Is this questionable behavior by an auctioneer?

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Posted By: warshawlaw

I want to preface this by stating that I am not trying to slam anyone here; I am trying to raise a concern about something I have seen that should be of interest to all of us who buy or sell cards through auctions. I really want to know how the other members feel about what I am describing below and whether we should as a group seek to arrive at a consensus and perhaps seek to exert some influence with respect to this issue.

In December Lelands auctioned off a very rare T229 Kopec Harley Davidson card (lot 426; SGC cert #1225762-011). I follow these cards closely so I followed the auction. The Lelands web site currently states that the card realized $517 (including vig). Today, the exact same card showed up on Ebay (Item number: 6246645118, same SGC cert number) with a $99 minimum bid. My observations are two-fold:

(1) The seller on Ebay is JSP CARDS & COLLECTIBLES. The listing itself gives a personal email belonging to Lelands staffer Jonathan Perry. He is referenced in the catalog for Lelands December auction as "bringing valuable hands on expertise to the New York office" and was staffing the Lelands booth at shows I've been to.

(2) The auction description of the card and the ebay listing describing the card are identical.

To me, this raises the question of whether the Lelands auction for the card really yielded a $517 sale. Did he actually win this card for $517 and is now ebaying it for $99? Or did the card not sell at Lelands and is being sold on Ebay? If the latter, how many of the Lelands results are not reflective of auction sales? Does the auctioneer-affiliated buyer receive a better deal on the sale than the general public? Was the language plagiarized or did Lelands grant permission to cut and paste it? Has Lelands got any interest in the outcome of this Ebay sale, or is the seller just taking the risk?

Here is my main concern: I consigned a card to that auction that sold for the minimum. I now have to wonder whether it sold at all or whether it was sold to a Lelands-connected person for my net proceeds. Is this something that auctioneers do? Is this a form of self-dealing something that we as a group should pressure auctioneers to disclose or not do?

I personally think Lelands has some explaining to do because this situation does not fill me with confidence either as a bidder or a consignor. I also think we should pressure auctioneers to adopt a policy barring self-dealing by employees. Robert Edwards Auctions already has that policy and I have to consider that as a consignor in the future.

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Posted By: davidcycleback

A possibility is that the person consigned his own card to Leland's and it didn't make the reserve, so he's selling it on his own. Many major auction houses, not just Lelands, have their own stuff in their auctions. Some take issue with this practice, but it's never bothered me. If the stuff is authentic and well described, I doesn't bother me that it is owned by the auction house. I'm not sure why it should.

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Posted By: warshawlaw

If the auction house owns it, shouldn't the result be reported as a non-sale rather than as a price realized?

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Posted By: davidcycleback

Adam, I don't know how it works/worked. Though, Sotheby's does list which lots did not meet reserve, including in their last sports acution. Sotheby's and Christies' got into big trouble not so long ago over consigment fees, so one can assume that Sotheby's is walking the straight and narrow in their disclosure and prices realized practices.

While in my opinion there's nothing wrong with reserves and auction houses consigning their own items, I agree that including unsold lots in the final sales realized results could be an issue.

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Posted By: Jonathan Perry

Adam,

Certain items were purchased by a dealer/collector acquaintance of mine. During the auction we spoke on the phone and he asked me if he won certain lots in the auction would I be willing to put them on e-bay for him so he can try and flip the lots to make a quick profit. I agreed and we established terms. Considering I work for Lelands.com as an independent consultant and wrote the description for the Kopec card I do not think I was infringing on any copywriting laws. If you have any further questions feel free to e-mail me directly at jperry@nyc.rr.com or jonathanperry@lelands.com.
-best
Jon

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Posted By: Frank Evanov

Something is not right here. Certainly if I owned Lelands, I would not be happy to have one of my employees re-selling lots for my winning bidders.

Frank

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Posted By: WP

JP,
So are you saying you saying a bidder in your Lelands auction asked you if an item would sell for more on ebay and you told him it would? What does that say for Lelands?? This is very strange.

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Posted By: Judge Dred (Fred)

I'm not trying to defend anyone here but here's something to think about.

