by Dr. J. Darragh M. Elliott, M.Sc., Ph.D.
“AN INSATIABLE COLLECTOR – Part Three”
There are all types of auctions. The most famous being those of Sothebys and Christies. Other auctions include, auctions held in arenas, hotel ball rooms, homes, farms, stores, and so on. Not every auctioneer has the luxury of having his own auction house. Some only have a warehouse and a office, and others may not even have a warehouse.
I would like to believe that most auction houses would prefer any potential customer to think that all of the items that the auctioneer has to be auctioned have been consigned to the auction house for that purpose. Therefore, my first rule for buying at auction is to not be naive enough to believe that all auction houses, all the time, only sell consigned items. In many instances right from a large auction house down to a one or two man farm auction, is to understand that some of the items that are going to be auctioned, are indeed owned by the auctioneer.
Consequently, in these cases the auctioneer is selling for his or her own profit, and not a commission. No auctioneer is going to tell you the he owns a certain item but, it is worthwhile remembering, as I will discuss later on.
The hardest part of an auctioneer’s job is the finding of good quality items to sell, not the actual selling of the items. Fortunately, for the large auction houses many of these items become available to them because, of their reputation. But even the largest of auction houses do not sit back on their laurels and wait for people to offer items for them to sell. They are continually out looking and advertising.
Other than on consignment, there are a number of ways that a auction house can acquire its merchandise to sell at auction, although the consignment method is the most preferred because, the auction house does not have to tie up its own money in merchandise. Some of these are to purchase a complete estate or estates, and there are various methods that a auction house will go about finding this type of merchandise. It is important to note that a auction house may purchase a complete estate for just one item, such as a rare painting. The balance of the estate may be sold at a lesser advertised or quality auction, or to people that sell items at flea markets etc. I will discuss this further in another article on selling at auction.
Other methods are to acquire end runs, over runs, merchandise from bankrupt stores, or companies, excess, or unsold inventory from manufacturers, or stores, and so on.
My second rule for purchasing at auction is to be aware as to where the item or items that you are interested in have come from. In some cases this can be easy to tell that they have been brought in for the auction. For example, if you are attending a auction of the contents of a house, and contained within that auction are a few pieces of furniture or jewelry that you know that the owner either could not have afforded, or did not fit in with the rest of the merchandise, then it is a pretty good bet that they have been brought in for that particular auction, and most likely by the auctioneer. The simplest of reasons may be that the contents of the house were not enough to support having a auction at the house and therefore, the auctioneer brought in some of his own merchandise.
Therefore, my third rule for buying at auction is to be realistic. If there are two or more complete dining room sets for sale at a house or farm auction, or if there are three antique back to the walls, hutches, or more items than the house of this type could, or would normally contain, then it is a very good bet that a lot of fillers have been brought in to sell at the auction. It is quite possibly done because, of the location of the auction. Which, if the location is a prominent one, then from the auctioneers point of view, why not?
My fourth rule of buying at auction is, if you can, always attend the preview, or to send someone on your behalf at the very least. That is assuming that there is a preview, which if there is not, you can always arrive early, and generally you will be allowed to inspect the merchandise being offered for sale at auction. Depending on the type of auction, and where it is being held etc. If it is a major auction, and you have registered, or purchased items from the auctioneer before, no doubt you will be on his mailing list, and you will have been sent a flier or a catalog, if you subscribe for them, of the up coming sale.
The earlier that you can inspect the item(s) that you are interested in the better because, this allows you more time to do your homework, or research.
Remember, it is not always what you have to pay for the item but, the what the cost of restoration is afterwards, which can exceed the purchase price, to put the item in pristine condition as, discussed in my previous article.
Therefore, my fifth rule for buying at auction is, to know as much as you can about what it is that you are interested in buying. As discussed in previous articles, is again to do your homework or research. Purchase the catalog, and purchase, and use your reference books. Research price guides, and previous sales indexes. Obtain other opinions, talk to the auctioneer and so on. Obtain as much knowledge as you can about the item(s) before the auction.
