Heritage Auctions, revisited

[smotan_02]

So it seems that the Auction Houses that are in the best position to promote the most transparency are the ones that are only an Auction House and do not double as a retail store.

Note: Promote does not mean practice

[Exhibitman]

OK, speaking lawyerly for a moment, I have to call BS on Ivy:

First of all, the fact that he says HA doesn't do something does not trump the express terms of the auction rules that allow it do so something. Having the right to do something that you do not do voluntarily is not the same as being prohibited from doing something by contract. If HA is committed to not bidding in the last 7 days or not allowing its employees to bid on their own stuff, it should be part of the express rules of the auction. Otherwise it is a meaningless voluntary posture that can be changed at will.

Second, because there are no teeth to the purported policies it leaves open the possibility that HA can do what Ivy says it does not at any time, which creates the appearance of impropriety. Us bidders have to trust the AH to do the right thing. If the rules expressly authorize the wrong thing, we cannot have that trust. No trust = lower bids.

Finally, I just wanted to point out that HA can rewrite the rules any time it wants, so there are no real barriers to conforming the rules to what Ivy says are the actual practices.

[glchen]

If it is as Chris Ivy states, I'm fine w/ Heritage's policy here. You just need to consider the price one week before the auction ends at that lot's reserve. I'm not exactly happy with allowing employee consignments b/c I think there's too much potential for conflict of interest. I can probably live with this, however. As others have stated, however, I just wish they would write these into their rules. If it is in the rules, the auction house will be compelled to follow them. Look at what's just happened to Mastro/Allen. A number of the charges were because the auction house had set a Code of Conduct, and then when these were not followed, the principals were charged with fraud.

[Exhibitman]

Originally Posted by glchen

If it is as Chris Ivy states, I'm fine w/ Heritage's policy here.

I'm not. If was the underbidder and the lot would have sold for much less than what Heritage bid, then Heritage just took a wad of cash out of my pocket. Why should Heritage get that profit, especially when Heritage doesn't have to pay shipping, BP or sales tax? And since they don't have to factor in those things, their "wholesale" price can be even higher.

[Matt]

Originally Posted by glchen

If it is as Chris Ivy states, I'm fine w/ Heritage's policy here. You just need to consider the price one week before the auction ends at that lot's reserve.

Not quite - as I understand it, they enter a ceiling bid at that time, so you can be bid up by their bid much closer to auction end. If they entered a fixed price bid a week in advance, I think it would be as you said.

[Runscott]

There are costs associated with running an auction house - that's what the buyers premium is for.

[travrosty]

then what are consignment fees for the seller for?

it used to be that there were no buyer fees, but they figured out they can get away with it, then it was 10 percent, then 15, now 20 and more and more.

they are working for the seller, you have to take pictures, describe the item, put out a catalog, etc. so i understand consignment fees.

just what work do they do for the buyer? there should be no buyer fees. they should be thanking the buyer.

[Runscott]

I'll re-phrase: auction houses have costs and have to get paid by someone. If you and I were bidding against each other and you didn't have to pay a buyers premium, then you'd have a 20% advantage over me. Not saying it's right for them to bid in their own auctions (I don't think it is), but because they are a business and have costs, it's not a 20% advantage.

...maybe there are some accountants here who can chime in as to the actual advantage they are getting by paying the buyers premium to a separate company.

[Wymers Auction]

Originally Posted by travrosty

then what are consignment fees for the seller for?

it used to be that there were no buyer fees, but they figured out they can get away with it, then it was 10 percent, then 15, now 20 and more and more.

they are working for the seller, you have to take pictures, describe the item, put out a catalog, etc. so i understand consignment fees.

just what work do they do for the buyer? there should be no buyer fees. they should be thanking the buyer.

Travis it is a very simple answer. Undercutting is what caused this example this guy sells for 25% then the next guy goes to 20% to try and steal his clients. Next thing you know we have auctions advertising no commission. I get calls from potential consignors every now and then that not only want one hundred percent of bid price, but also want a cut of the BP. Some auction houses also compare their services to others and feel that if they can charge 22% BP why can't I? I think bidders are already starting to factor these higher buyers premiums when they bid. I think also when you use a higher bp you tend to lose the last second bidding due to calculation.