I watch a lot of 19th century stuff in auctions (auction houses and ebay). Recently I've saw a few really odd transactions. Here's one:

A card won from a reputable auction house that was purchased for over $2K (with juice) was put up for sale on ebay. I watched that same card sell on ebay for about $1,400 less (that's right, $1,400 less) than what it sold for in the auction house only a month before.

It's all timing and sometimes you'll just be eaten alive and lose your shorts if the timing is bad. Who knows, maybe this card might not even sell for what it did in Lelands.

Yes, I also understand that one of the questions here has to do with an agent or employee of the auction house doing the business part of the auction on ebay. Although it seems strange this person stands a chance of not breaking even from the auction house realized price. If he does break even or do better then great but if he doesn't then there's one person that might not enlist that persons assistance for future auction advice.

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Posted By: leon

I know of people that buy lot's of stuff from auction houses. They immediately turn around and sell it via ebay or any of the other myriad of ways to sell. Sometimes they make money sometimes they don't. I don't discredit any consignee for not getting the price hoped for, as long as they did a good job (on whichever venue they are on) of promoting it. On ebay, as long as it ended in the evening, ran at least 7 days, and had big scans, what more can you ask for? Can't win everytime....though it would be nice..(I don't know all fo the facts in this case but am just making a point)..regards all

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Posted By: Daniel Bretta

Scott Gaynor buys a lot of stuff from Leland's and loses money all the time when he flips it. I think this has been discussed here before.

Leland's
http://www.lelands.com/bid.aspx?lot=678&auctionid=512>

Ebay
http://tinyurl.com/8tu26

He even uses the same exact photo sometimes. This time he lost $230 on this one item.

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Posted By: andy becker

this is too funny. does anyone really think that some "unknown" party bought cards from lelands and contracted a leland employee to sell them on ebay....

is "independent consultant" some fancy word for ebay-flipper???

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Posted By: Chad

If I bought something from Leland's and wanted to flip it, I'd consider contacting him. Since he works with leland's he'd have easy access to the lots I'd won so there'd be no shipping cards around the country and his ebay auctions are well run. This is just to say I think Jon is on the up and up here. Honestly, I have to think more about whether I think there are conflicts of interest here and how I'd feel if one of my consigned lots sold for the minimum bid and then popped up on ebay in the fashion described above. It's a gray area, I think.

--Chad

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Posted By: Jay Miller

Let me get this straight. Someone buys a lot in Lelands for X and then pays a 17.5% buyers premium on top of that so he is into the lot at at least 1.175X (at least because there may be shipping charges/tax/etc). He then decides to sell it on ebay where lets say his total cost of selling is 5%. That means that he must realize almost 25% more than the Lelands winning bid just to break even. My sense is that this is not a great long term business model. Adam, you raise some good questions which I'm not sure have been fully answered.

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Posted By: Nathan

I'm not too comfortable with Leland's explanation either...

If I was an auction house, I'd be sure to remove as much gray area as I could.

Kudos to those who already have done so.

Nathan

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Posted By: joe

This does sound strange as Jonathan Perry is the same person i have talked to on the phone and emails about consigning items from my collection to Lelands.

Joe

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Posted By: Rob

The result is usually that the flipper loses money and I've made money. Fact is that's it's tough to flip anything in vintage through buying from an auction house or Ebay with the expectation of quickly selling that item for a profit. My favorite example is where someone bought an 1888 Hall Imperial Cincinnati team cabinet on Ebay, then tried to sell it in a Lipset auction, where the realized price was $1000 less. Of course, the consignor could had bought that card back, eating Lipset's consignment fees, which would had been about $1000 as well.

The problem with the Leland sale is that the Kopec card was probably shilled in the Leland auction by the consignor. Of course, Leland can easily deny this takes place. Frankly, I believe the "great" prices realized by many of the auction houses is often the result of consignors bidding on their own items, effectively giving a "hidden" reserve. You can bet that Consignors buy back their high value items on a fairly regular basis in the large Auction House sales.

As Leon noted, you can bid or not on the Kopec card, but it will probably be shilled by the consignor. In each case, Leland's is collecting the fees.

