Just speaking the truth…
Imagine what life would be like without cable TV, worldwide web access in the palm of your hand, fax machines and GPS devices to help us find our way. If you’re over 40 years old (or so) you can remember those days of business when we actually had to hand deliver contracts, ad copy and photographs. We had to go to the library to do research on an item. If one was travelling and needed to make a phone call, you looked for those little blue signs along the interstate that advised the next rest stop or exit that had a pay phone (under 30 years old, search Google for ‘pay phone’). All these technological innovations of the last couple decades have improved the ease with which we communicate, participate in commerce and market/promote our businesses and ourselves.
However, sometimes the smorgasbord of information is digested without completely dissecting the form in which it is presented. And, we now arrive at our first topic, eBay and the Antiques Roadshow. These two entities have actually made the jobs performed by auctioneers, antiques and art merchants and appraisers a little harder.
Back in the old days (OK, early 1990’s…), individuals with items to sell chose an avenue to sell those items that best fit their needs. In the case of auctions, that avenue was seen as the least amount of effort on the part of the owner to achieve the highest net return in the shortest amount of time, while exposing the property to the largest number of people as could be reasonably achieved within budget and time constraints. Auctioneers with experience were seen as trusted advisors who were thought to have a grasp on the market for nearly every item under the sun. Specialists existed in certain areas if a specialist was needed, and individuals knew that a selling agreement with an auction house is the establishment of a percentage partnership, where both parties benefit from the highest gross sale price achieved for any item/items.
Times were, someone would bring an item to us and ask our opinion of value of an item, which we’re usually happy to share when the prospect of a commission looms. (Free appraisals are another story, but that’s a topic for a different day.) In previous times, our opinion of actual secondary market value was considered worthy of deep consideration, given that we, as auctioneers, participate in the market place on a daily basis. Today, many individuals have their own pre-conceived opinion of value for an item based on the ‘research’ they’ve done on the internet, they saw one for sale on eBay or at a retail internet site, or that they saw one almost just like theirs on the Roadshow. When our opinion of value doesn’t jive with the individuals pre-conceived value idea, we’re dismissed as trying to ‘low-ball’ the item, for some reason. Here’s the deal: unless the comparison is to the actual sold prices, what is found on the internet isn’t a comparable value! And the price that a retail dealer is asking for an item doesn’t have a hill of beans (in most cases) to do with value.
As auctioneers, in most cases, we don’t get paid unless we sell an item for a client. In our company, we endeavor to sell quality items for our clients, and provide an excellent resource for our customers to purchase those items using the competitive bidding process that is the auction method.
So, all of this great information doesn’t do an individual any good, unless you have (write this down, there will be a test) intimate knowledge of the item, the circumstances under which it was sold, the market conditions for the day it was sold, the condition of the item and the locality of the market in which it was sold (local, national, international). Just finding an item for sale on the internet, and using the asking price as your basis for determining the value of the item is a flawed and foolish perspective. And, if it was valued on the Roadshow, those aren’t secondary market actual sales, they’re opinions of value, and can vary greatly based on the aforementioned market conditions of sale.
And (OK, this is a bit of a rant), thinking that every appraiser on the Roadshow is able to spew forth every bit of information they share at the drop of a hat about every item that is evaluated, that is a terrible misconception, as well. Certainly, there are world-renown experts who have a wealth of knowledge about the items they evaluate, and yes, of course the knowledge they possess about a certain specialty or discipline is coveted by many. However, that one-hour show in which 8 or 10 items are evaluated is the result of looking at tens of thousands of items in a multi-day period. There are thousands of items that are believed by their owners to be valuable that fall under the category of “stuff”, and are not worthy of a live evaluation on television. Usually before an item hits the air, a team of researchers will spend hours poring over the details of the item ensuring that what gets represented as the history, or provenance, of the item is accurate.
Last topic: reserves. A reserve is a minimum price at which an item in an auction can sell, as agreed upon by the owner and the auction company. In the state of Indiana, by statute, all auctions and items in auctions are ‘with reserve’ unless otherwise stated. The term Absolute Auction conveys that every item in the auction will sell to the highest bidder, regardless of price, day of auction. The general public believes that most auctions in Indiana are conducted more in the method of absolute, than with reserve, and in most cases, they are right, even given the fact that the auction may not have been advertised as absolute. Most auctions/auctioneers conduct their sales with the intent of converting all of a seller’s assets to cash in the allotted time frame.
By law, any item may be withdrawn from the auction block (unless advertised as absolute) prior to the culmination of bidding, usually signaled by the auctioneers statement of ‘sold’, which accepts the bidder’s offer and binds the parties contractually.
Our company, as a matter of course, usually discourages the use of reserves for the following reasons:
1. We are somewhat particular in the style, quality and quantity of items we offer. We have established a history of offering certain types of chattel properties, and our clientele is typically an educated, knowledgeable buyer who seeks certain property(ies). In being selective about what we offer, we are confident that we are exposing those items to the proper audience, and in our ability to find ready, willing and able buyers for these items. What the item brings is determined by the aforementioned market conditions (we keep coming back to those, don’t we…?).
2. Often, a seller’s wish for a reserve price is more consistent with a high retail price than it is with an actual, arms-length transaction price on the secondary market. A reserve isn’t a price you hope for, it’s a price that is the minimum acceptable value at which you are willing to transfer the property. We have turned down the sale of numerous items because the seller’s expectations were way too high, and the offering of the item would be an exercise in futility. An insurance-based, replacement value appraisal isn’t an indicator of actual market value. Those values are sometimes two to three times the actual value of an item. Ask your appraiser…
3. The best time to sell an item is the first time. Given our worldwide exposure to the market, an item will generate the most interest when it’s fresh to the market, not when it’s been offered half a dozen times at three or four different auction houses with the pre-sale estimate declining each time, because the reserve was too high to begin with. That item is now stigmatized and the question that is asked is, “I wonder what’s wrong with it?”. Once an item is stale in the market, it will sell for less than it would have sold for the first time it was offered, assuming it was properly marketed. Promise.
Auctioneers are an excellent resource for the buying and selling of personal and real property, and present an opportunity for real commerce. Since the hybrid of worldwide, live internet broadcasting of traditional auctions, the method provides a global marketplace for the resale of just about anything.
Our business isn’t built on the quick deal, but on the relationships that develop through our interaction with our buyers and sellers, with integrity and honesty at the core of those relationships. If our company is the best resource for a potential client to sell an item or items, we are diligent in our representation of those items and use all our resources, both internal and external, to maximize the value of our service. If a different company, or method of sale, is in the client’s best interest, we will share our opinion and make recommendations in those cases, as well.
Finally, if the auction method is being considered for the sale of any asset, do more homework in choosing the auction company that is right for the property than you do to form your own opinion of value of the asset(s). Trust the auctioneer and auction company you have selected to use their experience and expertise to obtain the best overall result for you, and be confident in your choice of auctioneer. Our success depends on satisfied clients telling their friends and associates about the great experience they had with our company.