Steps to Buying Stamps at Auction
by Lowell S. Newman
Auctions are a major part of the philatelic market. The leading auction
houses in the United States have combined sales in the teens of millions
of dollars, and houses in Europe, Asia and Canada may equal or exceed
the volume of US sales.
The first step towards buying at auction is getting on an auction house's
mailing list, or at least getting to a catalog for an upcoming sale. Most
auction firms gladly send catalogs for at least one or two sales without
charge, and regular buyers are normally sent complementary catalogs on a
regular basis. If you want to get catalogs from a firm call or write with
your request. If the firm's offerings appear to have only a small amount
of material in your interest areas and you anticipate infrequent bidding,
you may wish to consider subscribing to the catalogs - the cost is usually
low - in order to be sure of getting them on a regular basis. Remember
that an auction house does not make money sending out catalogs to
people who never bid. They may send the catalogs, but they don't make
the money.
Once you have a catalog right there in your hot little hands you should
head right for the most important part of it. No, not the pretty pictures
or the glowing descriptions, but those itsy bitsy type at the front called
"Terms of Sale." Bidding at auction is not a game - at least not a game
without rules - and the Terms of Sale set forth in the catalog are the
rules which govern the transaction which you are about to make. Once
you have read the Terms of Sale, you will know such important things as
when payment is expected, when and how items can be sent for
certification, what does the house consider to be legitimate grounds for the
return of an item, what all of those odd abbreviations mean, and much
more.
If all bidders read, understood, and abided by the Terms of Sale printed in
the catalogs they bid from, there would be very, very few disagreements
between auction houses and their customers. Understanding the terms is
an important part in being a good customer. If there is some part of an
auction's house terms in which you either do not understand, or either you
feel it does not apply to your transactions with the firm, get an
explanation or arrange an exception to the published terms before you bid.
Earlier, we have emphasized the importance of reading and understanding
the Terms of Sale before even considering bidding in an auction. When
you send in a bid sheet, place bids through an agent, or bid person at a
sale, you are signifying your acceptance of the published Terms of Sale
and are entering into a contractual agreement based upon those terms.
You would never consider signing a contract to lease office space or a
company vehicle without first reading the fine print, and you should be
just as aware of the Terms of Sale for the auctions in which you bid.
It would be easy to assume that the Terms of Sale are a one-sided
arrangement, protecting only the interests of the auction house and their
consignors, but this is usually not the case. The Terms of Sale not only
protect the auction house and seller, but also give the buyer certain rights
regarding returns, examination by experts, and the accuracy of the firm's
descriptions. It is very important to read the terms so that you can be
sure of what your responsibilities and rights are when bidding in a
particular firm's sales.
The Terms of Sale are the ground rules for buying at auction. If you do
not read them you will not understand them. If you read them and do
not agree with any or all of a particular house's terms, you have the
option of 1) putting up with the terms as stated, 2) not bidding at all, or
3) negotiating with the house to tailor the terms to your satisfaction
before the sale.
You do not have the option of buying at a sale and then complaining
about the terms at a later date. An auction house's Terms of Sale are a
matter of public record and bidding in a sale signifies acceptance of those
terms as published, unless other arrangements are made prior to the sale.
Unwillingness to accept a particular term of sale does not imply that the
auction house is in any way dishonest or unethical; it merely indicates that
the potential buyer feels that a particular term places him in an
uncomfortable position in regards that particular transaction. If the action
house is able to alter its terms in order to facilitate the transaction
without sacrificing its obligation to the seller of the item, then a true
balance between these sometimes conflicting interests has been struck. If
no compromise can be struck, the bidder is faced with the options of
either entering into a contractual agreement with which he is not
comfortable, or not bidding on the item(s) in question.
The decision in such situations is completely in the hands of the potential
bidder and the prime influence on his decision is usually the degree of
desire for the item(s) being offered. My general advice to a person faced
with this situation would be to suggest that the person not bid on the
item. This advice would hold whether the sticking point was expertization,
payment terms or any other facet of the transaction, and whether the
house offering the item was one with which I was associated or any other.
Any good business deal should leave all parties satisfied. Just as an
auction house has the right (and responsibility) to protect both the seller's
and its own interests, a potential buyer should try to protect his/her own
interests. But neither party should go so far in the efforts to protect their
own position as to completely ignore the other party's potential needs.
Neither party needs to be a victim as long as there is flexibility and a
spirit of compromise on both parts.
After every successful venture at auction bidding comes the time to pay
the piper. While the Terms of Sale are usually quite explicit regarding the
time frame within which payment is expected, some buyers have managed
to stay blissfully ignorant of this important aspect of the terms and so
collection of funds has become another of the prime areas of conflict
between auction houses and buyers. Most firms' terms require that
payment be made within ten days of receipt of the invoice. Unless you
have made other arrangements with the firm concerning a longer grace
period or even an extended payment agreement, you should make your
payments in accordance with the published Terms of Sale.
