FYI: Protecting Consignors

Last month, Clayton Pennington's editorial in Maine Antique Digest urged auction houses to help protect consignors through the use of escrow accounts and the requiring of internet bidders to leave credit card numbers in order to leave bids. Both are good ideas.

The use of escrow accounts for consignors is proscribed under Ohio auction law. All payments from auction buyers in Ohio must be deposited by the auctioneer into an escrow account and that account cannot be used for anything else by the auctioneer. In fact, co-mingling of funds (mixing the auctioneer's money with auction proceeds) is one of the deadly sins an Ohio auctioneer can commit that will often get his or her license immediately suspended or revoked. This is good policy that helps protect consignors, and, frankly, all states should require the use of escrow accounts.

Requiring a credit card on internet bids, or regular absentee bids for that matter, is also wise, but doesn't necessarily solve the problem. Andrew had an experience when he worked for an auction firm in Cincinnati that illustrates this. A remote buyer bids on, and buys, a porcelain figure in an auction. Thirty days pass, two invoices are sent, and no payment has been received, so the buyer's credit card is charged for the purchase price and shipping and the item is sent. Within a week, notice was received from the credit card company that the buyer is claiming fraud (the figure was allegedly damaged and that damaged was not disclosed before bidding) and the moneys have been refunded to them. So...now the buyer has the item and the money.

You see, organizations like banks, the post office, UPS, etc. etc. simply do not understand antiques or how the antiques business operates (have you ever tried to explain to FedEx that they could pay to have the item fixed, but it's still worth less because now it's repaired???). In this case, the figure had a factory flaw that was described in the condition report, but the person at the bank didn't know the difference between a factory flaw, a crack, or a chip, so they immediately believed the buyer and refunded their money, and left the auction house hanging. Andrew did end up getting the item back, but after two months of arguing with the bank, appealing their decision, and hounding the buyer.

This is the flaw in the use of credit cards as "security" against deadbeat bidders: it's simply too easy for someone who is determined not to pay to actually just not pay. Use a bad credit card number (does anyone actually confirm card numbers prior to executing bids? And we'll talk later about the expectations of bidders and how frustrating extending deadlines would be if it became necessary to allow time prior to auction for a verification process....), lying about damage or some other issue to get a payment refunded, or had the auction house charged the buyer the purchase price but not shipped it, appealing the charge on the basis of non-receipt. Auction houses are simply at the mercy of the banks who are ignorant of how this process is suppose to work.

What might be a better way to protect consignors, and auction houses, against deadbeat bidders is a national database of non-paying bidders. Let an objective organization, such as the National Auctioneers Association, manage it. If an auctioneer encounters a deadbeat bidder, let him or her submit proof to the organization and that bidder's info gets entered into the database. Auction houses could run checks against the database for bidders new to them. If Joe Deadbeat can no longer register to bid at auctions because he's in the database, then that'll be fewer consignors who get disappointed by not getting paid for their item(s).

Bidders have all sorts of protection against crooked auctioneers (law enforcement, attorney general, auctioneer licensing organization, and, of course, banks), but auctioneers and their consignors have little protection against crooked bidders. And the last thing an auctioneer wants to do, even more than not getting paid, is disappoint a consignor.

Anyone Headed to New England??

As the summer reaches its midpoint, it's time to start thinking about antiquing in New Hampshire. Between Northeast Auctions' annual Summer Americana Auction and the shows in Manchester (and this year, in nearby Marlborough, MA, a sale at Skinner), there loads of great stuff to look at, to learn about, and to buy!

I [Andrew] will be there, visiting friends and colleagues at the shows and previewing the Skinner auction. Sadly, I won't be able to get to the Northeast sale. But, I'm sure I'll see plenty of great stuff.

So, if you find yourself in NH in a few weeks, be on the lookout for a man with no gray hair (i.e., me, a young collector who actually has a little bit of gray). I'll also be picking up some consignments for Garth's fall auctions and I'll be happy to do so for you as well!

That's more than what I paid....

I (Andrew) hear this a lot. Too much, in fact. When talking with a potential consignor, I often give them my thoughts on what a given object might bring at auction (always subject to further examination and further research, of course). So often, when I say that Joe Consignor's refinished cherry 4-drawer Sheraton chest will probably bring 500-800 at auction, I get, "But I paid more than that twenty years ago." I then, of course, begin lecture number 313, which is on the economics of the ever-changing marketplace and that trends come and go, and that today's marketplace emphasizes different things than the marketplace of the 1980s.

It seems to me that a large number of collectors, when they were building their collections, either assumed, or were told by dealers/auctioneers, that antiques appreciate in value. These collectors are then disappointed by my estimate, and then often again when their things sell.

It can be true that antiques appreciate in value. It can also be true that antiques can depreciate in value. Frankly, I don't believe that anyone can reliably predict what will and will not appreciate. Sure, if you are fortunate enough to be able to buy the very best (best forms, best decoration, best condition, etc. etc. etc.), AND you don't have to pay top retail (say, at the Winter Show in NY), then your collection might have a better-than-average chance of selling for more than you paid. Maybe. Let's not forget about trends. Victorian was all the rage a generation ago. Today...not so much. In the early 2000s, weathervanes were breaking records, but that market has already cooled, and I really don't believe the $6 million Indian weathervane purchased in NY a few years ago will ever achieve that price again.

On one level, this trend frustrates me. As an auctioneer, I feel like I'm getting blamed because the market has changed and someone's stuff isn't worth as much as it once was. But on a more important level, this trends saddens me. These life-long collectors have poured their hearts and souls into their collections, have felt a quickened pulse when "on the hunt" for their next purchase, and smiled every time they looked around their home and the objects that filled it. These folks' last emotion related to their collection is that of disappointment. Folks, that's truly unfortunate. It's hard enough to let go of your lifetime collection. I have had collectors cry when I emptied their house because they know that they will miss the stuff I'm taking to auction. I can appreciate that. I'm going to be like that. But then, for some reason, some of these same collectors seem to forget all the good memories, all the joy, all the passion, and focus only on the dollars and cents, thus the disappointment. Yes, I'm sure it might be a bit of a blow to the ego that the market doesn't "appreciate" your collection like you do. But you know what? No one will appreciate YOUR collection like YOU do. So why worry about it?

I do realize that for some, the financial hit might be troubling. I'm truly sorry for that. And that is why we NEVER encourage anyone to think of their antiques as investments. We want folks to collect because they love the stuff. When we talk to our friends about antiques, we talk about history and art and usefulness and green. Yes, we also talk dollars and cents, but we talk about "retained value," not appreciation or investment.

Living surrounded by history and art...that's why we buy this stuff. And when it's time to sell, we're going to be thankful that we were able to act as stewards for a collection of history and art. If we make money, great; if we don't, we'll consider the loss a small price to pay for the memories. Isn't that why you started collecting in the first place?