REA Policies Re: Alterations etc

[Archive]

Posted By: Robert Lifson

Happy Thanksgiving to all! I have been away for several days without access to the Internet. I know that sounds very difficult, but until my parents, who practically live in the Stone Age, get up to speed with computers (which is not likely to happen anytime soon), that’s just how it is during holidays. Therefore was not able to keep up with the board.

I cannot articulate the formal policies of any auction company other than Robert Edward Auctions. It is our policy, both for what we consider to be good form as well as for very sound legal reasons, to not publicly comment on the specific practices of any specific company other than Robert Edward Auctions, or even to comment on specific items for sale, auction, or items sold in the past by other companies. We have made it a longstanding practice to cite what we think are issues in the industry that we think deserve attention, and we have given much time, energy, and thought to REA’s policies regarding addressing these issues. I will review in this post REA’s policies regarding 1) the altering of cards, 2) the resubmission of graded cards, and 3) the disclosure of lots owned by any employee of REA (or family member of any employee).

REA’s position regarding the altering of cards is very clear: We don’t do anything to cards. Period. We don’t think it is right for dealers or auction houses to alter cards (or any items) without full disclosure.

For ease on my part I will cut and paste a few sentences from previous mass emails:

“We don't "do anything" to the cards. Robert Edward Auctions does not file the edges or corners of cards, "squash" cards, press cards, bleach cards, re-back cards, restore cards, clean cards, trim cards, remove creases, or in any other way doctor or alter any card or item. EVER.”

“We can't promise anyone that every card in every case will receive exactly the same grade we give it, or that there is never an encapsulated card with a problem; no one can do this. But at Robert Edward Auctions, if there is a problem with a card, at least you know that the auction house is not responsible. Ever.”

“Over the years, the most serious and active collectors and dealers in the field have caught onto this fact, especially as awareness of this issue has increased in recent years, and we are frequently told by buyers that this is very significant to them. Many even take special note when our catalog descriptions sometimes use the words that "we have submitted" a given number of key cards in a set for grading (as opposed to someone else having sent them in for grading). This is very meaningful to these bidders precisely because they know that we have not "done anything" to the cards that are graded, as well as the balance of the set.”

End of quotes.


In addition, collectors and dealers are sometimes surprised to learn that the number of times Robert Edward Auctions has broken cards out of holders, resubmitted cards for grading, and gotten higher grades is EXACTLY ZERO. That’s right. Never. REA has NEVER broken a card out of a holder for resubmission and NEVER gotten a “bump” on a grade. REA has a policy that we do not brake professionally graded cards out of holders and resubmit them in the hopes of getting higher grades. We live with the grades that we get. For better or worse. Period. (There have been several times when we have requested a review of a graded card in its holder. In each case there was no change to the grade. There have also been times where we personally grade a card differently than a grading company. We don’t have a problem with this, and this will sometimes significantly impact the final selling price of a card.) There is more to this than meets the eye and for REA this is, frankly, a double-edged sword. In short, we sometimes lose consignments specifically because are not willing to do anything to cards and because consignors are led to believe that they can get better grades elsewhere. We always ask them “How can this be? If another company can get better grades by altering the cards, this is wrong. If another company can get better grades because of influence, this would be wrong also. If another company is claiming that they can get better grades due to one or both of these factors, and they in fact cannot, then it is also wrong to make such claims.” We are very upfront that we don’t do anything to cards. We are very upfront that we don’t resubmit cards for grading. It’s not because we’re lazy. It’s because this is how we think it should be. This sometimes costs us consignments. We don’t think these would-be consignors are doing themselves any favors, by the way, and we are very confident that in virtually all cases, in part because of our policies, cards at REA are actually more likely to bring more money, especially as buyers have become more aware of the relevant issues. Similarly, we have had collectors tell us that the reason they don’t want to consign a given item to us is that we won’t let them bid on it or provide them with secret reserve protection. There’s nothing we can do in these situations. That’s just not how we do business and those are consignments that, frankly, we don’t want. We know that collectors appreciate our approach. It’s simple. It’s straightforward. There’s no gray area. Additional notes regarding the resubmission of cards: The resubmission of cards issue, whenever it does occur, is, of course, almost exclusively related to when the owner of the card(s) desires to do so. If a collector wants to resubmit his or her cards, that is certainly his or her right. It’s just not what REA as an auction house, in our opinion, is supposed to do. Cards resubmitted numerous times in the hopes of a lucky higher grade will, of course, tend to be overgraded on average compared to cards submitted once. That’s just common sense. When any auction company gets a PSA 7 1933 Goudey Babe Ruth on consignment, they don’t have the right or the financial motivation to break it out and see if its possible to get it into an 8 holder. There is risk. What if the card doesn’t grade at all the next time? When they own it, however, the entire risk-reward evaluation process is dramatically changed. REA doesn’t buy or own any cards so this is literally a non-issue for us. We strictly auction cards on consignment. We also do whatever we can to identify and address potential conflicts of interest. Related to this, and directly related to questions about auctioneers identifying owned lots, is the following text from an REA email that was sent in August 2006 in which REA amended our Terms and Conditions regarding material owned by employees. The relevant text of the email reads as follows:

