REA consignments

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Posted By: steve

I am looking forward to the 2008 Robert Edwards Auction. I have been talking with them - going to send off some cards tomorrow. They need all consignments by end of January.

Of all the great auction houses out there, REA appealed to me most. Its only once a year, but major. The timing seems good in late spring. My whole consignment is 0% commish. And all you folks here seemed to talk about it more than any other auction throughout the year.

This is the first "big auction" consignment - it'll be fun to see my stuff in their catalog line-up.

Cheers, steve.

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Posted By: barrysloate

Not sure I understand the point of this post.

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Posted By: steve

1. Reminder, if interested consignments due 1/31
2. Let folks know 0% commission can be obtained.
3. Give my 2 cents on why REA is a good choice.
4. Share my enthusiasm with you fellow hobbyists.

steve

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Posted By: Lance

Barry,

I don't think Steve is knocking any other service, but is excited about his first submission to ANY auction house. Steve, please correct me if I'm wrong. I too, have sent my first auction house sub to REA. I had a few cards that I didn't feel would do well on Ebay and took a shot with REA. I have always enjoyed their auction and they fit my need. Good luck Steve!

Lance

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Posted By: davidcycleback

I think the point was that the Packers run game looked good in the snow and the question is if how well their pass rush can pressure Eli Manning. At least that's what I took from the initial post.

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Posted By: barrysloate

It just sounds a little bit like an advertisement for the company. Now Rob is a friend so I mean nothing disparaging, but consignment fees and things like that seem to fall into the category of confidential information.

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Posted By: steve

steve

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Posted By: davidcycleback

My firm belief is the customer should pay for a service.

I find it humorous when people who want 0% consignment fees complain about 20% bidding fees, as if the two fees are unrelated.

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Posted By: stefan

im with barry on this one.

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Posted By: davidcycleback

I'm totally with Barry on this one. However, I'm also totally with Steve.

Steve's initial post resembled an ad, but appeared to me to be more a post from someone excited about his first consignment and giving the details. As there was an earlier thread about auction house payments, the post might not even be considered off topic.

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Posted By: barrysloate

David- very cryptic.

I don't think what Steve did was a big deal at all, I just think he could have expressed his enthusiasm without going into consignment details.

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Posted By: boxingcardman

I appreciate the consignment details. We collectors are in an antagonistic (friendly but still antagonistic) position relative to auctioneers. We want to pay as little as possible to sell our cards; auctioneers want to make as much as possible. i consider it very relevant and helpful to hear what sorts of deals collectors are getting.

As far as confidential information goes, unless it is pursuant to an agreement or law, it ain't confidential.

Sic Gorgiamus Allos Subjectatos Nunc

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Posted By: barrysloate

Adam- I agree you have a right to negotiate the best deal you can if you consign something, but it should be between you and the auction house. If the house chooses to discuss consignment fees publicly, they can take out a banner ad. Obviously, since you and I sit on opposite sides of the consignment desk, it is only natural that we would have a different take on it.

Eat at Joe's, best burgers in town.

(I am guessing this is the translation of your Latin phrase, since I do not know Latin).

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Posted By: Brian Weisner

Hi Barry,
I thought Joe only sold fruit.....
Be well Brian

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Posted By: barrysloate

Watch out for his plantains...doesn't matter, I got banned from the store!

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Posted By: Rob Dewolf

Just think, it was only a month or so ago when posts such as "If Ty Cobb were a tree, what kind of tree would he be?" were commonplace on this board. And today there's debate on whether a post about consigning with one of the elite auction houses in our hobby is proper.

Talk about progress.

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Posted By: T206Collector

....Group offended by this post would be one with a vested interest in a competing auction house.

_ _ _ _ _ _ _ _

Visit http://www.t206collector.com for my blog, interviews, articles, card galleries and more!

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Posted By: Julian

Just kidding...Nicely put Mr. Dewolf.

Lance

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Posted By: Jeff Lichtman

A mighty oak?