Now that you have seen the items being offered for sale at the auction, it is extremely important that you look up in the catalog the items that you are interested in and make note of the numbers, and any remarks about the item, such as damage, beside its notation in the catalog. With any auction, you have to know that what you are looking at with a number on it is the same item as, described in the catalog. In catalogs most major auction houses have many disclaimers printed in the inside covers or elsewhere, within the catalog. It is very important to read these so you know exactly what the rules are because, they can differ from one auction to the next.
Now that you have done this, read the description very slowly and very carefully. Note, the little words such as after, style, similar, etc. All of these mean that the item is not original but, a copy. Note, and compare the dates. Sometimes mistakes are made, and the catalog states a certain date or circa, and the item was not of that time period. With the hundreds of items that have to be cataloged, unintentional mistakes turn up here and there, and at a auction you have to remember that it is, (cravat emptor) buyer beware. You should also read carefully the descriptions “that in the auctioneer’s considered opinion”, that this states or means that etc.
I have spent up to two solid weeks of work just researching one painting. I found out all about the artist, why this painting was being sold where it was, and why not in New York, or Europe, where this painting had been before, if, when, and by whom, had sold it at auction before, and all of the other recent sales made, at a major auction house, of any works by this artist, anywhere in the world. Who had sold them, the size, the subject, the medium, and the price that the works had sold for, and when. The result was, that when I arrived at the auction to bid on this particular painting, I knew exactly what it was worth to me. This was a fully authenticated painting, and I ended up the lucky buyer at less than twenty five percent of what a painting, by the same artist, and of a similar subject, size, and medium but, and here is a big but, that the other painting had recently sold, in New York, by a major auction house, and that the painting had only been attributed, to the same artist, and was not fully authenticated. A big difference. I was told afterwards by the auctioneer that they had been given the whole estate to sell, and that they agreed with me that the painting should have been sold in New York, or Europe. Further, that they had even contacted some other auction houses about it, and that the other auction houses wanted the painting but, they had not been able to come to a deal within the time period that they had.
No auction house is going to risk loosing possibly of all, or most of an estate by telling its executors that they would obtain more money for only one painting elsewhere. They want to make their commission because, that is why they are in business.
Not all times am I so lucky but, it has happened to me on a number of occasions, to the point that while I am an acquisitionist of fine art, other collectors and dealers have asked me, and pay me to buy for them.
This then brings on my sixth rule for buying at auction. It is important that you get to know the auctioneer, and that he get to know you. Depending on what you are purchasing and where, a number of regular purchasers have worked out with the auctioneer certain signals that they are bidding. The reason for this is, if a well known person, or a large dealer attends a auction and bids on a certain item, it can tell other people that this is an important item, and that they should make a try for it as well. This can result in driving up the price to a point higher than it normally would have gone, or that to which the large dealer was prepared to pay, and therefore, he did not, or could not, purchase the item so as to make a profit on it at the time of resale to his customer. As a result, a lot of people who attend a preview never show up at the auction but, either have someone there to bid for them, have left a bid with the auctioneer, or are on the telephone with the auctioneer at the time the item is on the block.
