Featured Estate Auction Economics

Overhead a conversation between an auctioneer and a few antique dealers that I thought was interesting. The auctioneer said that he had to be selective in his consignments because the fixed costs for holding a moderately sized estate or consignment auction was $6,000 before the first item gets sold.

Costs include staff for day of sale and to move and prep the items beforehand including 2 auctioneers, 4 ringmen, 1 clerk, and a person in the checkout booth. The rental of the facility is also a sizeable cost despite there being a plethora of old abandoned retail storefronts in the area. Advertising is also costly, the auctioneer says he still takes out small classified ads in the local paper, pays for an auctionzip listing, and sends out fliers to some regulars. He doesn't accept credit cards since that would add to fixed costs and decrease margins, anyways the auction crowd in the area is usually well stocked with cash and checks. Lastly there is disposal fees on the stuff that doesn't sell and the consignor won't take back.

He said that he often has to take the whole estate, including the good and the bad and that there can be substantial cleanout, dumpster costs that are sometimes passed on to the consignor, sometimes eaten by the auctioneer. He pointed to one of the wagon loads packed with old books, household goods, low end antiques and said that he doesn't care what the contents sell for as long as the new buyers "take it" since it was the "junk" he had to take to get a shot at selling the better items at a later sale.

Your Thoughts?

 

Interesting, and helps put things in perspective. Auctioneers charge between 18% and 32% on hammer price which is quite a bit. That's what buyer pays (my exoerience.)
Do they all charge the seller too? CATAWIKI splits their charges between seller and buyer. Not sure about others, but would definitely be interesting to know. Anyone has more feedback?

 

The auctioneer referenced in the opening post doesn't charge a buyer's premium so their compensation is coming entirely from the consignor's take. I've heard of run of the mill estate auctioneers charging 20% of hammer plus some pre-negotiated fees to help limit potential downside for the auction company if stuff doesn't sell well but there is also another auctioneer I know (yes he is a jerk) that charges 40+% of hammer, a buyer's premium, and then manages to bill the consignor for the majority of his expenses/clean out costs out of the auction proceeds.

Higher end auction houses with catalogs and additional services such as authentication and lavish settings often charge much higher commissions while some like Heritage on high dollar items like rare coins may not charge the consignor anything at all and make their money on the 20+% buyer's premium.

 

RE: $6000 -- I don't think it has to be that expensive, considering modern technology like the Internet and social media. I think that is probably old school prices but innovation always happens in business and all it takes is a willing person with commercial real estate and some dealers who are willing to staff the auction.

 

The auctioneers in our area definitely need to leverage social media more to their advantage. A few have Facebook pages but that is about it --- with a few exceptions. One savvy auctioneer does a live Facebook walk through on the day before his sales and tries to generate interest in his sales through social media by posting pictures and answering questions. Another better auctioneer has a live auctions with floor bidders while having internet bidding for catalogued lots and occasionally does YouTube videos for exceptional items.