“Effective immediately, we are amending Section 13 of our Terms and Conditions to provide a formal identification in the lot description of any and all lots consigned from the personal collections of any executive or employee of Robert Edward Auctions (or any relative of any executive or employee). Because REA does not buy material for auction, in many ways this policy amendment is a non-event. In the April 2006 auction, for example, a total of sixteen lots out of 1,411 would have been identified as property consigned from the personal collections of executives, employees, or their relatives (and we should add that every single one of these lots was purchased many years ago). So why are we even bothering doing this? Because Robert Edward Auctions believes that the many conflicts of interest that are so common and so accepted in the sports card and memorabilia auction world play a great role in promoting many of the most serious problems that are epidemic in the auction industry. Robert Edward Auctions strives to stand out as an example to the auction world, demonstrating how auctions ideally should be run. So while this policy amendment has no impact on REA, it is intended to be a call to action for all auction houses, and a wake up call to all collectors who participate in auctions. Bidders should never intentionally be misled about who owns the lots they are bidding on. Some auctions have claimed they are not dealers, when in fact that is exactly what they are. Some auctions present collections of very well known collectors or ballplayers, and intentionally give the impression that these collections have been consigned, rather than the truth: that the collection has been purchased and is actually owned and is being sold by the auction house. If bidders are being intentionally misled about something as basic as who is really offering a collection, and a false impression is given that material has been consigned when this is not true, it is misleading both to bidders and to potential consignors, and it raises the question, “What else is not as it seems?”

We believe that collectors approach auctions very differently when they understand that material presented is often owned by the auction company, as opposed to being consigned as represented, and are much less enthusiastic about bidding on all lots (including those lots which are actually consigned) in any auction in which they feel they have been intentionally misled. When collectors finally learn the truth about this issue, let alone when they come to understand that at many auctions the auction company consigns hundreds of lots, and its employees also consign hundreds of additional lots, and both the auction house and the employees bid in their own auctions, they become less enthusiastic bidders in those auctions. This should be very important to all bidders and consignors. We are seeing a greater awareness of these issues that affect all lots in auctions which combine secretly owned auction-house lots and consignments. As collectors grow more sophisticated, they are gaining a greater understanding of the conflicts and misinformation that are regularly presented to them. It's time that all lots owned by auction houses, auction house executives, auction house employees, and their relatives be identified, as opposed to being camouflaged among consignments in a manner that could be interpreted as a deliberate charade of deception.”

End of quote.

This is going to be our only post regarding these issues in response to recent threads. We cannot speak for any company other than REA. We think our policies are very clear. They are always evolving. We are pleased to see serious attention to topics that we consider to be among the most important and overlooked in the field. REA cannot solve these issues, but by calling attention to them by formally adopting and communicating our policies, we have always felt that we were playing an important role in encouraging and heightening awareness. It is our hope that these discussions will result in greater awareness and play a role in promoting significant change where it is needed.

Sincerely,

Robert Lifson
President
Robert Edward Auctions LLC
www.RobertEdwardAuctions.com