My seventh rule for buying at auction is, the strategy of bidding. By this time, I have arrived at the auction, have my catalog in hand, and have registered with the auctioneer to obtain a bidding number or a “paddle”. I never tell anyone at the auction that I am going to bid on this or that item. The strategy here is to out fox the foxes without being outfoxed yourself. Much of this is to have, as stated again, “done your homework”. The first thing here is to set a limit on what you are prepared to pay for the item, and no matter what happens, don’t catch “auction fever”, and go over your previously set limit with your bidding. My eighth rule for buying at auction is, to decide on how you are going to bid on the item. Are you going to start of bidding at the beginning, or come in at the middle, or wait to the end. The catch here is, not to let the auctioneer control your bidding but, you control the amount that you are prepared to pay, which is as little as possible. So here we go. Let’s assume that you want the next item up for bid, you have done your homework, and set the limit on the amount that you are prepared to pay. You have read the catalog and noted the auctioneer’s estimates of what he feels that the item will sell for. Now to determine the reserve bid, note the lower of the two estimates, and deduct ten percent. This will usually be very close to the “reserve” bid which is either held by the auction house, or a consignor as previously discussed. The reserve means that the auctioneer will not sell the item unless the price being paid equals, or is higher than the reserved amount. The main point here is to remember that the auctioneer also, has strategies too, these are designed to make you pay more for an item than you normally would. At auction, you should remember that you are buying at the wholesale level, and not at the retail. How many times I have seen people become caught up with “auction fever” and end up paying a way more for the item than even the retail price. Because, they simply have to had it at that moment.
Not all of the following examples of various strategies always work, all of the time, and it is fun to vary them, just to see what other people do. And by no means are these all of the strategies used, however, these are some of the more effective and simpler one’s.
One way is, to sit or stand at the front of the auction audience, and that on every item that you want, that you just hold up your card or “paddle” high in the air, so everyone at the auction can see it. Keep it there until the bidding against you stops, and you have bought the item. This may sound silly but, it becomes very effective as, you may start off paying a higher price for, say the less expensive items that you are bidding on but, after a few purchases everyone attending the auction knows that no matter what, that you are going to end up buying the item.
When the items that you really want come up, and perhaps they are now the more expensive one’s, as soon as, the other people see your card up in the air, they quit bidding against you because, they suspect that you will out bid them anyway, so what’s the use. On the other hand, if they really want the item, then they think that they are going to have to pay the retail or higher price for it. Maybe, in some instances you force them to do it, and then they realize too late that they overpaid. Another strategy is, having decided in your mind what the item is worth to you, is let’s say the auctioneer asks one thousand dollars for the item. No one bids. Then he reduces the asking price to the point that either there are no bids or the item is withdrawn, or the item is bought in by the auctioneer. This is accomplished in a number of ways. One is that he just points to the back of the room and says thank you, and sold to number 123. This number being the house number. Another way is that he actually has an employee(s) in the audience bidding up to the reserve price and then quits. If you are bidding against this kind of situation, it is important for you to know that the auctioneer will try to have your bid land on the reserve bid so he sells the item to you. A gutsy way to bid is, that first you really have to know what the item is really worth by doing your homework in great detail first. Now let’s say that the item starts out again at one thousand dollars and the auctioneer reduces the price down to say five hundred dollars when the first bid is taken. Now he asks seven hundred and fifty dollars. You can either come in here or wait but, I think that the sooner that you come in is better. Now instead of raising your hand or card to acknowledge that you are prepared to pay seven hundred and fifty dollars, you yell out, and I mean yell out, one thousand dollars. The auctioneer just hates this because, he has to accept your bid because, it is higher than what he is asking. So now the auctioneer tries to get control back again and asks twelve hundred and fifty dollars, and let’s suppose someone bids twelve hundred and fifty dollars, now you again yell out, loud enough, so that everyone in the room can hear you, two thousand dollars. Now what you have done is thrown your competition off base. They obviously know that you want the item but, at first the incremental increase started at two hundred and fifty dollars, and you changed it to five hundred dollars. Now on the next time around the asked increment was two hundred and fifty dollars, and you have pushed it up by seven hundred and fifty dollars. If it comes back to you again, your competition now realizes that you are going to push them up by at least a thousand dollars or more, so they quit. They also quit because, they can’t think fast enough to know whether to bid again or not, or what is going to happen. They just say that it isn’t worth it, let him have it. What you then have accomplished is that you have bought the item for two thousand dollars, that if the auctioneer had his way, he would have been able to run it up to five thousand dollars, or more. It can become really exciting if the increments go into the tens of thousands of dollars.
