From the Auction Block…

Here are a few general rules and regulations you can expect to find at a brick and mortar auction house. Every auction house is different and imposes different rules on their buyers and sellers. Most of the ones listed here are basic and are probably in play at the majority of houses although there may be some variations. When attending a live auction, you will probably see several postings on the walls covering the rules of that particular house. You should take a few minutes to read them to prevent any misunderstandings and to ensure that your experience will be fun and entertaining.

1. Acceptance of a bid card indicates a buyer’s knowledge of the house rules.

2. All sales are final. All merchandise is as is, where is.

3. Buyer is responsible for previewing each item before bidding on it. Once you are the winning bidder you own the item and the house is no longer responsible.

4. Items may not be removed until they are paid for. You may pay as many times as you want during the course of the auction.

5. We try to call any damage but failure to do so does not absolve the buyer from paying for an item. It is your responsibility to check for damage on any items you are interested in.

6. Merchandise must be paid for the day of the sale. Merchandise purchased via a telephone bid or a left bid must be paid for within 48 hours either in person or with a credit card over the phone.

7. Buying an item at an auction is considered a binding contract. Failure to pay for an item purchased at auction will result in legal action as allowed by state law.

8. Telephone bids have a mandatory opening value.

9. All merchandise must be removed from the building by a certain time. Merchandise not picked up by this deadline will become the property of the auction house and will be resold.

10. Buying and selling of merchandise between customers anywhere on the premises is strictly prohibited.

11. Consignors/Sellers are forbidden from bidding on their own merchandise.

12. A copy of your State Tax ID Certificate must be on file in the office or you will be charged sales tax. No exceptions. Sales tax will not be refunded once it has been collected.

13. A buyer’s premium is in effect on all items purchased.

14. Buyers will be charged a fee for any returned check. Failure to satisfy a returned check will result in prosecution.

15. You must have a current driver’s license to register for a bid card. We require name, current address, telephone number, driver’s license number and date of birth.

16. The auctioneer settles all bidding disputes. The auctioneer’s word is final.

17. Bid rigging is against the law.

18. We make no warranty, express or implied, as to the authenticity, period, value or condition of any item sold.

19. Announcements from the block take precedence over any advertising or written material.

20. Statements made about merchandise by either the auction house, auctioneer or auction house staff are strictly opinions and are not to be construed as statements of fact.

If you were to read the above rules and regulations posted inside the auction house you might be thinking that you want to get back in your car and go home. Some of this can sound a little daunting if you are not familiar with the auction process. Once you have attended a few auctions, these rules won’t bother you and you will be able to relax and enjoy yourself. Since we want you to feel comfortable from the very beginning, let’s briefly dispel any fears right now by at least addressing the ones that sound threatening:

1. (See #7). Many states have laws that protect auction houses from people obtaining bid cards, bidding on and buying items and then just leaving without paying.  If this were a frequent happening at auction houses, the houses would be out of business in short order. Therefore, people who buy items at auction and then refuse to pay or leave without paying are breaking the law and can be prosecuted.

2. (See #10). Auction houses make their money on the buyer’s premium and the commission rate paid by consignors. For example, if the buyer’s premium is 13% and the average consignor commission rate is 25% then that’s 38% of the total sales. Some people would think that the auction house is making a killing. As previous auction house owners, we are here to tell you that we never made a killing. There were times when we did quite well but there were other times when we would enter that black abyss known as the summer season in Florida.

Our overhead was approximately $30,000 per month. That’s a lot of commission! You have to sell a lot of items to make that back before you even think about the elusive and much sought after profit. This is why people are not allowed to buy and sell among themselves on the property. During the auction, if people are doing business with each other rather than the house then the house is not making any money.

3. (See #15). Auction houses are subject to state regulations. They are required to keep good records of sellers, buyers and all items sold should they ever get audited. This is why they require a driver’s license to register you. Their customer lists are private and are not sold to third parties. They record your driver’s license number and date of birth so they can accept personal checks. If this information is already on file, they don’t need to collect it from you every time you write a check. The line to pay can get long at times and this keeps the line moving along nicely.

4. (See #17). Bid rigging has always been a problem for auction houses. It is against the law and is covered by the Sherman Act. More importantly it can really hurt an auction house’s bottom line not to mention unfairly jeopardize the amount of money a seller should be able to realize for his items. Bid rigging is when two or more people conspire to reduce the amount that will be bid on a particular item. In other words, “I want this item and I know you want that item so if you don’t bid on what I want then I won’t bid on what you want.” Of course, this is a watered down version of bid rigging but you get the general idea.

Hopefully our elaboration on just a few of these rules shows you where the auction houses are coming from. They are just trying to protect their businesses and look out for the well being of their consignors. In Florida, an auction house’s main responsibility is to its consignors, not its buyers. Of course, unless the auction house is cordial and helpful to its buyers, the sellers won’t do as well as they might otherwise. It is a fine line that auction houses walk in order to maintain a proper balance.

Written by Anne Benedetto, Auction House Talk
 All Rights Reserved

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