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Posted By: cmoking

If there is any doubt there is a conflict of interest, that means it's probable that there are many who would consider it a conflict of interest. Just because the person in question (the employee/consultant of Lelands) doesn't think its a conflict of interest does not mean that others don't think so.

If I was the head of Lelands, I would confront this person and tell them it could hurt the business...so stop doing it.

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Posted By: Judge Dred (Fred)

Do the main auction houses allow people (that have consigned material to them) to bid on their own items? I would think that this is a poor practice but then again all the person has to do is enlist someone else to do the bidding and nobody would know unless of course the item went back to auction and the auction house saw that the original consignor was again trying to sell/pedal the item in question. I couldn't imagine that a large auction house would track this type of activity.

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Posted By: leon

I will state again that I have no idea about that particular Lelands auction. It is common practice to allow consignors to bid on their own items in auctions, in general. If they didn't allow it then other people would do it for them. What's the difference except a public perception that it's not happening when in reality it is. (and yes that perception could be good enough to say you can't bid on your own item). No need to be an ostrich with your head in the sand though. I am not making a statement about it being right or wrong I am just saying it is done and I understand why. Bottom line is always bid what you are comfortable with on an item and you won't get the short end of the buy. regards all

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Posted By: Rob

It hasn't been pointed out the Auction Houses are often giving advances for valuable items. Now, suppose the consignor wants a quick loan, but really wants to keep his valuable collectible. The consignor gets his advance and the Auction House gets it's item to sell. The Auction House will set a low enough reserve to encourage bidding, yet the consignor wants far more than the opening bid. He is definitely going to bid his item up to a level where he either keeps the item to at least a point where the "advance" is less than or equal to what a Pawn shop may offer as a loan, (good luck trying to find a Pawn Shop loaning money for baseball cards) or bid it up to a level where he would had been happy to had sold it on his own.

There is absolutely no reason for an Auction House to discourage this activity, as it brings them both rare items as well as higher commissions. There's at least one reason for Auction Houses to encourage this activity: high reported prices bring out more rare material to be auctioned, which is the reason for those big full page color ads from auction houses with their "realized"prices, which may or may not be real.

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Posted By: Daniel Bretta

I agree with you Leon, but I think in an auction setting there is the perception that you are going to get a "deal" on something. If consigners are allowed to bid on their own items then that may make some people shy away from the auction house. There really is no real way for the auction houses to police this though as like you said they'll just have someone else bid on their item for them.

I went to an old Tin Toy auction this past summer where the owner of the toys was there and was even introduced by the auctioneers. He sat next to a guy who obviously had no knowledge of old toys and was telling him how much to bid. Needless to say there were no deals to be had that day. The auction house can't be held liable for this type of activity if they don't even know it's happening.

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Posted By: Bottom of the Ninth

Card ended at $99.99. Slightly less than the $400 bid plus the juice in Leland's auction.

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Posted By: Judge Dred (Fred)

Win some, lose some.

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Posted By: Josh

when we enter an consignment contract with a consignor, it is clearly written AND verbally agreed upon, prior to us accepting the lot or lots into our auction, that the consignor may not bid on their own items....HOWEVER...

as stated in a few posts above, it is impossible for us to police this. If a consignor gives us a nice piece and signs our contract that he won't bid on his own items, there is nothing we can do if he decides to ask his next door neighbor or friend around the corner or brother on the other side of the country to bid up to a particular dollar amount on a particular item.

As the auction house, if the consignor has someone win back their item, they are responsible for the consignment fee, plus our 15% buyers' premium. This means they will pay anywhere from 20-30% of the sale price to get their item back. Obviously, we hope this never happens, but we cannot control it in a situation like that.

Just my $0.02

Josh

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Posted By: Mark

As an aside, I note that Adam's price guide and Leland's description are at odds with one another on whether or not the athlete depicted opn this T229 was "the" harley davidson.

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Posted By: Wesley

Mark, The description in the Leland catalog is correct. The athlete on the T229 card was a roller skater and has nothing to do with Harley-Davidson Motorcycles, which is a combination of Bill Harley and Arthur Davidson's names.

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Posted By: warshawlaw

Has been corrected in subsequent versions.