How does one avoiding losing their shirts with auctions houses?

[Leon]

Probably hasn't opened it yet. IN a little while. He is probably lifting weights somewhere...

To the original question, buy low and sell high....and never, ever pay a seller's commission, no matter how great the AH says they are......

Originally Posted by edhans

I can't seem to get into the current auction. Keeps defaulting to the February lots. Anyone else having the same problem?

[jefferyepayne]

Originally Posted by Leon

To the original question, buy low and sell high....and never, ever pay a seller's commission, no matter how great the AH says they are......

Yes. How you buy is as important as how you sell when trying to make $$$. Some things you can do to minimize purchase cost.

1. Avoid auctions houses with offices in your home state where you have to pay sales tax! Plenty of other auctions to choose from without paying this extra fee. If you must have something in an auction that is going to charge you tax, reduce your max bid by the tax amount so you don't overspend.

2. Take any discounts available by paying with cash / checks. I know you want your items ASAP but I personally would rather have the item AND more cash in my pocket. I'll wait if there is a discount.

3. If you have your own insurance, ask the auction house if they can reduce their shipping & handling and use your insurance if your policy covers shipments to you.

4. Opt out of getting a printed catalog if the AH gives you a small discount for doing so. A few do.

5. Last but most definitely not least ... stick to your price and don't over spend! Most (but not all) items you are after will show up again in the next year or so and may go for even less.

jeff

[Aquarian Sports Cards]

Originally Posted by Leon

To the original question, buy low and sell high....and never, ever pay a seller's commission, no matter how great the AH says they are......

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.

[Leon]

You picked the lowest percentage to apply my statement to.
When I made it was thinking of a 20% (which is fairly standard) BP....and at that, an AH can make a living, probably without a seller's fee. But again, if there is a ton of work to do or some other extraordinary thing, then a sales fee can be warranted. I am pretty sure I have actually paid a small one before too, now that i think about it....

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.

[Aquarian Sports Cards]

Originally Posted by Leon

You picked the lowest percentage to apply my statement to.
When I made it was thinking of a 20% (which is fairly standard) BP....and at that, an AH can make a living, probably without a seller's fee. But again, if there is a ton of work to do or some other extraordinary thing, then a sales fee can be warranted. I am pretty sure I have actually paid a small one before too, now that i think about it....

It wasn't all about your statement, like I said if you listened to everyone's advice you'd wind up at 12.5%. It seems like the attitude towards auction houses is very adversarial and that is disheartening. I'm not trying to "beat" my consignors or my buyers and it's sad to think that they're trying to "beat" me.

Also I think people lose sight of the value of the item's impact on the equation also. Obviously if we're talking $5,000 items 20% is dandy (though again in the auction world at large 30% is more customary) but on a $100 item 20% is pretty cheap, and on a $50 item 20% just doesn't cut it. Basically the items cost the same to sell for the auctioneer, but the difference between $1,000
and $10 is obviously an issue.

Maybe everyone in this thread travels in a higher rent district then a lot of buyers, but we do auctions where the AVERAGE price is around $40. At 20% there'd be no way to keep the doors open, but there are a LOT of guys with interest in this type of auction as evidenced by our 30+ year history. When we do sell more expensive items we adjust rates accordingly. It is not unusual for us to handle complete sets from the 50's that go for up to several thousand, but until we start selling items that AVERAGE in that range 20% total margin just isn't feasible. We have a number of Net54 members who are buyers, I'd love to hear their input!

[Topnotchsy]

Originally Posted by Aquarian Sports Cards

It wasn't all about your statement, like I said if you listened to everyone's advice you'd wind up at 12.5%. It seems like the attitude towards auction houses is very adversarial and that is disheartening. I'm not trying to "beat" my consignors or my buyers and it's sad to think that they're trying to "beat" me.

Also I think people lose sight of the value of the item's impact on the equation also. Obviously if we're talking $5,000 items 20% is dandy (though again in the auction world at large 30% is more customary) but on a $100 item 20% is pretty cheap, and on a $50 item 20% just doesn't cut it. Basically the items cost the same to sell for the auctioneer, but the difference between $1,000
and $10 is obviously an issue.