Many firms will extend a "professional courtesy" grace period of 30 days to
dealers in good financial standing, but on should never take such a
courtesy for granted, especially when dealing with a firm for the first time.
A quick phone call to the firm can easily establish what the time
requirements are for making payment on any lots which you win. Once it
has been clearly established when payment is due, be sure to honor that
deadline. The auction business requires enough paperwork without adding
"reminding notices" to the list.
In particular, if you have been given the courtesy of a 30 day grace period,
you should see to it that your payment arrives by the 30th day. If you fail
to hold up your end of the deal, you can hardly expect the auction house
to extend you the same courtesy on future transactions. If an emergency
will prevent you from making your payment in a timely manner, contact
the auction house immediately and explain the situation - something can
usually be worked out - but don't expect much sympathy from the firm if
they have to chase after you to collect funds that are long overdue.
Also keep in mind that needing money to go on a two-week vacation to
the Bahamas is not an emergency which will excuse being late with a
payment. You may need the vacation, but you have an overriding
obligation to pay for the lots in accordance with the terms to which both
parties have agreed.
A minor point which you should consider when paying for purchases at
foreign auctions is that most auction houses require that payment be made
in their native currency and in a manner which does not result in high
banking charges for foreign collection. If you are not able to accommodate
the house with a check or draft payable on a domestic bank, be courteous
and included sufficient additional funds to cover the collection fees on the
check sent. The same applies to the sending of currency which may be
difficult for the house to have exchanged.
Another aspect of paying for auction lots which can lead to ruffled
feathers on both sides is the matter of state sales tax. Auction houses do
not like collection (or paying) taxes any more than you do, but they are
required to collect taxes in accordance with their state laws.
Now that you have digested the Terms of Sale you are ready to begin
searching for those items in which you hope to buy. The important thing
to remember is that you will be most successful at buying and selling items
from areas where your knowledge is greatest. If you do not know the area
well enough to be an informed buyer, steer clear. Remember it is not
auction's house fault that you bid on and win material which you are
unable to sell later.
Once you have determined which lots you want to bid on, it is time to
carefully formulate your bids. Keep in mind most houses charge a split
commission - a buyers premium can be added to the "hammer price" for
each lot. The premium is part of the sales price and should be considered
when calculating your bids. Similarly, if you plan on using an auction
agent to handle your bids, be sure to factor your agents commission into
your bidding calculation.
If you anticipate needing to get a certificate on a certain item, remember
to add the cost of the certificate in your anticipated total cost when
figuring at what level you can bid for a profitable purchase. If the item
already has a certificate, remember to figure in the value which the
certificate represents when calculating your bid. While we would all like
to buy material at bargain basement prices, we should be prepared to pay
a reasonable price which allows us to profit on resale. There are bargains
to be had at auctions, but bidding 10% of what you think is its real value,
is not likely to win you many lots, or many friends, in the auction
business.
Having decided what you are going to bid on each lot on your list, you are
now ready for one of the most important steps in the bidding process -
filling out the bid sheet. No, I am not kidding. If there is any part of
the entire auction buying process which causes nearly as many problems as
ignorance of the Terms of Sale, it is sloppily prepared bid sheets. Be sure
that the bid sheet which you send off (either to the auction house or to an
agent) is legible. Check to make sure that you have bid on the right lot
numbers, and at the right prices. Be courteous and bid at the proper
increments. Remember that a bid sheet constitutes your offer to buy the
items which you have listed, at the prices which you have listed, and in
accordance with the firm's Terms of Sale. Saying "I made a mistake on
the bid sheet," is not grounds for return.
It is advisable to keep a copy of the bids which you submit in case there
is any question about the bids at a later point. Auction houses and agents
always appreciate receiving bids, but the processing of bids does take some
time. Be courteous and get your bids there more than 5 minutes before
the first lot on your list if to be sold.
If you are phoning in bids, do not wait till the last minute (phoned in bids
are even more work on the receiving end) and be prepared to send in a
written confirmation of your bids - this will protect both you and the
auctioneer in the event that any questions arise concerning the transaction.
Many auction firms now have FAX machines and accept bids by fax, but
be sure that your faxed bids are very clear - the reproduction of many fax
machines is of low quality and the information can be easily
misinterpreted.