<----- note inserted smileys

Ahhh...the old days.

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Posted By: Rob Dewolf

Jeff,

You forgot "good."

Oh I get it ... you didn't forget.

Rob@NoSmileys.com

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Posted By: dan mckee

I agree, consignment info is very important to future consigners. I rarely if ever agree with Adam but I must back him on this one. When I decide to sell, it is nice to know where I may go for zero percent commission. The houses are creaming the bidders for 20% so the sellers should reap some of the benefits. I have mainly been a bidder. But making 35% on each auction lot is insanely high in my opinion.

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Posted By: barrysloate

Who gets 35% in total commissions? I can't believe anyone can get away with that and still be competitive.

I think consignment fees can be discussed openly and professionally between the seller and the auction house. If a seller is given a particularly favorable cut, he need not post that on a public chatboard. There is nothing wrong with a little confidentiality and a little discretion. This is not a debate about whether or not a seller should negotiate the best deal he can; it's about posting it publicly. If it were one of my consignors I would probably pick up the phone and have a brief chat with him.

Everyone feel free to negotiate the best deal you can. It's just business.

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Posted By: steve

I had no idea this would be such a touchy subject.

We all talk about the many ways we buy cards. We have a regular post to talk/show the cards we buy. In some ways, it is more emotional when we sell rather than buy. I have even suggested a monthly "let go" thread to honor the cards we loved but have parted with. For every pick-up, there is a sale. It is the other half of our hobby that I did not realize was such taboo.

For the record, I did state earlier, "Of all the great auction houses out there..."

No harm ever intended.

steve

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Posted By: Brian

Barry, if you don't like the thread -- why keep bumping it to the top?

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Posted By: Rob Dewolf

Steve,

It seems pretty simple to me: If the auction house with whom you've made your deal has a problem with you disclosing the terms of that deal, I'm sure you'll hear from them. If your deal was so sweet that the auction house wanted you to keep it private, my guess is that would have been communicated to you beforehand. Given that one of the banners I see daily on this board advertises an auction house offering 0 percent commissions on certain cards, I don't think you've exposed some dark secret.

Then again, I don't make my living running auctions.

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Posted By: barrysloate

Brian- I don't dislike the thread at all. I'm happy to keep the discussion going and have no problem bumping it to the top.

When it comes time to sell and you feel it best to consign your collection, you should work out the best consignment deal you can. Maybe you will get a 0% rate because you are consigning a six-figure collection. Maybe the guy who consigned a five-figure collection is paying 5%. And maybe the guy who consigned two $500 cards will have to give up 10%. Deals vary, but they are between the auction house and the seller.

There are large offices that have many employees. Some are extremely talented and help the company make a lot of money. Others are so-so and just kind of hang around. When it comes time to give them raises, one is going to get a bigger raise than the other. Don't you think that is confidential information? Can't you see the trouble it will cause the company if everyone discusses their raise on the office bulletin board?

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Posted By: Rob Dewolf

Barry,

Would you agree that if the employees at Ford were posting salaries on the bulletin board, it would be odd for the management at General Motors to voice its disapproval?

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Posted By: barrysloate

So what you are really saying is since Steve posted his consignment fee with REA, I should have stayed out of the discussion and minded my own business?

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Posted By: Jason L

I'm going to go with Peach tree

please let me know what I've won!

Barry, I too would like to pay nothing to sell my cards, and I would also like to not only pay nothing to buy my cards, -I don't even want to have to pay for the cards themselves anymore! having trouble finding this service and website, however.

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Posted By: barrysloate

Free cards always work.

I think at this moment I am going to bail out of this discussion. I tried to make a point, but I guess without great success. Well, can't win them all.

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Posted By: Rob Dewolf

Barry,

No, I didn't say that. I merely pointed out that I don't necessarily agree with your example.

