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Selling at Public Auction

Auction houses bring buyers and sellers together. Beyond that simple statement lies a multimillion dollar industry. Collectors who wish to sell all or part of their collections know that they will achieve the highest price only by exposing the items being sold to the maximum number of other collectors. Where the items are exotic or of only narrow collecting interest, this exposure is even more important, and the seller must have confidence that what few collectors there are in a particular area will know that his property is for sale.

Auctioneers serve the function of advertising the prospective sale of art and collectible property, and managing the business aspects of that sale. A professional auction house acts as warehouse, appraiser, insurer, photographer, researcher, bank, salesperson, and credit manager for its consignor, in ways that I will discuss in upcoming columns. For the buyers, the auctioneer is authenticator, appraiser, and delivery service. And even these lists don't do justice to the auctioneer's pivotal role in the art and collectibles industry. The many benefits of public auction explain the near overwhelming use of that method of sale in the largest art and collectibles transactions.

Property is consigned to the auction house for sale, usually pursuant to a written consignment agreement. Although the wording of these agreements varies somewhat among auction houses, certain subjects are nearly always covered, and must be considered in working out the business terms of the consignment. Auction houses require that consignors give them the exclusive right to sell the items being consigned. This means that items cannot be withdrawn from sale by the consignor except as provided by the Consignment Agreement. Ordinarily, there is no right to withdraw at all, and consignors may reclaim their own consigned property only if the property fails to meet a reserve bid, or if the consignor buys his or her own property at the sale. This makes sense, because the auction house can't undertake the effort and expense of cataloguing and promoting the goods if the consignor has the right to withdraw them or sell them elsewhere.

The flip side, however, is that an auction consignor is locked into the auction process once he or she signs the Consignment Agreement. Keeping in mind that auctions usually take place months after the agreement is signed, a consignor choosing between selling directly to a dealer or via public auction takes a gamble that by the time of the auction market conditions will not have changed to his or her detriment. The art and collectibles market is very volatile, and today's favorable trends could reverse themselves while property awaits auction. In addition, personal circumstances can also change to the point where a quicker sale would be advantageous. If in doubt about disposing of your collection, seek advice from someone knowledgeable about the coin business.

In the Consignment Agreement, the auction house usually reserves for itself the right to withdraw items from an auction without the consignor's permission, and without compensation to the consignor. This is rarely done, because the auction house does not earn commissions on withdrawn items. However, if questions of authenticity or title are raised prior to the sale, an auction house may withdraw items rather than sell a fake or stolen item. Also, in appropriate cases items may be withdrawn in order to be sold at "private treaty." Private treaties are appropriate where it is clear who the top buyers will be, and they are becoming increasingly popular in the art world. The auction house acts as broker, without either a catalogue or a hammer, and negotiates a private purchase of the item, generally with a lower overall commission from the consignor.

Rare coin auctions are held throughout the year at many different locations. Many major sales are held in conjunction with shows or fairs, when dealers and collectors are in town. Timing can be crucial, not just because the markets in art and collectibles are so volatile, but also because it is best to sell when dealers and collectors can take notice and bid. This argues for placing your goods along with other similar items in sales featuring such items, such as selling your large cents along with a sale directed at large cent collectors. However, it occasionally happens that too many of a particular type of item in one sale may dilute bidding interest and result in lower prices.

The dominant markets for rare coin auctions in the United States are southern California and New York City. Leading firms such as Heritage also hold major auctions during fairs such as the Long Beach Coin and Collectibles Expo and the Florida United Numismatists Convention. The largest rare coin auction of the year is generally held in conjunction with the American Numismatic Association's annual convention, which is held in a different city every year. For some ancient or world coins, sales might be held outside the United States to reach the greatest number of bidders. Consignors have a limited influence on when and where their property is sold, with the decision usually being made by the auction house on the basis of the type of material and which auctions are still accepting consignments that year.

Armen R. Vartian

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