If You Started An Auction House Today...
 

Other than rates (because every rate discussion here always shows that people think auction houses can run on a different gross margin than literally every other business in the world) with an eye especially to the challenges the hobby is facing today. What would you do if you were starting an auction company?

Remember you're starting from scratch, you're not REA and you have to build a consignor AND buyer base.

What policies would you have for altered cards? Would you sell them and merely note the problem? Would you refuse to sell them?

What would you do when you accidentally sell an altered card? Eat it and pay out of pocket? Make the consignor pay (somehow) refer it back to the TPG?

What other major issues do you see that need addressing?

While I have only had first-hand experiences with Memory Lane & Heritage in the last decade, I have to admit I'd be a somewhat of a novice but here are some responses

Building A Base: Likely have to eat some costs here. Fees & BP would have to come down for the first auction cycle. Make the interface for on-line bidding as simple and user-friendly as possible. Believe it or not, the registration, rules, format are the reason's I have steered away from the bigger auctions. I was using eBay quite a bit when I left the hobby. When I started collecting again, I was astonished how it had changed. Lots of folks north of 50 are looking for EASY ways to participate.

Altered Cards: No problem with them at all. I would offer them and simply state the alterations and to bid accordingly.

Accidentally sell an altered card: I'm guessing this means you sell a '55 Clemente, for example, and later it is discovered that it was holdered by third party authentication service, despite having been trimmed or re-colored, etc.
Eating the cost would be impossible. I would state up-front that any card that is found to be altered must be addressed with the TPG. "Blah Blah Blah Auctions" will assist up to $1000.00 and refund any buyer premiums in the event that a TPG card is proven to be altered and not stated in the auction.

Frankly, the best way to start an auction house today, I believe, would be to only offer RAW cards. Have some of the known experts here or otherwise certify the cards as authentic. I am easily qualified to spot a doctored card--like scary good--when I can actually handle it. There are others even superior to me right here on these message boards. I would trust a guy who has collected a certain type of stock that was delivered in a consistent method for 30-40 years that has seen and handled the size, cuts, surfaces, paper, substrates etc. If I had a T206, for example, that I wasn't sure of, the first place I would look for authenticity would be here--NOT PSA. That's a fact.

Answers in Bold. I would imagine like in most businesses staying away from the EASY money and staying 100% honest would be the hardest part, especially in extended slow times.

An auction house should do serious and honest diligence on alteration detection, consideration and information dissemination. However, the graded cards are in plastic, and the grading companies should be ultimately responsible, including financially if there are issues. That's their stated policy.

Selling raw cards is an interesting possibility. I would imagine places like REA and Mile High would be good at examing raw cards, and I would trust REA's and some other folks' opinions over grading companies. Just as seasoned autograph collectors prefer who is the seller over what LOA an autograph comes from.

Would be kind of interesting if a future auction house sold raw cards with not only big clear photos, but UV and IR photos of the cards.

I would support (and consign to) an auction house that featured only raw cards. As long as they could properly and accurately describe the cards in question.

And they must be able to disclose any flaws such as surface wrinkles, instead of a randomly assigned “4” or something that really tells you nothing about the card itself. I’d much prefer detailed descriptions to an arbitrarily assigned number that the corrupt entities love to hide behind.

I think high quality images would help with selling raw. I assume you can see all the flaws, including wrinkles in high grade images.

Wrinkles and creases quite often do not show up, even under magnification. So high quality images, accompanied by decent descriptions would be ideal.

I agree that a raw-only AH with detailed descriptions and hi-res scans would be great.

But collectors have grown accustomed to only high end in slabs. In order to get high dollar cards an AH has to sell slabs unfortunately.
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I do sell a lot of raw, but I just don't think I'd survive if I went raw only. Look at it this way. I'd be excluding the opportunity to auction what 90% of all cards over $1,000?

I am listening to the thoughts shared here though!

Exactly. Without graded cards you would almost always be in the lower dollar categories. Unfortunately grading is a must and the current grading companies have been shown to be anything but consistent or trustworthy. Transparency, communication, service and trustworthiness are always important.