropriately utilize the broad reach of the Internet.

• Competitive Rates
  Auction companies charge both buyer's fees and seller's commission rates to pay the expenses of the sale and turn a profit. A seller's commission rate of 15% has become standard and you should not have to pay more, unless your collection has extraordinary "bulk" or requires out-of-the ordinary attention. Indeed, if you have a significant collection, you may be able to negotiate a better rate.

• Strong Writing and Imagery
  Catalog descriptions and photography create immediate excitement and demand for a sale's collectibles and are all that is available to entice bidders who cannot attend the sale in person. Our company, Heritage Auction Galleries, is currently pioneering the use of CD-ROM and the Internet as alternative cataloging media, and this may well become the wave of the future. Until then, look for examples of good catalog writing and high quality photography.

• Professional Personnel
  It takes quality personnel and lots of them to put on a great auction. The auction process is a complex one when done right. Consignment coordination, grading advice, cataloging, customer relations are all important factors. In qualifying auctioneers, be sure to ask them how many people are involved in handling your consignment and what their roles are. Our company provides potential consignors with a video that details the auction process from start to finish, and other companies should at least have literature that covers the same ground. Any company is only as good as its people. Talk to several and get a feel for how they will treat your collection. In summary, auction is often the best venue for high-quality collectibles, particularly if the items trade infrequently. A good auction draws the right mix of bidders to establish the real value for each individual piece, often far in excess of the average price.

If this seems the best route for you, interview potential auctioneers to determine who combines the best business resources, venues and personnel assets.

As an aside, our company has expanded our scope of venues to include several kinds of Internet auctions. The Internet is an amazing communications tool that, among other things, allows individuals to perform functions that previously were available only to businesses. Someone asked, "What if a collector or heir wants to sell a collection by himself on the Internet?" Well, the many auction Web sites such as eBay, Yahoo and Amazon are certainly available for just such a project. The question is whether the choice is a good one relative to the other options. We have a good idea of the basics, so consider the following questions:

• Do you already have a "feedback" rating that will give you credibility with the bidder base? Many Internet auction bidders are leery about dealing with strangers. They are, after all, sending their hard-earned money to someone they've never met and probably never heard of. The equalizer is the feedback system that each Internet auction employs to establish "cyber-reputations." Each party to a "trade" gets the forum to comment on how the other trader performed. Every positive comment equals a point. Every complaint takes one away and the text of the complaint is there for future potential traders to evaluate. If you don't have a feedback rating, some bidders will avoid your auctions altogether and others will bid less (as if ameliorating their risk).

• Do you have the equipment and skill to create digital images of the articles to be auctioned? It's a proven fact that Internet auction items that don't have pictures bring much less money. Disregarding the skills, you will need either a high-resolution digital camera or a flatbed scanner, and an image management program to acquire the images. You will also need either a Web site or learn to use one of the "free posting" sites to upload your images.

• Do you have the skills to write descriptions for each item? Auction bidders are best motivated when a "story" is available to make the collectible more interesting. It's called "building value," and the visual image and description provide the combination that maximizes an Internet auction's results.

• Do you have the business skills to analyze potential problem situations? Can you collect a bad check or determine whether a "special request" from a customer is legitimate or a scam? Most of the people on the Internet are honest, but there are exceptions. Unfortunately, it doesn't take many bad deals to turn a profitable situation into a loss.

• Do you have the knowledge and resources to send high-dollar packages to a hundred different people? There is a lot of administrative responsibility in conducting one's own auctions, not the least of which is delivering the goods. It takes a thorough knowledge of postal regulations and requirements, a considerable amount of shipping materials and insurance, and a great deal of organization.

• Do you really want to sell collectibles that might have upgrade potential in an Internet-only venue? Actually, the question is whether you can recognize the pieces that have upgrade potential.

The final questions are whether you have the time and patience to accomplish this, and whether the outcome is likely to be superior enough to justify your added involvement (which will be considerable). If you can answer yes to all these questions, then maybe this is an option for you to consider and you probably don't need any further guidance from us. If not, we strongly recommend you seek a different option, as these questions just scratch the surface of what can be a complex and diverse process.

TIPS FOR HEIRS: A major auction can be the best option for heirs faced with the disposition of a valuable collection, particularly if you have no knowledge of collectibles and are concerned about getting fair value. In this scenario, the auctioneer is working on percentage and your best interests are theirs: the more money you make, the more money they make. Additionally, the values will be established by third parties in the competitive bidding process. The real benefit of employing a major auction house is their versatility. Summing up all of the methods of disposition, certain collectibles are better suited for one method, while others would benefit more from a different venue. A major company should be willing to recommend the best venue for each of your pieces and split the collection to your best advantage. Just be sure to ask.