Maybe everyone in this thread travels in a higher rent district then a lot of buyers, but we do auctions where the AVERAGE price is around $40. At 20% there'd be no way to keep the doors open, but there are a LOT of guys with interest in this type of auction as evidenced by our 30+ year history. When we do sell more expensive items we adjust rates accordingly. It is not unusual for us to handle complete sets from the 50's that go for up to several thousand, but until we start selling items that AVERAGE in that range 20% total margin just isn't feasible. We have a number of Net54 members who are buyers, I'd love to hear their input!

I think it's a world of difference when the items being sold are $40 as opposed to $400 to $4000 because as you point out, there's not a ton of difference in how much work is being done regardless of the price of the item.

I do have to ask though (and I'm asking out of genuine curiosity), on items in that price range, what is the thought process behind working with an auction house over listing them on eBay (or even using a big consignor on eBay)?

[Aquarian Sports Cards]

Originally Posted by Topnotchsy

I think it's a world of difference when the items being sold are $40 as opposed to $400 to $4000 because as you point out, there's not a ton of difference in how much work is being done regardless of the price of the item.

I do have to ask though (and I'm asking out of genuine curiosity), on items in that price range, what is the thought process behind working with an auction house over listing them on eBay (or even using a big consignor on eBay)?

speed and volume I would guess. You get paid within 7 days from end of auction with us, often quicker. we also have a number of consignors who, at our Hershey auction, provide us with well over 100 lots at a time.

Also, thinking more about it, it is items that frankly don't necessarily do great at ebay auction. Lots of raw 50's stars, lots of vintage commons, etc... I would say we do better than ebay on a wide range of low dollar stuff even when taking commission into account. Are buyers definitely appreciate the "luxury" of being able to handle the cards in person before they buy.

[Topnotchsy]

Originally Posted by Aquarian Sports Cards

speed and volume I would guess. You get paid within 7 days from end of auction with us, often quicker. we also have a number of consignors who, at our Hershey auction, provide us with well over 100 lots at a time.

Also, thinking more about it, it is items that frankly don't necessarily do great at ebay auction. Lots of raw 50's stars, lots of vintage commons, etc... I would say we do better than ebay on a wide range of low dollar stuff even when taking commission into account. Are buyers definitely appreciate the "luxury" of being able to handle the cards in person before they buy.

Makes sense, thanks for responding.

[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.

[Luke]

20% is pretty standard these days and I don't think there are too many people who would avoid doing business with an AH that charges 20% as the BP. The BP shouldn't matter at all to buyers (you just factor it into your bid and bid accordingly). If it keeps consignors away, then that is a problem, but it sure seems like the AHs charging 20% are getting some nice stuff lately.

And, if you're doing a live auction, I really don't think anyone would expect you to do it for 12 or 15%. I could be wrong, but I would definitely expect 20% or more because you're offering more of an experience and I would assume you have higher costs.

[Aquarian Sports Cards]

Originally Posted by Luke

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.

Their margin is still only the money they bring in that doesn't go out to consignors, so 12.5% is indeed the gross margin. Then out of that comes catalogs, auction platforms (for the online guys) payroll, and all the other expenses. Risk or investment has nothing to do with gross margin.

[PhillipAbbott79]

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.

Restaurants are at 3% to 4% I think. The key is volume. If you have the volume you don't need the margin to survive.

You want to start a business and have a long line of people right from the get go. That is not easy to do. That is why people buy businesses and why some are more profitable than others.

[Aquarian Sports Cards]

Originally Posted by PhillipAbbott79

Restaurants are at 3% to 4% I think. The key is volume. If you have the volume you don't need the margin to survive.

You want to start a business and have a long line of people right from the get go. That is not easy to do. That is why people buy businesses and why some are more profitable than others.

Maybe the net margin, maybe. A gross margin of 3%, is a quick path to bankruptcy.