Last week was Arizona Consumer Protection Week, and we saw a lot of stories relating to fraud complaints. Unfortunately, the auction industry is not immune to unethical and sometimes criminal behavior. Here are some tips for making sure your experience with an auction house is a positive one:
- Research Online Reviews: Start with an internet search and delve deep into recent reviews. A few negative reviews may not be a problem, but if you see a pattern of complaints, such as late payments or lost items, that’s a sign that something is amiss. Also, watch for what I call ‘manipulation reviews.’ These are basically fake reviews from the employees, their friends, and others.
- Interview the Auction House: If possible, do this in person. Ask for a realistic value of your collectibles and find out whether the auctions are online-only, live on-site only, or a combination of both. Ask the representative what their consignment process entails from start to finish. Make sure they have a system in place to track your items throughout the process and have them walk you through it in detail.
- Keep your own inventory. This way you can cross check it against future reports generated by the auction house. Start by taking photos of each item you want to sell. I recommend prepacking your items before they are transported to the auction house. You’ll also save money since most auction houses charge a fee to package your collectibles.
- Check the Pre-Auction Summary. Once your collectibles are cataloged, you should receive a pre-auction summary listing everything that will be sold. Keep in mind that some items may be sold over several weeks. For example, if there is a surplus of dining room tables one week, the auction house may choose to spread them out over several weeks to help drive up prices.
- Understand the Contract Before Signing. Be careful of legal jargon and make sure you understand the commission structure. Most auction companies will include a timeline for paying their consignors, and a reputable company won’t include open-ended clauses, such as “about” 14 days or “after” auction company receives payment from buyers. Rather, make sure the contract states “settlement will be provided (number of days) business days after auction closes.”
- Monitor Items that Don’t Sell. When items don’t sell at auction, it’s often because they are broken, worn, stained, tattered or heavily-used. Sometimes there is no market demand. In these cases, the items are donated to charity. The auction house should provide you with an itemized list of donated items along with a boilerplate donation slip from the charity.
My last bit of advice is to ask the auction house for three references of past clients who have consigned with them in the last two to three months. They should also have sold items that are the same genre of what you are looking to sell.
Most in the auction industry share the same passion and core values…integrity for us is everything. Like anything in life, use caution and do your due diligence to protect yourself.
Erik Hoyer owns EJ’s Auction & Appraisal in Glendale.