auction advances
 

Hi Guys and Gals,

I have never auctioned anything through an auctions house, but plan to do so soon. Would someone tell me everything that goes into an advance on an item you are auctioning through a major sports auction house? What percentage of their estimate will they give as an advance? For example, the auction house estimates an item will go for $20K, what would they advance? Are these advances treated as loans with interest? I literally know nothing about them, other than they exist?

Thanks for any help -

I am sure it varies a great deal. I'm not sure an AH is going to offer you an advance on something as "low" as $20,000. The one time I did an advance it was for a six figure item. Just an advance and no interest. It was clear that the item would pull multiples of what I asked for as an advance. Good luck. I am sure you will hear different things from different AHs.

They most likely would start at 25 percent and end up at 50 percent.

Hi

Many auction houses do advances and they treat it like an advance and not a loan. They typically give up to 50% of their estimate of the item. A lot do advances on items as little as 10k that I am aware.
However if the auction house allows reserves they usually do not give an advance if you put a reserve since if it does not sell it could be an issues.
Also if you take an advance they usually either not give you points back if it is a card desirable to them that the want or my not give you as many points as they would since they are advancing you money

Best way to do this is to contact the AH’s you are considering. Thanks

The AH I use generally offers me ca. 33% of the estimated value and has done so for values of all my lots combined as low as $15K.

To be clear, this only happens once the items are in hand and once I have signed a contract agreeing to the terms of the auction process.

If for some reason the lots I have consigned have been so badly estimated that they don't even net me (after the agreed upon cut the AH gets) the 33%, I will owe the difference to the AH. If they do better, then the advance will be deducted from my net proceeds. There is no interest involved either way.

I don't know the technical term, but I think of this as a short-term, interest-free loan with the lots they have in hand as collateral. I don't want to mention the AH because I do not know what their overall policy is...the % they offer and the minimum value needed to get this % may change based on the customer and value of the lots consigned.

I believe the reason AHs do this is an an inducement to get consignments. Having some cash up front may be the deciding factor in what AH to use (assuming other things are roughly equal).

Genuine question and this is not meant negatively, I am genuinely interested.

Why would I take advantage of an advance at all unless I am in desperate straits for liquidity? Especially if it costs anything in points of sellers commission?

Is there something I am missing or is it as straight forward as immediate need like a pawn situation? I just have waited for my traditional payout and if it exceeds a acceptable amount of time, I would not use that house again.

Just wondering if there is an advantage to this I am not seeing.

I agree that if it cost something in terms of the commission it would be a questionable decision and I would recommend it only if someone was desperate for money quickly.

But assuming the same commission, if someone said to you, you can have $30K in three months or $10K now and $20K in three months, I don't see the drawback in taking $10K now. There is of course the possibility that the collectible market could crash before the auction....but 67% down across the board would mean there are probably a lot more issues in the world than just collectibles crashing.

I would also add that it might depend on what you are consigning. If it is fairly standard stuff like T206s and Goudeys I think the expectation of the result won't change that much in a few months. If it is more speculative, recent "shiny stuff" then I would be more cautious.

Justin it can take several months by the time you ship the consignments to the auction house,
as they have to have it well in advance of printing the catalogs, & then the auction runs & winning bidders pay....& then the consignor gets paid.
So perhaps 2-4 months, many of us are consigning cause we can use the funds, so why not get some in advance?

Points?
 

I am curious what you mean by "Points back"?

Thanks!

some auction houses might really want your card or cards in their auction and they will incentive you. For example no seller fees or sometimes they will give a percentage "points back" from the buyers fee. So for example the buyer pays a 20% premium. The AH might pay you 1, 2, 3% etc from the buyers fee. So you would get whatever the gavel price on the auction plus those extra points from the buyer.

I get zero sellers fees and 30-50% from several AH on total lots as small as $5k - all vintage with minimal market volatility. If you don’t, go somewhere else; it’s competitive out there.

Yep, AH may agree to give you 105% of hammer for example. Full hammer price and an additional 5% out of their commission.

Anyone who sells anything of high value and pays a seller's commission isn't paying attention.

105%
 

Is 105% of hammer price the best you are likely to be able to do on a single item worth an estimated $20K?

Nothing wrong with that return.

No, just wondering if 105% is the best one can usually negotiate with a big auction house for 1 baseball item worth an estimated 20K?

Personally, I work with one AH here who is a longtime member and I know how hard he and his family work to sell my consignments, they do such a great job I would never ask for a piece of his end, but that's just me, I'm more into relationships than a 5% vig.

No offense, but your situation is not the same as mine. I have no allegiances to any auctioneer because I have never used one before. I am simply asking for opinions on my particular situation and what I should expect from auction companies from members who have auctioned an estimated 20K item in the past.

Can anyone address my very specific question?

None taken.

You are asking for a specific answer to fit your situation but people can only answer from their own experiences and their own situations. There is no one answer to "what kind of advance can I get on a $20K item and is 105% the best I can do on the hammer price".

But as a general answer:
1) most AHs give advances
2) they seem to range from 25-50% (in my experience it is closer to 33%)
3) some consignors utilize this option, others prefer not to
4) no one yet has mentioned interest
5) the % of the hammer price you receive is negotiable but it seems like 100% is now pretty standard....you may or may not be able to get a better rate like 105%, but I don't think you can do better than 105% except for really rare/valuable items (that's just my opinion)

Essentially, your question is only answerable by contacting several AHs, telling them what you have, and asking them what % they can offer as an advance (and also the best they can do regarding the % you will get of the hammer price).

Thanks
 

Thanks to everyone who responded and help educate me about this process. Four auctions houses expressed interest in selling my item. Interesting, estimates for it varied widely. Among those auction houses I was offered between 0-10% of the buyers premium for a hammer % of between 100% and 110%. I selected the auction house that I thought showed the most excitement about my item and felt they would do the most to advertise it. I signed the electronic contract today.

Thanks again!

Best of luck with your item.

+1 agree glad the forum could help and good luck with the auction

I have heard some collectors take the advance in one year and then the rest of the payout in another year to offset taxes.

Plenty of the houses will offer you an advance on $20000 seems like Steve wanted to brag about his six figure consignment. Should be able to easily get half of the estimate if not more. Should not be a loan should be no interest. If they try and structure like one look elsewhere. There’s enough competition for consignments out there this shouldn’t be an issue. Also shouldn’t effect the rate they charge you. I’d try REA, heritage, mile high, memory lane and love of the game. See what they all offer you.

Sounds like you made a solid decision. Let us know how it comes out and what the payout times actually were.

i once got in advance from a guy named vito..in queens ny .it didnt work out for me ...

Everything is negotiable.If you have high value graded items that require little research work by the auction house they will undoubtedly be willing to give an advance and points back on the buyers commission. How much of an advance, how many points back—depends what you negotiate. If you can’t get these things find another auction house. If you have a lower value consignment that requires a lot of work by the auction house to write it up then they will be less likely to negotiate with the consignor.

Best of luck !!!

Remember the saying, "Dealing with an auction house is like buying a boat. The best time is when you buy and when you sell." :D

Lol
 

Hilarious Octavio! I almost did a spit take when I read your comment.I did laugh out loud.

Rich hope your well