Bidding Blunders. Be Glad This Isn't You.

This house-owned lots business is a fallacy. They're buying stuff at wholesale to sell at wholesale? Or do you think they can offer someone 5% of cat for a collection that has everything with certs and they can buy it for that? I can see where the 292 lot in question may have been part of a group that was largely reserved or guaranteed a price, though.

Before the 2008 Recession, companies were bought with cheap money to take any cash they held and the company or just the remaining equipment sold off. It's stupid for any company not wanting to become an immediate takeover target to have any cash today. Most don't have any cash anyway, period.

Further, auction companies normally even don't get a line of credit from banks. Why? Because they don't have any assets to guarantee creditworthiness. Remember when Sotheby's was up for sale By Alfred Taubman and didn't sell? They may sell multimillion dollar artworks all the time but their operations are equally costly. Wealthy buyers are notoriously slow payers, too, as is true in the stamp world. And they don't like to pay interest charges and often get away with not paying them.

At the time of the Taubman sale attempt, all the analysts said that Sotheby's was a break-even proposition based on the numbers crunched. Taubman was already wealthy, as is its current owner, so there's prestige and all that, but it's mostly that. I daresay the current owner can make money by just loaning Sotheby's a bunch of cash with interest when it's needed to to pay consignors.

You are flat out wrong if you think that most auction houses don't own some of the material they auction.

Kelleher will buy outright for at least US collections. Cherrystone owns some material and some of that ends up in their online stamp store if unsold, Sandafayre owns material. There are no doubt many more.

On the other side of the pond, Sandafayre and Universal Philatelic Auctions own a good deal of the material sold in their auctions.

Do you mean the mail bid sales? That's a different situation where there's usually an unviewable reserve that's set relatively high vs. open auction prices in my experience, not including reserved lots. Universal states bids of less than 80% of estimate are respectfully declined. Then, do you not think that if you bid over their minimum that they wouldn't automatically be making a respectable profit at that point?

The key is if you see unsold items being flogged over several sales before being sold or moving to another venue.

The argument revolves around the word "some". How much is some? I think it's less than you think based on my experience in the stamp auction industry.



Does that all go into the auction? They are not an auction-only company. And how much do they actually buy of what they are offered? And who's money is buying it? Banks won't give them the money but individuals can and will, particularly if given a guarantee/guaranteed profit. Plus there are individuals looking to buy intact collections and this is a way to do it with the auction house getting a commission but not putting up any cash.



That's a given based on the specialized stuff they are selling. And you know for a fact it belonged to them before the auction? They could be selling online for the consignor. Or if they received it as consigned material, gave the consigner a guarantee and got insufficient bids and were stuck with some items? There are many scenarios possible and yours is not a given. Also, with a store for the longest time, they're not auction-only, either.

If it was in a name sale at Siegel's, I would agree with you that it was likely not house-owned. Maybe Trepel knew that there was an interested buyer, but he was in the bathroom, so he dragged it out. Seriously, though, who knows?? It could have just been a random lack of focus that resulted in time ticking off the clock before the hammer fell. That coulda happened to anyone.

I have worked for a number of auction houses over the years. When someone walks in with stamps, the first thing that the house will attempt to do is to BUY the lot. If the stamps were Grandpa's and have been sitting in a closet for a while, the heir will likely be willing to sell in order to be done with the whole thing. My experience is that collectors tend to want to consign rather than sell. An outright purchase will net less than what the collection would likely get at auction - the rationale is that the auction house is putting up their own money and the seller is walking out with a sure thing. There is nothing underhanded about it (usually) - some people simply want to walk out with $$$ and/or don't know what the items could get at auction. By the time the collection is broken down, the lots described and photographed, the sale created, the sale to arrive, and the buyers to pay for their purchases, there can easily be 6 months between bringing the stamps in and getting paid. Some people simply don't want to wait that long. I have found that anywhere from 5% to about a third of the lots in an auction (where I have inside info - which I got when working for these companies) were house-owned. For a name sale, though, I would expect the entire sale to be from the consignor - assuming the named person consigned, rather than sold. That's a pretty safe assumption.

I've made errors myself. I just suck it up and try to be more careful.

Jack Kelley

hy-brasil - why would Kelleher buy items outright that do not go into an auction unless it was a one-off/known situation? This seems silly. I would think brokering offline transactions, which I am sure does happen, would be far harder to facilitate than their regularly scheduled auction programming, and definitely not as lucrative.

I would think if they were able to get items at a deal, then using all their marketing and selling acumen would allow them to tune the reserve, opening, and tempo to maximize a return AT AUCTION, where they get premiums. Earning through transactional costs are the most sought after money producers with the least risk profile. Owning stinks in comparison.

I will say when I have reached out to auction houses to ask them about contacting previous parties engaged in transactions, the results have been extremely poor in them being able to actually create a new transaction.

Hy - my info on several auction houses matches what mooter said (and I'm talking real auctions, not mail bid sales).

Vance in Canada is the same & their lots recycle every 6-9 months if not sold.

There's been some material in their mail bid sales that bears a striking resemblance to lots that went cheap at an earlier Maresch or Sparks auction.

It is off-topic but so much material goes around and around. I recently made a purchase of some Russian material from Loral and the rigid envelope that contained my stamps which was inside an outer envelope had Ukraine stamps and an intact return address which I recognized as being Old Louis address whom I also deal with. The higher value stuff is endlessly cycled. You can see that when you research Cherrystone and Siegel sales. The same stamps will be sold multiple times over the years and sometimes multiple times within a year.

Back on topic, you can see material for sale in Cherrystone's online store that was previously in their auctions and went unsold. Not all of it but enough. They have an extensive inventory from around the world at decent enough prices. Where did it all come from?