There is no simple answer to this question. Every auction house has its own criteria for accepting material, based on many factors. Here are just three of the questions an auction director might ask in order to determine whether or not your collection is suitable for auction:
What is the total value of the collection?
Are you willing to allow some items to be grouped together?
Will you include your bullion coins in the consignment?
What is the Total Value You of Your Collection?
The first question an auction director usually asks is “What is the total value of your collection?” All auction houses have their own minimum value guidelines.
Let’s look at the different policies of three fictitious auction houses, all conducting top-level public auction sales. In our examples, we will call these auction houses Arthur’s, Bill’s, and Davy’s.
Arthur’s auction house has been around for over thirty years and has handled some of the greatest collections in history. They have a basic minimum value guideline of $10,000, so if the total value of your collection comes to less than $10,000 you probably won’t see your consignment in Arthur’s next public auction sale.
Bill’s auction house hasn’t been around as long as Arthur’s, and is not quite as demanding. Bill is willing to accept total consignments valued at $5,000 or more, perhaps because Bill’s has a lower operating cost structure and will make concessions in order to compete more effectively with Arthur’s.
Davy’s auction house is even more lenient. Davy currently has fewer consignments lined up for his next sale. He might well be induced to take on a few single items adding up to only $2,500 if he feels the items fit well into his next offering.
As a general guideline, don’t expect any major auction house to get too excited about your collection if the total value fails to reach $5,000.
If you have a really good relationship with an auction house due to many successful transactions in the past, you might get the auction director to sell a few $500 to $1,000 items for you, even if the total consignment fails to meet their value guideline.
If all three auction directors turn you down, you could be better off selling the items by “private treaty” (direct sale without using the auction process) or by finding someone who will sell them for you through an online auction (Ebay). ( Direct Sale vs. Public Auction).
Keep in mind that the minimum total value is not the only factor the auction director considers.
Will You Allow Some Items to be Grouped Together?
The auction director at Arthur’s determined that your collection might bring a total of $10,000 or more. Arthur then took a closer look at your material and noticed that some of the items are worth less than $500 each. Arthur’s basic policy is to list items worth $500 or more as single lots. He will accept items that are valued at less than $500, but only if you are willing to allow him to group them together in multi-piece lots.
Some consignors refuse to allow their items to be placed into group lots. This can be a major sticking point. If you have a large and valuable collection and you are adamant about having every lot sold separately, be sure to negotiate a clause in your auction contract that reflects that position. You might offer to pay a higher commission rate on these lower value lots in order to have those items listed separately.
A flexible and reasonable consignor is usually a happy consignor in the end. If you can tolerate having some of your items grouped together, you will make your auction consignment much more attractive to auction directors. If your consignment is not large and valuable, insisting that every item must be listed separately may make your collection unattractive to some auction houses; you will be politely told to go elsewhere with it.
Despite what many consignors think, grouping items together is not always bad. Some auction houses have a knack for lotting items into groups that sell at decent prices. Keep in mind that all auction houses work on commission, and they usually try to get maximum results for everything they sell.
Will You Include Your Bullion Coins in the Consignment?
It may not always be wise to sell your entire collection at auction. There are times when it makes more sense to sell parts of a collection directly to a dealer or to a fellow collector. A collection containing bullion coins (coins with no numismatic premium – their value is directly related to their gold or silver content) is a good example.
Most auction directors are delighted to accept bullion coins for auction, but it may not be such a good idea to consign these coins. To see why, let’s do a little simple arithmetic.
Suppose spot gold is worth around $1,000 per ounce and you are thinking of consigning some one ounce American Gold Eagle gold coins to an auction.
You check with local dealers, or on the Internet, and find out that there are buyers who will pay $1,020 each. If you consign the coins to an auction and get a 0% seller’s commission, how much can you reasonably expect to realize for each 1 ounce gold Eagle? Probably around $850. Here’s why:
A sophisticated buyer attending the auction sees your Eagles and thinks this way about bidding on them:
“I can buy one ounce gold Eagles directly from various sources for a slight premium above gold, perhaps $1,075.”
This potential buyer knows he will have to pay the hammer price (the amount he bids) plus a buyer’s fee of 15% if he bids in your auction.
Here’s the algebra necessary to figure out what maximum bid he should be submit in order to pay no more than $1,075.
Amount to Bid = $1,075 / 1.15 = $934.78
Our buyer should bid no more than $935. If he wins the coin at the hammer price of $935, he pays about $140 in buyer’s fees, which comes to a total of cost of $1,075.
What does all this mean to you, as a potential consignor?
If all bidders of the bidders in this auction think that way, each Eagle should sell for $935.
You will receive $935 for a coin you could have sold directly to a dealer for $1,020.
Don’t consign bullion coins to auction unless you absolutely have to. Shop around. Get a few competitive bids, and sell your bullion coins directly to a dealer you trust. (See Direct Sale vs. Auction.)
Some estate situations may require that all of the coins in a collection be sold intact in a public auction. In cases such as these, negotiate a separate seller’s fee on the bullion coins, and consider placing reasonable reserves based on the spot price of gold on the day of the auction. If you set the reserves too high, you won’t sell anything. Set them too low and you may not get the best results. Contact us if you want professional help.
Other Factors an Auction Director May Consider
What is the state of the current market for collections like yours? What catalog publication deadlines are looming for the auctioneer? What was your previous relationship with the auction house? What potential future business might result from accepting your consignment now? Are similar, or identical items, already consigned to the auction house?
Check our website on a regular basis. We will be addressing these questions, and many others, as time goes on.