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Posted By: Dan Bretta

I could see why this is upsetting to Barry, but this board is a board of collectors and I see nothing wrong with someone disclosing what kind of deal they got from an auction company. I don't think it's a closely guarded secret that you can negotiate these percentages.

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Posted By: Jeff Lichtman

Barry gives me -5%.

Now THAT I could see you getting upset about.

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Posted By: JK

Barry,

I have to disagree with a couple of points you made above. I think if an auction house expects the terms of its deal with a consignor to remain private, then, as noted by Adam, a confidentiality provision should be included in the contract (as it so happens, I would be glad to help you draft one ). That brings me to my second point - your analogy to employees discussing their salaries and raises with one another is not a valid comparison.

Specifically, you stated: "there are large offices that have many employees. Some are extremely talented and help the company make a lot of money. Others are so-so and just kind of hang around. When it comes time to give them raises, one is going to get a bigger raise than the other. Don't you think that is confidential information? Can't you see the trouble it will cause the company if everyone discusses their raise on the office bulletin board?"

First, most employees choose not to discuss such things because they want to keep that information private. Second, not to get overly legal in this thread, but it is actually against federal law to prohibit most non-supervisory employees from discussing their wages with one another (despite the fact that many companies have policies attempting to do just that). Specifically, such policies violate the National Labor Relations Act (NLRA) to the extent that they restrain or interfere with the employees' right to engage in "protected concerted activities". And, if anyone is wondering,the Act covers unionized and non-unionized employers alike.

Rob - if employees at Ford were posting salaries on their message board, not only would it be odd, the management would already know not to go near it with a ten foot pole. While many non-unionized employers have no idea that interfering in such activity could land them in hot water, I guarantee that Ford is well aware of its employees' right to discuss such things free from interference.

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Posted By: Rob Dewolf

Josh,

Feel free to substitute Ron's Pizza Shop for Ford and Jim's Pizza Shack for General Motors in my example and the point remains the same. Maybe the fact that the pizza unions aren't as strong as the UAW makes the premise work a bit better.

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Posted By: barrysloate

I respect that most who have responded on this thread have disagreed with me, and I realize my point is not a very good one.

However, I will say that while I don't know whether or not there is a confidentiality agreement in someone's consignment contract (mine is rather simple and nothing like that is mentioned), it seems like common sense not to put that information on a public chatboard. And I'll leave it at that.

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Posted By: JK

Rob,

I agree.

Barry,

Respectfully, I just dont understand why the consignor would not want to share that information. However, I certainly understand why the auctioneer may not want the information shared. Of course, you also have Mastro advertising 0% commissions in a banner ad, so Im not sure what the problem there is either.

Finally, someone above mentioned something along the line of consignors shouldnt expect to get a service for nothing - not sure I agree completely. In my opinion, the auctioneer needs the consignor more than the consignor needs the auctioneer in most cases. An auction is only as good as the items being auctioned off and good terms are a must to get quality material. The payoff comes at the end, when the items are sold and the auctioneer gets to add its BP. Its not much different than a buyer's side real estate agent who works for nothing and gets paid only if his/her client buys a house (and then not from the buyer, but by the seller).

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Posted By: Jim VB

<<Its not much different than a buyer's side real estate agent who works for nothing and gets paid only if his/her client buys a house (and then not from the buyer, but by the seller).>>



Ironically, it is not only different, but the polar opposite. I've pointed this out before. In all other commission sales that I can think of, the payment to the agent comes from the person collecting funds.

We live with a business model that collects a commission from the person disbursing the funds.

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Posted By: Joe D.

As a response to your post above "...Finally, someone above mentioned something along the line of consignors shouldnt expect to get a service for nothing - not sure I agree completely......"


I kind of see the 0% consignment as a salesman's way to try to get consignments when the $$$ is backloaded into a larger BP. An offer like that somewhat plays on a potential consignor not taking in the whole picture of the transaction.

Potential bidders will take into account the buyers premium and bid accordingly.

