How does one avoiding losing their shirts with auctions houses?

[Luke]

Originally Posted by Aquarian Sports Cards

As someone who is in the process of becoming an auctioneer, statements like this are so disheartening. If you listened to everybody's advice in this thread you would never deal with a house that charged a seller's commission or over 12.5% buyer's premium. I'd like you to tell me what other business you know of that is expected to survive on a 12.5% margin? I know when I sell as a dealer I certainly couldn't make those margins work. Any full time guys here want to chime in on trying to make a living on a 12.5% GROSS margin? Trust me, one of the reasons I am getting into the auction game is because I think it can be done better, but man I don't know how you expect someone to make a living let alone run a company on the numbers you all appear to be suggesting.

In my opinion, it seems like you're looking at this in the wrong way. If you're the auctioneer, it's not really a 12.5% margin. If you had bought an item for $100 and then sold it for $112.50, then that would be a 12.5% margin.

As an AH, you're just selling other people's stuff that you have no money tied up in. If I give you a Green Cobb to sell and it goes for $5k plus the 12.5% BP, that's $625 you just made without any risk or investment (obviously advertising, salaries, etc, but every business has these things). As long as you can build the business enough to get good consignments and your overhead isn't massive, of course you can make a living with a 12.5% BP. Those are big IFs of course, but the business model itself is pretty easy to understand.