auction advances

[uyu906]

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 -

[Snapolit1]

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.

[BeanTown]

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

[mrreality68]

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

[uyu906]

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

Thanks!

Originally Posted by mrreality68

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

[mrreality68]

Originally Posted by uyu906

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.

[wondo]

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.

[Snapolit1]

Originally Posted by mrreality68

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.

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.

[molenick]

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).

[JustinD]

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.

[molenick]

Originally Posted by JustinD

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.

[Jay Wolt]

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?

[jcmtiger]

Originally Posted by uyu906

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 -

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