So, for example, if a consignor pays a 10% sellers premium while the bidders pay a 10% buyers premium in the same auction - - It is very possible that consignor is better off in that situation rather than a situation where the consignment is 0% and the BP is 20%.

On the surface it looks like 0% is better than the 10% SP - but when the auction is over - and one or two less bids because have come in because of a higher BP.... the consignor may actually be getting less.

So what is the answer?

I don't know.

It is a much more complex mathematical hypothetical that it would appear.
My guess is somewhere where the overall premiums are shared by seller and buyer works out best to maximize result for the consignor. But what the heck do I know?


I think a consignor should consider many many more factors beyond the sellers premium.

1) Number one would be - do I trust the auction house?

2) Number two would be - is it the right venue for my particular item (some auction houses may be better suited for certain items.)

3) Number three would be - BP and SP - do I think it is the right mix to maximize return? And am I getting a good deal considering the size and value of my consignment?



As far as the initial post... whether or not it was good or bad form....
in general I would think details of a transaction are held between the parties involved.

If both agree that the details can be made public - that is just fine.
If the initial thread poster (although a very happy one about REA) did not ask REA if it was okay to disclose this information publicly... REA may very well be upset about it - I don't work for them, so I do not know.

So, it is okay form if both parties knew of the disclosure ahead of time.
Not okay form if either party were to post this without first discussing it with the other.

just my 2 cents.


edited content - and probably will continue to do so

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Posted By: barrysloate

Josh- the consignor is free to share anything he wants, no disagreement there. Perhaps it would be better to share it privately among friends. A chatboard is just a funny place to put information like that. As far as Mastro having a banner ad advertising 0%, that was paid for and they made a business decision to post it. REA probably wasn't all that happy to see that post, as it wasn't their decision to provide it.

When Steve first posted I felt his enthusiasm- he wanted to share that he was consigning material to a major auction (and I believe for the first time). He could have discretely left it at that.

And I agree auction houses compete for consignments and it's fair to say they need the consignor more than the consignor needs them (although you can argue an auction sometimes gets spectacular results, greater than a seller even thought his material was worth). But I'm still going to stick to one thing- confidentiality is certainly appropriate in business transactions.

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Posted By: Jay

Jim--It doesn't matter how you paint in, the consignor effectively pays. The buyer is buying the lot for the hammer multiplied by 1 plus the buyer's premium. That is his "purchase price". The seller, even in a 0% consignor's premium environment, realizes just the hammer. Thus, the seller is getting the "purchase price" reduced by the hammer multiplied by the buyer's premium. The higher the buyer's premium, the less the seller realizes. Don't feel sorry for the auction houses in a 0% consignor's premium world. They are still realizing the hefty buyer's premium. Reducing consignor's premiums and raising buyer's premiums is really just a shell game.

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Posted By: Jim VB

Jay,

I'm not feeling sorry for anyone. I know exactly where the money is coming from. However the next time you buy a car will you be suprised, at the closing table, after everything has been negotiated, when the dealer tacks on a $2500 fee to cover his commission? (Substitute "home", "suit", "shoes", "major appliance", etc. for "car" if it makes you feel better.)

I'm just pointing out that our business model is backward. I'm not suggesting it will change.

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Posted By: Dan Koteles

Not to say that STeve is a youngster, but there are alot of collectors that havent been through the experience here .Maybe they are geeting a first time "feet wet" type situation and it is okay. Tame or bitter the situation, they should be able to speak for themselves while chatting.

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Posted By: Matt

Jay said: "Reducing consignor's premiums and raising buyer's premiums is really just a shell game."

Can anyone explain why these are separated into 2 separate categories for any reason other then marketing? Is there some tax difference between the two or something like that? Otherwise, I would think an auction house would just need to have 1 percentage that they take off the top and the rest goes to the consignor.

