AUCTIONS UPDATE
It was interesting to read Arthur’s letter responding to my recent article and referring to his experiences of underhand practices at auctions. The aim of my piece was to provide my objective opinion of the current position rather than looking back to what was possible in the past. I believe what he recounts are some of the worst practices of local generalist sales from years ago rather than being representative of current national or international auction houses with militaria sales. I hope that readers will have noted from my previous articles that although bargains are possible at generalist sales, they require more circumspection than specialist sales.
I believe there have been two major game-changers that have reduced inappropriate behaviour - the increasing use of Buyer’s Premiums, and the availability of the internet. Buyer’s Premiums started to become widespread in the mid 1990s, since when they have steadily increased in percentage terms on the hammer price and currently stand around 25%, more than twice the seller’s commission of about 10%. The effect of this is that if, as the writer suggests, employees buying up to £1,000 commission free was supported by the auction, an effective loss of some £250 in revenue per person involved would be sanctioned by the auction house. Under current minimum wage terms that equates to about four days’ pay. In addition, there is a risk that such activity may attract the attention of HMRC if regular unexplained discrepancies between sales and recorded revenue occurs, so it is an increasingly high-risk strategy. I would therefore need additional information before I could concur that everyone benefits from allowing staff to buy commission-free. Similarly, the Buyer’s Premium has had a significant impact on sellers pushing up prices. It cannot be foreseen when the other bidder will stop bidding and if the dealer buys his own item, he will collect fees of some 30% - ie the Premium plus 20% VAT.
New technology has meant that the days when an unillustrated catalogue could only be produced a few days before the sale, with viewing perhaps only an hour or so before the auction, are long gone and any auction that continues to operate in this way I would treat with a great deal of caution.
Such timings do not allow research to be undertaken, which a well-run auction house appreciates. Online catalogues are now often available several weeks in advance of sales, which in addition to descriptions for each lot also includes least one photo and often several. Many auctions also show previews of lots awaiting formal listing, which is all part of auctions seeking to obtain an edge over their rivals in an increasingly competitive environment. A longer runin gives more time to attract buyers, allows questions to be asked and answered, additional photos to be sent, and condition reports completed, all of which is communicated quickly by email. Recent innovations also include booking online video viewings. All this makes it ever more difficult for auction employees to conceal items from buyers. Social media calls out business malpractices and therefore signs of unethical activity, including an auctioneer creating fictitious ‘off the wall’ bids, are likely to be publicised, which can result in significant reputational damage that can be ill afforded when competition exists from both other auction houses and online platforms such as eBay, Etsy, Delcamp, etc.
With increased options available, auction houses need to be mindful of the standard of service they provide in order to remain in business. There do remain opportunities for misdemeanour but far less than previously and in conclusion, my view is that Arthur’s comments are not representative of auction practices, as they currently exist. I would echo our Editor’s comments in that no one is forced to do business at any auction, so do your research and consider taking your custom elsewhere if you believe inappropriate activity is occurring. Also, look for SOFAA membership, as this indicates agreement to follow an appropriate set of standards.
Steve Woolnough by email