Another piece of strategy here is to sometimes bid against your competition in such a manner that you stop short, and he is left in such a manner that your competition is paying more than he would have otherwise. Let’s say that the incremental increase is one hundred dollars, and the estimates are twenty five hundred to three thousand dollars. By deducting ten percent from twenty five hundred dollars, you know that the reserve price is approximately twenty two hundred and fifty dollars. You can either jump bid as I just outlined, or you follow up with the incremental increases. Now if the auctioneer is smart, he will know that when you make a back and forth slash motion with your hand, that you are telling him that you are prepared to pay a further half of the incremental increase. Now you run this up in such a way that you land on lets say twenty six hundred dollars. Your competition says twenty seven hundred dollars, you make the slash motion, meaning twenty seven hundred and fifty dollars, your competition comes in at twenty eight hundred and fifty dollars, and you stop bidding. Your competition has bought the item for twenty eight hundred and fifty dollars plus ten or fifteen percent buyers premium, plus taxes, and he is a way over the estimated amount, and he knows that you have forced him to overpay for the item. Do this a few times, and your competition won’t bid against you anymore, or if they do, by only the merest of margins.
This will work against absentee buyers too. Now because, you are there, and he is not there, and you can pick up the other items that you want at very good prices because, you have intimidated your competition. They want no part in bidding against you.
Coming in, in the middle, usually creates a three way split. Here again the bidding can sort of go around in a circle. Make sure that you are going to be the person who will land on the reserve bid, and even jump the bid a bit to do this. This can create enough of a pause that the auctioneer may just bring the hammer down soon enough to allow you to buy the item at the reserve price. The auctioneer doesn’t know whether or not anyone else will bid as, everything has stopped. It is better to sell it now, and have a sure sale, rather than take the risk that you may withdraw your bid. This works especially well, if it is the auction house who is the owner of the item. They have made their profit, and want to move on, as quickly as, possible.
A good point to note here is that the auctioneer wants to sell as many items as quickly as possible because, if the auction drags out, people will get tired or bored or both and leave. This he does not want to happen.
Coming in at the end is another good way to not only confuse but, disappoint your competition. Especially, if you have bought previous items. The bidding has come to a halt and the auctioneer is saying “going once, going twice, last call”, and then you come in with your bid. Your competition is almost rejoicing that they have bought the item, and then you step in. Now what do they do?
Maybe, they will bid against you a bit. They have to think fast, usually too fast. What if you just push them up, and stop? How much more should they pay? Do they just let the item go, and try for another one? All of these questions are whirling around in their mind, all at once, all at the same time. Now, if they have done their homework as you have, you may have a battle, and therefore, you go to your preset limit again, and stop bidding. You have a fifty -fifty chance of buying the item at your price. But, if they haven’t done their homework, guess who has the advantage now?
My ninth rule for buying at auction is, to know what is going on, and what is going to go on beforehand. Some auctioneers try to make the sale a fun time, while others are extremely serious. The fun sale, usually is the better one. But you have to be on your guard at all times. Here is an example of what can happen. At certain auctions, the auctioneer can have two or three of his employees “working the crowd”. This means that at the preview, or perhaps just before the auction, they have been talking to or watching who is interested in what. They may carry a rolled up catalog with them, and just as your item comes up they get you to bid, they point their rolled up catalog at you, and they yell out your bid or say yeah, or here, or some other word, indicating to everyone, that you are bidding. As the bidding starts to wane they are on you saying look only another fifty dollars, and it’s yours. You are very tempted to go that extra fifty. Especially, with all of the hype going on around you, and everyone in the room watching you. They may intimidate you to go that extra fifty but, when you do, then someone else is trying to get another person to go that further extra fifty too. This way they run you up an extra two or three hundred dollars that you wouldn’t otherwise have paid. But, no one should think badly of this because, this is their business. The only thing is to remain calm, and stick to your limit. I personally think that this is a wonderful way to hold a charitable auction. But then it is for charity and not business.
