Auction Brokers Represent You, Not the Auctioneer
Auctioneers are not all the same. Just as Doctors and Lawyers have different levels of experience and different areas of specialty, so do Auctioneers. Some Auctioneers have considerable experience, while others are fresh out of Auction School. Most Auctioneers are generalists; others are experts or specialists in a particular area. Some Auctioneers have an excellent reputation and a strong following of loyal customers, others are struggling to stay in business. Most Auctioneers are honest, some are not.
And if you select the wrong Auctioneer to handle your consignment, your decision could cost you dearly.
That’s where an “Auction Broker” comes in. The difference between an “Insurance Agent” and an “Insurance Broker” is that the Insurance “Agent” represents one and only one company, whereas the Insurance “Broker” represents several companies, and is able to shop your business around with several companies in order to locate the best company, and to obtain the best rate, for your particular needs.
The same is true of an “Auction Broker”. Whereas an “Auctioneer” represents one and only one Auction Company (their own), an “Auction Broker” represents several different Auction Companies and can steer your consignment to the Auction Company best suited to handle what you have to sell. This is extremely important because the key to getting the most amount of money for what you are selling at Auction is to locate the best Auctioneer for what you have. And the Auction Broker is often the best person to help you accomplish that.
Most Auction transactions involve signing a contract with the Auctioneer. That contract will specify important points such as the commission and fees involved, when you will get paid, standard terms and conditions of sale, etc.
All Auctioneers are going to charge you a “Commission”. That commission will normally be a percentage of what they sell for you. For example, if your consignment sells for $10,000, and your flat rate commission is 20%, you will receive $8,000, while the Auctioneer keeps $2,000 to cover his/her staffing, advertising, administrative, and other expenses…and hopefully their profit.
If you are unable to deliver your merchandise to the Auctioneer, most will charge you to pack it and transport it to Auction. And occasionally other fees such as photography fees, listing fees, Internet fees, and other charges may apply.
In exchange for these fees you are, in effect, “renting” the following from the Auctioneer:
• The Auctioneer’s Name and Reputation.
• The Auctioneer’s Place of Business.
• The Auctioneer’s Years of Experience.
• The Auctioneer’s Expertise in the commodities you are selling.
• The Auctioneer’s Marketing and Promotional Ability.
• The Auctioneer’s Mailing List and Contacts.
• The Auctioneer’s Knowledge of Potential Buyers for what you are selling.
So the key to getting the most amount of money when selling at Auction is to locate the best Auctioneer for what you have to sell. As an extreme example, you wouldn’t want to sell your Tools through a Doll Auctioneer, because there would be few, if any, Tool buyers attending a Doll Auction. And you wouldn’t want to sell your Doll Collection at a Tool Auction for the same reason.
But what if you have little knowledge of the Auction business in general? Or the specialties and reputations of local, regional, or national Auctioneers? What should you do with your consignment? That’s where the “Auction Broker” comes in.
Just as the Insurance Broker can place your business with the best Insurance Company for you, so too can the Auction Broker help you to locate the best Auctioneer for what you are selling. A qualified “Auction Broker” will perform several vital services that will help you to obtain the most amount of money for what you are selling:
• They will explain the Auction process to you.
• They will explain the difference between National, Regional, and Local Auctioneers, and which Auction level is best suited for what you have.
• They will walk you though the legalese on an Auction Contract.
• They know which Auctioneers specialize in specific commodities, and which Auctioneers have upcoming Auctions in your particular category.
• They will locate the best Auctioneer for what you have to sell.
• They will help you to understand the best time of the year to sell.
• They will help you understand when to send it all to one Auctioneer, and when it’s best to split your consignment between two or more Auctioneers.
• They will negotiate the fairest commission possible for what you have to sell. (Are you aware that in some instances Auctioneers will work for “Zero Commission?”).
• Depending upon the merchandise, sometimes (but not always) they can negotiate a reasonable “Reserve” for you. (A “Reserve” is a minimum price below which the item will not sell, and usually has to be negotiated with the Auction Company).
• They will help to ensure that you are not cheated in the process
Here are just a few examples of how Auction Brokers have helped clients receive the most money for what they have to sell.
• Client had several pieces of better art, some better Tiffany and Cartier sterling silver pieces, along with some more average, middle market merchandise. Arrangements were made to have the better items saved for a much better “Catalog” Auction with a prestigious Auction House several months later. These items were pictured in a 4-color, printed catalog and sold on the Internet as well as before a live Auction audience, in order to attract a national and international bidding audience. Those items not worth storing were sold more quickly and turned into needed cash faster.
• Client had mostly middle market items, along with a few better pieces of jewelry. Arrangements were made to sell the jewelry through a company that specialized in jewelry sales, while selling the lower end items through a less experienced Auctioneer who was eager to sell such items, and who sold most of the items individually rather than as “Box Lots” (i.e., selling them by the box), thereby netting the client more money.
• Client wanted to dispose of a Stamp and Coin Collection. Arrangements were made for the Stamps to be sold in a Stamp Specialty Auction, while the Coins were sold in a separate Coin Specialty Auction, resulting in significantly higher prices than if they were sold through a non-specialty Auctioneer.
How are Auction Brokers paid? They are generally compensated in one of three ways.
• Flat Consultation Fee: Here the Auction Broker will charge the client a flat consultation fee to review the items, sort them into specific categories, and make recommendations where they will sell best. If the Auction Broker is expected to pack and transport the sellable items, those fees will be additional. This usually works better with smaller consignments.
• Percentage of Final Selling Price: Some Auction Brokers will work on a percentage basis. In this compensation format, they receive a percentage of the final gross selling price of all items. This concept encourages the Auction Broker to sell for as much as possible because the higher the final selling fee, the more money both the client and Auction Broker will receive. This format works better with higher value consignments, and not as well with low-value consignments. The more work that is expected of the Auction Broker (i.e., packing, transport to the Auction House, etc.), the higher the commission rate.
• Referral Fee from Auction Company: Sometimes the Auction Broker will receive a “Referral Fee” from an Auction Company, just as the Insurance Broker is paid for writing business with a particular Insurance Company. Often this represents a percentage of the final commission the Auctioneer makes on the consignment.
The “Broker” concept is well-established in the Insurance industry, but is fairly new in the Auction business. If you regularly attend Auctions and understand the Auction process, you probably don’t need the services of an Auction Broker. But if you are relatively inexperienced in the Auction field, and if you are considering selling things of value at Auction, then an Auction Broker can probably help you from making a very major and expensive mistake.