I go with #2.... unless the consigner is a repeat customer, a well established hobbyist or if the item is a very high dollar amount item, then in that case I think it would be in the best interest of the auction house to absorb the costs. Anyone who consigns cards, should be told by the auction house that the item would bring significantly more money graded, and that it would cost "X".. I don't think a consigner would complain if being told about the cost upfront.
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