Buying at Public Auction
In July I looked at buying at eBay, which is in part an auction venue. Auctions have a long and distinguished history in the philatelic world, going back into the 1860s, almost to the birth of our hobby. Public auctions remain the venue of choice for most high-end rare stamps and large collections.
This column discusses the process of buying at public auction with a focus on specialist auction houses dealing in stamps and postal history, though many of the tips here are also applicable to more general auction firms. A future column may delve further into tips for reviewing and pricing auction lots.
Like stamp dealers, auction firms vary widely in size, quality, reputation, and specialty. Many prominent auction houses have been in business for decades (Figure 1). The biggest firms sell tens of millions of dollars of stamps and covers a year, but many smaller auction houses serve the national, regional, and local markets around the country.
Figure 1: H.R. Harmer, which held this sale in 1995, is among the long-lasting auction houses.
Auction firms have their own personalities, price points and specialties. Certain firms are known for high condition stamps, some for postal history, some for bulk lots and collections; some for material from specific countries, and so on. If you are not lucky enough to have an auction firm near you, the larger auction houses broadly distribute catalogs for their sales and have robust internet presences.
The website stampauctionnetwork.com presents catalogs for many domestic and international auction houses, though by no means all of them (Figure 2).
Figure 2: A partial list of upcoming auctions found recently on the Stamp Auction Network website.
Auction catalogs typically have identification and description of material, and usually photographs (some houses now include PDF files or videos for larger lots). Many sales have a specific focus or contain a large number of items from a specific “named” collection (Figure 3). Other sales contain a wide variety of different material.
Figure 3: A catalog for a name sale by Daniel F. Kelleher Auctions
Auction houses most typically sell material belong to others on a consignment basis, but sometimes it’s their own material that is being auctioned.
Descriptions can range from a paragraph or more to a few sparse words (Figure 4). Some auction houses provide a minimum starting bid in the auction; others provide a value range as an estimated final price of a lot. Some auction houses do not provide estimates on material that has a specific catalog value. Especially until you are familiar with a specific auction house’s knowledge, experience and practice, you shouldn’t always take the house’s word for it, either on identification or pricing. Mistakes can occur, and all of us in the stamp hobby know more about some areas than others.
Figure 4: A very detailed description from a recent Robert A. Siegel auction.
As with buying in other formats, it’s hard to substitute for being able to see material in person so you can inspect it yourself for condition, color, details, or other attributes. In-person review can be of particular importance for collections or large lots, which cannot all be photographed or described in a brief space.
Estimates (Figure 5) are just that – an auctioneer’s guess as to what a lot will sell for. Many lots will sell within the estimate range, but it is also common for lots to sell above and below those ranges, sometimes by large amounts. It takes experience with each particular auction house to get a sense of its individual practice or personality when it comes to pricing. Especially in more specialized areas, pricing can widely vary as individual collectors enter and exit a market. This said, past auction realizations can be a useful tool in assessing the value of items; many of the larger auction houses have searchable archives of past sales and prices realized.
Figure 5: A recent auction by Sam Houston Philatelics shown via Stamp Auction Network lists an estimate, at right, for this item, a U.S. Louisiana Purchase stamp (Scott 325).
Traditional public auctions are held live, and the highest bidder at the end of bidding for a lot is the winner. “Mail bid sales” are slightly different in the lack of a live bidding component.
Bidders can attend an auction in person (or by telephone or, increasingly, on the internet) and place bids live, with the house (“on the book”) in advance, or can use an auction agent (a third party) to place bids on their behalf. I have used all of these methods in my own buying.
Bidding in real time allows for flexibility and does not require anyone else to know your intentions, but requires an investment in time, runs the risk of technical problems or mistakes in bidding. There also is always the risk of losing discipline and getting caught up in the emotion of trying to win a desired item that is escalating in price.
Bidding “on the book” is convenient but lets the auction house know a true maximum; using an agent combines some of the flexibility of bidding live with the discipline of having someone else follow set instructions; at the cost of having to pay the agent.
It’s important to always review the terms and conditions for any auction sale. The terms and conditions will include things the amount of bid increments, the time bids must be submitted in advance and how to submit them, the ability to return material, the ability to send material “on extension” for expertizing, and perhaps most importantly the buyer’s commission – the percentage extra you will pay to the auction house for your purchased lots.
The commission rate for most stamp auction houses in the United States ranges from 15 percent to 20 percent. For example, if you purchase a lot for $100, you will pay $115 after the application of a 15 percent buyer’s commission. Terms and conditions may also reveal whether an auction house may place a “reserve” price (below which the lot will not sell) on material, whether the house itself may own material that is being sold, how tie bids are handled, and how final bids are determined.
When a lot is auctioned, the auctioneer will select a starting bid (either a minimum, or a starting point based on bids received by the auction house before the sale). Bids then proceed in increments that may differ by auction house and by the value of the lot. Final price is typically, but not always, one increment over the second highest bid received, but there are possible variations that may be described in an auction house’s terms and conditions.
After an auction, the auction house will send invoices to successful bidders. Bidders will be expected to pay the hammer price for their won lots, plus commission and shipping fees (which can be expensive for valuable or bulky material). Increasingly, sales tax may also be charged unless the buyer can demonstrate exemption from sales tax (for example, if the buyer is a dealer and is purchasing for resale).
Some auction houses might immediately ship material to established customers without waiting for payment, but this is not to be ordinarily expected.
Buyers at auction should review purchases promptly after they are received to ensure that lots are present, undamaged, and what the buyer expected. Most auction houses have relatively limited return periods (driven in part by the desire to be able to render payment to consignors for sold material), and some lots – typically groups or collections – cannot be returned.