The Pro's and Con's of Auctions and Consignments
by Harry Viezens
I have been asked by many clients, what is the best way to “go” when they wish to sell off their collection. Should they sell their collection by Auction or Consign their collection with a dealer? After careful thought, I have come up with these guidelines to help the seller to make a informed decision as to what may be the best way to “go” with their collection.
First off, lets discuss how an Auction Works. When you send a firearm to be auctioned, you will be charged a percentage of the sale when the item is sold. As the seller the fee can vary from auction to auction from as low as 15% to as high as 22% or more. It depends on what you have, and how you work out the details prior to the consignment to the Auction House. Do not forget that the Auction house also makes a profit from the buyer on the percentage of the sale, or hammer price. So from the Auction house point of view, it is a “win” “win” deal for them. That is not necessarily a bad thing. Some Auction services Such as Rock Island Auction have on staff many experts and research staff to handle and catalog all the items coming in in a proper way with photos and full descriptions of each firearm or accessory listed. That takes time and research to do this right for the seller. The plus side is that when potential bidders call to ask for more details on items they are interested in, the Auction house has the staff to handle the call and be able to give a accurate description and details to the potential bidder. The down side is that Auction Houses of that size like to have huge sale listings on auction day. This makes the auctioneer go fast to be able to go through the day’s listings in reasonable time. Your item may not be given the time needed to generate higher sales for you, the seller. Many of these type of Auction Houses want to be able to say that they generated millions in sales in their last auction. They do not tell you how many items did not meet their low estimate, only the ones that did great at the sale. Do not forget that the Auction House Gets paid regardless of how well you did with your items.
To illustrate a point, lets say your firearm is appraised at $2000.00 to $2500.00, never mind what you have invested in it, this is the appraisal they think you should see at the upcoming sale. The hammer falls on your item at let’s say $2200.00. You get that amount less the sellers fee. Lets say the fee is 15% you get $1870.00. If you have less than that price in the item you gain. Now lets say the Auction Service is having a slow day, and your item sells for $1400.00. your return less the fee is $1190.00. If you have more than that invested in that item you lost. Not many auctions have a “reserve” that has to be met on a item to protect from lowballing bids. It is not practical to have “reserves” on each item, just rare or special items. With that in mind, you the seller have no real control of the outcome of the sale when it starts. Good or bad you are committed to that sale when it starts.
Now let’s talk about the average Auction Service. When you deal in firearms, most general Auction services do not have the staff or the knowledge necessary to auction firearms correctly. This can be a serious disadvantage for the seller. You can have your firearm not properly written up, poor photos and when potential bidders contact the Auction House they do not have someone knowledgeable to answer the questions asked. It can be something as simple as “is this firearm reglued”? or what is the caliber? This certainly will turn off potential bidders! Some of these “houses” do not care, they will make a sale regardless of how your item does. There are exceptions to the rule. I have personally delt with some small Auction Services and I can say honestly, that they have done a great job promoting the sellers products and trying to get the best price possible. It still all comes down to what you get for your firearm on any given day less the sellers premium. It is still a gamble with no real control of the results. If you are disposing of an estate, or something along those lines, and do not want to deal with a dealer, you can get a lump sum of money for your effort and get it over with then Auction Services is the way to go. Keep in mind, that in most cases, you will not get the full amount of money you may be planning for. The Auction service cannot control the outcome of your sales.
Now let’s talk about consigning your firearm. When you consign a firearm you have more control over your gun. You can set the price this firearm is to be sold at, the amount of time the consignment will be consigned, the amount of interest to be paid to the dealer, and if there is a offer, your choice to accept or decline. The dealer you choose will determine how well the consignment will go for you. You would not want to use a dealer that is known for modern firearms to consign a Civil War firearm for example. It also helps that the dealer has a good web site and is known for his skills in dealing with firearms and the public. With consignments, you must understand that generally the sales take longer to conclude. It is not like an auction in that you know the auction date of the sale and that you will get a sum of money after the auction. There is no set rule as to how fast a consigned article will sell. I depends on the market and demand of the item to be sold. Do not forget, an auction can also have a “no sale” on a item due to a person not paying, or no interest in the item to be auctioned. The main advantage that you will have with consignments is that you will get more money for your sale due to you controlling the price and the interest to be paid the dealer. Most dealers work at 15% of the sale price. However, the interest can be negotiated on the basis of rarity and amount of consigned items for example. The dealer will keep you in contact with what is happening with your products and of any serious offers tendered.
It is up to you to decide what is best for you. Both of these choices have good and weak points to consider. I hope this outline of how Auctions and Consignments work will help you to decide which service will work best for your needs. If you would like to contact me about this article to get more details, please do! Knowledge is real power when you need to make good informed decisions.
Until Next Time