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Posted By: Jay

Actually, the math is pretty easy in a perfect world:

If the "Purchase Price" of the lot(the net amount the buyer pays) is P, the buyer's premium is BP and the consignor's comission is CP, then the the amount that the consignor realizes is calculated as follows:

P=Hammer(1+BP)

Consignor Realization=Hammer(1-CP)
=P(1-CP)/(1+BP)


Interestingly, the consignor actually does a little better as more of the burden is shifted to the buyer. If the consignor and the buyer both paid 10% then the consignor realizes .818P. If the consignor pays nothing and the buyer pays 20% then the consignor realizes .833P. If the consignor pays a negative 5% and the buyer pays 25% then the consignor realizes .84P.

Also, the auction house does worse as more of the burden is shifted to the buyer. Why? The auction house realizes the hammer times (BP+CP). In a perfect world the Purchase Price does not vary based on the fees. It is the lot's worth and buyers will adjust their bids to pay this value (or less). However, as the BP increases, even if the CP decreases by a like amount, the Hammer decreases to keep the Purchase Price unchanged. Because the Hammer is what determines the auction house premium this will result in a lower auction house take if the sum of the BP and CP is unchanged. As one might guess, this difference is exactly equal to the gain to the consignor as the BP increases.
So, what does this say. Basically that auction houses are costing themselves money by shifting the burden from consignors to buyers.

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Posted By: Josh Adams

I read through this thread, and I don't understand what is the big deal?
The original poster was talking about his consignments to an auction house, something we would all agree is relevant to this board.

So what is the problem with Steve and his original post? I would think buyers and sellers premiums are of somewhat importance to the people who read and post.

Just a question I have.

Thanks.

Go Go White Sox
2005 World Series Champions!

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Posted By: Joe D.

first let me say - you da man!
In this one sentence:
"Reducing consignor's premiums and raising buyer's premiums is really just a shell game."

you expressed what I tried to say in a whole bunch of sentences.
I love brevity - so bravo!



I do have some more considerations that I think must be added to your 'math is pretty easy' post (again, great post):

What complicates the math further than the example you show is:
1) the bidding increments
2) the allure or psychology of 'just a little more'

If a bidder is faced with a 10% increment and 20% buyers premium - they may just say fugggedaboutit at an early level. Now 10% increment and 10% premium - they may just say "I'll throw in another bid". If that person is an underbidder (and destined to be an underbidder) - the winner will pay two bids more than where it would have ended.

As far as the psychology behind the decision to bid.... I am thinking if a bidder feels less of a jump in $$$ (instead of 10% increment plus 20% BP) - he will be more apt to bid 'just a little more'.

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Posted By: Robert Lifson

Hi Guys! Just taking a one minute break from cataloging lots to post once since it seems appropriate. REA consignment rates vary from 10% standard down to zero percent, just as our advertisements, emails, and literature have always communicated, depending on exactly what the consignor has, how much its worth, and how much time and resources are involved in doing justice to the material. We try to work with consignors on an individual basis, depending on exactly what they have and what is involved with their material. No two consignments are exactly the same. There is a big difference in the economics of handling a 1952 Topps Mickey Mantle in Excellent condition compared to the investment in time, money, and sometimes even catalog space, to handling a far less valuable “shoe box” collection, or a set of cards in varying grades and requiring a great deal of professional grading. The differences in the economics of handling memorabilia can sometimes be even greater. We also try to work with active collectors, and sometimes give them a special break on a lot or two when we think it is appropriate, especially when they are into the item for an excessive amount and are not going to make out well, as a courtesy.

Back to cataloging (but first I've got to read Jay's last post again!)

Sincerely,

Robert Lifson

Robert Edward Auctions

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Posted By: steve

Just saw this thread this morning - wow!

Its to point we should all take posted comments seriously, but still sit back and laugh a little.

Perhaps I am a bit of an newbie on etiquette, will learn more as I buy/sell through the years.

Thank you Robert Lifson at REA for the post and extra insight.

steve

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Posted By: ScottIngold

As always Rob and Robert Edward's shows why they are the best out there.