How Do Stamp Auctions Work?

I have been buying stamps from Canadian auction houses for many years but have been wondering how exactly they work.

Where do auction houses get their material? I was looking at the latest Eastern Auction catalogue and there was over 5000 items up for auction. Vance Auctions has over 6000. This repeats every 4-6 weeks. I also buy from Weeda Auctions, a small company with 200 lots every two weeks. Where are they getting this material?
All I can think of is that people buy large lots from auction houses and then split them up to make smaller lots. Do they make a profit out of this?
Can someone explain to me how this works? There are many more auction houses out there, in the States and around the world. Where do they get the material?

My understanding is as thus-

Most are consigned their material from estates, surplus material from collectors, etc.

Others simply sell material that they acquire.

I'll hazard a guess at some of this and wait to be corrected.

I would imagine a good portion of the material comes from stamp collectors or dealers that "leave the hobby" and have no interested heirs. Its obvious on many occassions for less than exceptional collections, these collections get broken down in various ways. The profit likely comes from the time saved by the various sellers and needs to cover the work put in by the various buyers down the chain. So, imagine the first seller purchases from an heir an entire estate at a fraction of the cost because the heir doesn't want to expend time in cataloging, selling etc. (time is money). Imagine for simplicity the estate to be many many volumes of Scott International. They both get they want on this deal. The seller puts some amount of effort in breaking the collection down into smaller collections, lots and auctions at a higher price to cover the labor involved. Imagine these sales are the individual volumes one at a time. The purchasers might indeed be ebay dealers that break the lots down further and sell maybe individual pages or stamps, again at a higher cost to cover the labor involved. There could even be another level that makes profit in this chain.

Everyone makes a profit, but not a killing I would imagine, all made possible by the first sale of the large estate at a fraction of the value in order to save time/effort.

Vance and Eastern own everything in their mail sales. It is more of a price list. They have reserves on all lots internally, that they will sell the items for. When the bidding reaches those numbers, they sell the items. If they don't, they just recycle it in another price list. The real auctions, are live auctions that you can participate in. These all have a buyers commission involved. These items are usually consigned, and you will pay the true market price for items. Unfortunately, when you factor in 15% commission, and HST, you end up paying 30% above the hammer price. At these auctions you will find the premium items. These houses are Eastern, Maresh, and Spark's. I have purchased from all three in the past. Sometimes, you can get some really nice stuff, if you are the only one interested in the item.

Well then, where do you go when you want to sell a stamp at auction online? What should one expect as fees and how much do they take off the realized price?

-IBFS

Auction Houses come in all kinds of styles and operate with different rules .There are honest firms and there are firms that are shams. Every firm have their pros and cons . I have lots and lots of experiences with the different firms and seen stuff that should be reported to State regulators . Firms operate in the shadows so that one customers problems never come to light for others to know about .I should write a book for
some of the stuff that goes on .
All customers should have a guidebook to understand all the different ways they can be played with .All the stories you heared about stock market fun and games with stock manuiplations also goes on in the stamp trade with stamp auctions .

If you cant be present on the floor, or be able to bid live on the internet, I never leave bids with the firm. It is funny, when I do leave bids, when I win, it is at my limit, or one bid below the limit. Funny how that always works.

Theres a lot of truth in what floortrader is saying.on the other hand I know small dealers who buy in bulk at auctions and make a living breaking the lots down for resale..i have seen both sides and I am certain floortrader has also !

I have been watching quite a few auctions. Unless you are going for a particularly prime item, it seems to me they are not for me.

I have also noticed in the past few years, that certain things seem to become available at multiple outlets at the same time. I am not sure if it is just multiple sellers keeping up with what is hot, or whether there is some giant postage stamp wholesaler that decides what dealers and auctioneers should offer next.

I have purchased a few auction lots locally, and have been pleased with what I have gotten.

I have always wondered how I would do as a floor trader on the CBOT. Perhaps I will have to try that sometime. If successful I could really fill in those holes. :D

Auction lots come from a variety of sources. Collectors who decide to sell all or parts of their collection for various reasons, heis who have no interest in stamps, dealers who have bought things on the cheap that thy don't want to carry in stock, or they have too much inventory and need to lower it, or their stock has become tired (too picked over), or they retire. All of those would be consignments. Auction houses sometimes also own some (and sometimes most if not all) of the lots they are offering. Sources of such items are the same ones listed above plus they ill sometimes buy lots fromother auctions - either because they feel the lot was too cheap, or they buy bigger lots and a lower % of catalog (low wholesale) and then break them down into smaller lots which typically will sell at a higher % of catalog.

If someone put a stamp up for auction, with the volume of stamps in that catalog, how would anyone ever find it? You can pay to have your stamp put on the cover, but I shudder to think of what that would cost. And what if it doesn't sell after all of those...i'm sure...fees?



-IBFS

How do auctions work for me ? well if I am the only stamp collector in the room they work very well...must avoid getting in a bidding war !

I-B-F-S.-----Most auction houses keep list of who is looking for what and a list of past buyers and what they collect.The auction firms also reference other stamp auctions to understand what they can expect to realize.

PHILB-------Life was sweet for me at the big stamp auctions with there end of catalog mixture lots .......then the internet and ebay came around. Now its bidding and losing to all the ebay sellers and especially New York Stamps which acts like a vacum cleaner on large mixture lots.

I use Eastern and Vance and I kind fo figured that there was a minimum bid for everything. Didn't realize they purchase all the stock first.

I have been using Weeda Auctions for a while now and really like it. Everything starts at $0 with no buyers premium. I have got some nice stuff from there.

So how about some recommendations from people? What auction sites do you prefer?

Like I mentioned before, I primarily use Vance and Eastern and Weeda. I bought a few things off Maresch years ago and might have to take another look at them.