If you find yourself online (many auction companies have online presences), discovering auctions rich in items at what seem like great estimated prices, there are a few things you should be careful about. I want to say the concerns are, “condition, condition, condition,” but other things, like buyer’s premiums and shipping costs, also bear mention.
More after the jump . . .
For art, for furniture, for anything, condition is the primary auction bugaboo. You cannot tell the condition of something from a picture. Period. Everything looks whole and desirable in the auctioneers photos. The auctioneer is trying to sell you the item, after all. Similarly, the auctioneer will use auction lingo to describe condition. Honestly, a chair in “good” condition means “not destroyed, maintains the approximate shape of a chair. Upholstery ruined, foam hard and crumbly.” “Very good” means “may be sat upon without collapse, but will not provide pleasure if looked at from less than 8 feet.”
And you may not even see any description. You may have to contact the auctioneer to get the condition report. It’s easy, just send an email asking. These will often be more detailed and forthcoming, but will still be incomplete. This leads to an important auction caveat – buy locally. Auction houses have “preview days” at which you can physically see the items before you buy them. Take advantage of these. Look first, then bid. Trust your eyes, not someone else’s. If you must buy from an auction house 2000 miles away, bid presuming that the item has major flaws, i.e., bid low and be prepared for the worst.
Don’t forget the buyer’s premium. It is the amount the auctioneer charges you for the privilege of buying from them. It is what they earn on top of the percentage they get from the seller. Occasionally, you may see no buyer’s premium, but that’s exceptionally rare. Expect 15% to 20%. Some auctioneers charge even more than that – 25% is becoming more common, though I tend not to deal with those folks, it seems like overreaching.
Now, when you know the premium, you know that your bid will be increased by X amount, but it’s easy to forget that in the heat of the moment – “it’s still only $1000, I can keep bidding!” Don’t be surprised when the total you have to pay, with the premium and tax (if you’re buying in-state), surprises you a little.
Shipping is yet another expense when dealing with distant auctions. Auction houses often will not ship. That means they will not manage, nor be responsible for, shipping the item to you. Why does this matter? Well, first, it’s an inconvenience. More important (to me anyway) is it can be expensive. If you buy a painting from me, and ask me to ship it for you, I will box it up carefully, go to the FedEx dropoff, and charge you for the shipping cost (plus maybe a box, if I need to buy one). It may cost $25-50.
If you buy the same painting from a no-ship auction house, however, you will have to contact the UPS Store or PakMail, or whatever, which will go to the auction house, pick up the painting, pack it semi-carefully, and ship it. They will charge not only for the shipping, but the picking up and packing – that’s where their money is. My $25 becomes their $150. So your $500 painting, plus 20% premium, plus shipping, is now $750.
Furniture’s even worse, for obvious reasons, but using a company like UShip or FreightQuote may enable you to keep costs down.
Auction estimates are just that – estimates by the house of what something will go for. When I say “the house,” does that remind you of something? Vegas? Of course, the estimate is what the auction house hopes it will get, not only what it thinks it will get. Some auction houses always estimate high, sometimes wildly high. I think this is a shady practice, hoping to influence an uninformed buyer’s willingness to pay. Occasionally, however, an auction house will estimate unreasonably low, hoping to entice buyers in with an unrealistic expectation of the bargain they may get. Finally, sometimes the auction house has no idea what something’s worth. I routinely see things go for a tiny fraction of the low estimate, or a substantial multiple of the high estimate.
Appraisal (and estimates are vague appraisals), as I’ve mentioned before, is a complicated “science.” Be very careful letting an auction estimate guide your own evaluation of the value of an item.
Finally, and this is more psychological and individual than absolute, consider the absentee bid. This is how I bid on almost everything. Rather than bid against someone in real time, with the danger of competitive instinct getting the better of me, I simply submit a maximum bid. “This painting is worth X dollars to me. If I get it for that much or less, good, if not, so be it.” The auction house will enter your bid and charge you only the amount that other bids force it to. In other words, your bid is not your only bid, it is the maximum it will go to.
Feel free to email me if you have any questions