Not long ago we published a column on the “3 Pillars of Antiques Shows,” which included the Promoter, the Exhibitors (Antiques Dealers), and the Gate (those paying to enter the show). In this column we’ll discuss “The 3 Pillars of Auctions.”
Successful Auctions don’t just happen. They require good timing and a lot of hard work. There are three “Pillars” to any successful Auction, all are inter-related, and all are required for any Auction to succeed.
Auctioneer: It takes more than just a fast-talker to be a successful Auctioneer. Most are savvy business people who need to make a fair profit if they’re to remain in business. They solicit “Consignments” in order to acquire merchandise to sell, and then they must market and promote it in order to attract bidders to purchase it. They charge “Consignors” a “Commission” (usually a percentage of the gross sales) for any merchandise they sell. They rarely charge an “Admission Fee” to attend their Auction. But many charge all “Successful Buyers” a “Buyer’s Premium,” which represents an amount over-and-above the actual sale price. (For example, with a 20% Buyer’s Premium on a $1,000 Sale Price, the Successful Buyer must pay the Auctioneer not $1,000, but $1,200). From the Commissions and Buyer’s Premiums, the Auctioneer must pay facility rental fees, marketing & advertising, staffing & labor, and other expenses, while still hoping to make a profit.
At the top of the Auctioneer pyramid are a few companies who gross billions of dollars in Auction sales each year. At the bottom of the pyramid are smaller full-time and part-time “Mom & Pop Family Auctioneers” whose sales are miniscule by comparison. However, all Auctioneers require a large quantity of quality Consignments, and enough Bidders & Buyers to purchase it all. Without Consignors, and without Bidders & Buyers, no Auctioneer can remain in business.
Consignors: Some Auctioneers sell their own merchandise which they’ve acquired elsewhere (e.g., estate liquidation purchases, private purchases, or purchases from other Auctions). But most merchandise comes from Consignors who hire the Auctioneer to sell their merchandise for them. Consignors pay the Auctioneer a Commission (usually 10%-35%) to sell their merchandise, and they hope that their Net Sales (i.e., Gross Sales less Commissions) will exceed their acquisition costs and other expenses. And Commissions rarely includes a “Pick-Up Fee,” which means that most Consignors must deliver themselves, or pay the Auctioneer the Pick-Up Fee. If they are pleased with their “Net Sales,” they will probably consign with that Auctioneer again. If not, they will most likely take their business elsewhere. And if their Auction experience was bad enough, they may never consign to any Auction again.
Bidders & Buyers: Collectors and Dealers need Auctions in order to acquire merchandise for their collections or re-sale businesses, and it takes multiple Bidders for an Auction to succeed. If there was only one Bidder, theoretically all items would sell for only $1.00. There are actually two types of Bidders: “Successful Bidders” and “Under-Bidders.” It takes “Under-Bidders” (Unsuccessful Bidders) to push the bidding up, and in the end, the highest bidder will become the “Successful Bidder,” or the “Buyer.” Bidders will attend an Auction based upon the type, quantity and quality of merchandise as well as the reputation of the Auctioneer. Both the Auctioneer and the Consignors need “Bidders & Buyers” to succeed. If Bidders & Buyers fail to attend an Auction, or if those attending fail to spend any serious money, both the Auctioneer and Consignors are seriously affected.
In Summary: All three of these groups are interrelated, and none can exist without the other two.
WHAT’S IT WORTH: The “Power of Auctions” is based upon “Competitive Bidding.” Highly desirable merchandise sells best at Auction. The rarest items, in the best condition, that are highly desirable to many people, will usually do well at Auction. Average-to-below average merchandise, items having condition issues, items that interest few bidders, will usually flop. Think of it this way: Most “Record Prices” are not set by Private Sale, but at Auction. It’s the “Power of Competitive Bidding,” it’s the “I May Win It with Just One More Bid” optimism that makes Auctions work. Never been to an Auction? Have some fun and attend one. You just may walk out with an incredible bargain.
Mike Ivankovich is an Auctioneer, Appraiser, Home Downsizing Expert, and host of the “What’s It Worth? Ask Mike the Appraiser” Radio Show. Now in its 6th year, “What’s It Worth” airs live in the Philadelphia PA area on Friday mornings from 9:30-10:30 AM EST on WBCB 1490 AM, and on the Internet at: www.WBCB1490.com. You can also visit his Radio Show Web Site: www.AskMikeTheAppraiser.com If your local station doesn’t carry “What’s It Worth” tell them they need to add it to their programing mix. If you know anyone who needs any Personal Property Appraisal work, or if you need a Speaker for an upcoming meeting or event, call Mike at (215)-264-4304, or visit: www.michaelivankovichMEETNGSPEAKER.com