My tenth rule for buying at auction is, listen to every word that the auctioneer says. Sometimes things go so fast you have to be on your toe’s. Like three items being sold every minute. On the other hand the auctioneer may say ” he really wants it”. This is simply doing a customer a favor by telling him that he knows that you are going to end up buying the item. This has happened to me, exactly in this way. The auction house’s estimate on a painting was twelve to sixteen hundred dollars. I ended up paying sixty six hundred dollars for this painting. Why? Because, I had done my homework. Obviously, someone else had too! But, when the auction records came out the next year, I looked up what the sales had been for the previous year for this artist, and guess what? This was the lowest of all of the sales of this artists works. The average sale including mine was fourteen thousand dollars.
The auctioneer’s strategy may be to try to intimidate you too. To make it look as if you are almost stealing the item. He might say “you mean only X dollars for this wonderful gem of a work by so and so? Will not someone at least give fifty dollars more”?
Further, the auctioneer may move the bid up very fast, and it is extremely important to listen, and to hear every word that he or she is saying. Because, this is what can happen. If the increments are one hundred dollar amounts, when the item reaches one or two thousand dollars, the auctioneer may not ask one thousand one hundred dollars, or two thousand one hundred dollars, or eleven hundred dollars, or twenty one hundred dollars. He can just say one, or one hundred. He is implying that the one or two thousand mark has already been met, and that he is asking for one hundred dollars more. If you haven’t been paying strict attention, you could end up bidding twenty one hundred dollars while thinking that you are bidding eleven hundred dollars. The auctioneer’s reason for this is purely psychological. He wants you to be thinking in terms of hundreds of dollars, rather than in the thousands of dollars.
This way he wants you and others to bid more without realizing it. It could end up being very embarrassing for you, if you were the buyer when the hammer fell at one or two thousand dollars more than what you thought that you were going to pay. The auctioneer further, has the advantage here as, if you do not take the item, you have embarrassed yourself in front of everyone at the auction, so to avoid this you end up overpaying for the item, or if you do not take the item, he then asks the next lower bid to take the item, and that person generally will because, they do not want to be embarrassed also. Using this strategy, the auctioneer has sold the item, possibly for a far greater price than anyone at the auction ever intended to pay for it.
Now that you have bought those items that you wanted and have them home, check them out again, and compare them with your catalog. If you have bought your items from a major auction, and paid a lot of money, it really pays to check them out. With fine art, take the painting out of the frame, see if it is really that oil on canvas, or is it a print glued to canvas and overpainted? Take a ultra violet light and in a dark room run it all over the painting. Any repaired areas will come up black. Therefore, is the signature black? If it is, the painting more than likely is a fake. Now you have approximately two weeks to return it to the auction house together with the proof that the item is not that as exactly stated in the catalog to obtain a refund of your money. Check your furniture for replaced wood, rugs for repairs, glass for cracks, chips, verify that jewelry, and so on. After everything checks out then display, and appreciate it.
Now, let’s suppose that a item did not sell, and was bought in by the house. It may be owned by the auction house, or consigned. Usually, not all items sell at auction but, the auction house by buying them in during the auction wants to make it look as if every item sold. If you have the suspicion, or are still interested, there is nothing to be lost by telephoning the auctioneer the next day to ascertain if the item was actually sold or not. If it hasn’t sold, and you still want the item, make an offer. Sometimes you will be lucky and get the item at a even lower price because, the auction house wants to be rid of it as, they need fresh merchandise for their next auction.
In closing, I want to leave you with a good extra rule that my father taught me, which also pertains to anything, and this is, if you really want something, and you don’t get it, it means that the Good Lord, God, Allah, Buddha etc., has something better in store for you. This has always proven to be correct without exception. It’s also known by a better name called “FAITH”. Believe me; it will always happen for the better, no matter what the situation. So now you know beforehand that you are not going to be successful with everything that you try. However, at auctions, and everywhere else, with “FAITH”, the law of averages will always look after you.