Bidding in person at an auction may have both advantages and
disadvantages for the participating bidder. On the definite plus side is the
more compete control which floor bidding offers in terms of choosing
which lots to bid on, what level to bid at, and the overall amount of
spending in a given sale. Being at the sale also will often allow you to
view the lots which you may be interested in prior to bidding on them, but
this is not always a clear advantage, as some houses greatly restrict the
right to return any lots which have been viewed at the sale, and other
houses make no provision at all for viewing of lots on sale days. On the
minus side is the expense involved in attending a sale (both in terms of
travel costs and the time, which may be very much needed for other
activities) and the potential for catching "auction fever" and ending up
paying too much for the items which you acquire.
Just as with bidding by mail or through an agent, there are certain
procedures which should be followed in order for the floor bidding
experience to be a successful one. You should always read the Terms of
Sale carefully before attending and bidding at any action. Even if you
have bid with the firm before, be sure to at least scan the terms to see
that there are no changes which would adversely influence your dealing
with the auction house.
If there are changes in the Terms of Sale and you buy material in the sale
you are obligated to honor your part of the transaction in accordance with
the new terms, not the ones which you were used to operating under. The
best rule in this and any other transaction is to know the rules before you
start to play the game.
After reviewing the Terms of Sale you should also familiarize yourself with
both the Bidding increments and the various abbreviations and descriptive
guidelines used in the firm's catalogs. When marking your bids in the
catalog (or on the bid sheet if you bid directly from the sheet) be sure to
keep your bids in line with the firm's published increments.
During the floor bidding is simply not the time for you to decide if you
want to go to the proper bidding increment. Expecting the auctioneer and
the rest of the bidders to wait while you reevaluate your bids is
inconsiderate. The same goes for asking for time to take a second look at
the photo of the stamp being sold, or even having the nerve to ask to
look at the stamp itself while the bidding is going on (yes, it has been
done!)
If you have "followed the rules" doing your review of lots and establishing
the maximum price which you are willing to pay for each item of interest,
the process of bidding on the floor actually becomes quit simple. When
the lot of number which interest you is called just raise your hand and
keep it well in sight for the auctioneer for each bidding increment until
the lot number is knocked down to you or passes the level to which you
have decided to go. You may wish to raise or lower your hand for each
increment, but the important thing to remember is that the auctioneer
(not the person handling the mail bids, not the person next to you, not
your inner self, but the auctioneer) can clearly see that you are bidding.
The more crowded the room, the more important it is for the auctioneer
to be able to differentiate between bidders and non bidders. Do not try
to be cute and bid with ear wiggles, eyebrow twitches, winks, or blinks
unless you are willing to accept the risk of the auctioneer missing your
bids and selling the lot to a more obviously bidding person. While the
bidding is going on, pay attention to what you are doing. A lot can be
knocked down to someone else before you can bid, if you are paying more
attention to today's crossword puzzle than the progress of the auction.
During sessions of the sale that have no lots of interest to you, be
courteous and refrain from talking, rattling papers, snoring, humming and
whistling or any other noisy pastimes which will disrupt the sale.
At some sales it is possible to have a lot which had been previously sold
&"to the book" reopened to the floor for bidding. This allows someone to
who passed over another item to go back and bid on their "second choice"
if they were not able to buy the lot listed later. Remember the lots which
are sold to bidders on the floor cannot be reopened in this matter.
Many firms also make provisions for specific groups of lots to be
purchased as a combined lot. In such cases the lots are generally first sold
on a provisional basis, with the bidding starting at one increment over the
totaled prices of the individual lots. Such combination sales must be
requested in advance, and it is best to speak to the auctioneer about them
at the beginning of the session, rather than just before the first lot of the
proposed combination is offered. Mail bidders may also request a
combination of lots, and it is not unusual for combined mail bid to take
lots after the individual lots were provisionally sold to floor bidders.
As a general rule, auction houses give the first bid received at a certain
increment precedence over later bids at the same level. Thus, a floor
bidder who ties with the high mail bidder will usually be asked to "break
the tie" by going up one more increment or the lot is considered sold to
the mail bidder. This situation is evident only when the bidding
progresses in such a manner that the last bid from the book happens to be
one increment below the top book bid, leaving the floor bidder with an
identical bid which was received prior to the sale. Thus, such tie-breaking
requests are merely an extension of the "earliest bid received wins" rule.
If all of the floor bidders and the auction house staff come to the sale well
prepared it will proceed very smoothly. Unfortunately, it is a rare occasion
for any large group of people to come ready for business and with their
attention well focused on the job ahead. At almost any auction some of
the bidders are going to make mistakes, feel slighted, get their feathers
ruffled or their egos bruised (if only from being on the losing end of
bidding wars). Try to keep in mind that all of the participants are human
(well, maybe not all of them) and that humans will make mistakes. Keep
your reactions to others failing in proportion to the offender's offense
(this just isn't a life and death situation) and we will all somehow survive
until the gavel falls on the last lot.
Lowell S. Newman is President of Lowell S. Newman Auctioneers, Inc.
