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Eric
04-13-2007, 12:43 PM
Hey everyone-
There has been a lot of discussion about the different approaches auction houses take to forming their policies.

I thought it would be valuable to be able to look at the approaches all in one place. Today I'm sending out to the major auction houses the following email:

Hello-
I had a few simple yes or no questions about your auction house policy. I'm actually sending this to all of the major houses because I'd like to see how the various companies approach their auction policies.

Here goes:

1) Does your auction house list items in which you have a financial interest? (Either you own it, or have a stake in?)

If the answer is 'yes,' are these labeled in any way? (For Example "House Lot")

2) Do you allow your authenticator (one who's services you pay for) to consign items to your auction?

3) Are members of your auction house allowed to bid on the items in your auction?

I look forward to your response.
Sincerely
Eric Stangel

The emails are being sent to:
American Memorabilia
Grey Flannel
Lelands
Mastronet
Robert Edward Auctions
Vintage Authentics
Memory Lane
Heritage Auctions
Historic Auctions
SCP Auctions
Hunt Auctions


I will let you know what I hear and hopefully we can learn a lot from this.
Eric

kingjammy24
04-13-2007, 02:36 PM
eric,

great idea & questions.

it's unfortunate that the entire exercise is completely dependant on the responses being completely honest. this may be beyond the abilities of some of the individuals on your list.

we've seen that the actions of certain auction houses can run opposite to their official policies. some say they aren't dealers offering their own items when in fact they are dealers offering their own items. funny stuff.

rudy.

Eric
04-13-2007, 03:39 PM
Our first response was from Robert Edward Auctions (I had predicted that in my head) Here's how it went
Eric


Answers to questions for Robert Edward Auctions are below.

1) Does your auction house list items in which you have a financial interest? (Either you own it, or have a stake in?)

The auction house does not own any lots in part or whole. Here is an except from our terms and conditions page (a link to which I am providing here: http://www.robertedwardauctions.com/site/terms.aspx (http://www.robertedwardauctions.com/site/terms.aspx))

We provide the following relevant text in our auction guide, both in our catalog and online:

"A WORD ABOUT CONFLICTS OF INTEREST:Edward Auctions’ policies regarding Conflicts of Interest are summarized by Section #13 of REA’s Terms and Conditions:
"13. There is no circumstance under which Robert Edward Auctions, LLC may execute bids on its own “house account,” thereby unfairly competing with bidders. In fact, to be clear, Robert Edward Auctions does not even have a “house account,” unlike many other auctions. Under no circumstance may any executive or employee of Robert Edward Auctions, LLC place bids in the auction for their personal accounts. Under no circumstance are consignors permitted to bid on their own lots. This is a consignment auction, conducted on behalf of consignors, by Robert Edward Auctions, LLC. Under no circumstance will any lot be offered in any Robert Edward Auctions, LLC auction which has been purchased or is otherwise owned outright by Robert Edward Auctions, LLC. Executives and employees of Robert Edward Auctions, LLC may consign their personal property to the auction. Any and all lots consigned from the personal collections of any executive or employee of Robert Edward Auctions (or any relative of any executive or employee) will be explicitly and formally identified as such in the lot description. All bidding records are archived, as always, indefinitely, and will forever be available for auditing purposes, if necessary."
We are not dealers. And we mean it. Robert Edward Auctions will never place a bid on material in our auction. Robert Edward Auctions will never purchase material outright to offer at auction. With Robert Edward Auctions, bidders are guaranteed that they never have to worry about the auction house bidding against them on any lot in the auction – EVER. With Robert Edward Auctions, bidders also never have to worry about secret hidden reserves – EVER. These firm policies translate into greater and well deserved bidder confidence, and in turn higher prices for consigners.
Many auction houses are also dealerships, offering material they own at auction, often intentionally misrepresenting this fact to the public. Many auction houses, as a standard practice, place bids in their own auctions against their bidders, with an emphasis on higher-priced items and on material they own. Some auction house rules actually clearly state that the auction house, as an entity, may bid in the auction, in addition to permitting all executives and employees of the auction house to bid. Some auction houses routinely alter or destroy bidding records after each sale. These and other common practices in the auction industry expose consignors and bidders to numerous irreconcilable conflicts - conflicts which can and do cost bidders and consignors money, and can ultimately make bidders uncomfortable even participating in the auction.



These are conflicts that DO NOT EXIST with Robert Edward Auctions.
Robert Edward Auctions believes that protecting the integrity of the auction process, by taking clear and unambiguous positions with reference to conflicts of interest, results in greater bidder confidence, greater participation, and higher prices. Everyone likes an honest auction.
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Also relevant is the following additional text:

"A Word About Auction House Consignment Disclosure:
With reference to recent attention in the industry regarding questions about auctioneers identifying owned lots, the following text is from an REA email that was sent in August 2006 in which REA amended our Terms and Conditions regarding material owned by employees. The relevant text of the email reads as follows:

“Effective immediately, we are amending Section 13 of our Terms and Conditions to provide a formal identification in the lot description of any and all lots consigned from the personal collections of any executive or employee of Robert Edward Auctions (or any relative of any executive or employee). Because REA does not buy material for auction, in many ways this policy amendment is a non-event. In the April 2006 auction, for example, a total of sixteen lots out of 1,411 would have been identified as property consigned from the personal collections of executives, employees, or their relatives (and we should add that every single one of these lots was purchased many years ago). [In the April 2007 auction a total of only 5 lots out of 1594 represent property consigned from the personal collections of executives, employees, or their relatives.] So why are we even bothering doing this? Because Robert Edward Auctions believes that the many conflicts of interest that are so common and so accepted in the sports card and memorabilia auction world today play a great role in promoting many of the most serious problems that are epidemic in the auction industry. Robert Edward Auctions strives to stand out as an example to the auction world, demonstrating how auctions ideally should be run. So while this policy amendment has no impact on REA, it is intended to be a call to action for all auction houses, and a wake up call to all collectors who participate in auctions. Bidders should never intentionally be misled about who owns the lots they are bidding on. Some auctions have claimed they are not dealers, when in fact that is exactly what they are. Some auctions present collections of very well known collectors or ballplayers, and intentionally give the impression that these collections have been consigned, rather than the truth: that the collection has been purchased and is actually owned and is being sold by the auction house. If bidders are being intentionally misled about something as basic as who is really offering a collection, and a false impression is given that material has been consigned when this is not true, it is misleading both to bidders and to potential consignors, and it raises the question, “What else is not as it seems?”

We believe that collectors approach auctions very differently when they understand that material presented is often owned by the auction company, as opposed to being consigned as represented, and are much less enthusiastic about bidding on all lots (including those lots which are actually consigned) in any auction in which they feel they have been intentionally misled. When collectors finally learn the truth about this issue, let alone when they come to understand that at many auctions the auction company consigns hundreds of lots, and its employees also consign hundreds of additional lots, and both the auction house and the employees bid in their own auctions, they become less enthusiastic bidders in those auctions. This should be very important to all bidders and consignors. We are seeing a greater awareness of these issues that affect all lots in auctions which combine secretly owned auction-house lots and consignments. As collectors grow more sophisticated, they are gaining a greater understanding of the conflicts and misinformation that are regularly presented to them. It's time that all lots owned by auction houses, auction house executives, auction house employees, and their relatives be identified, as opposed to being camouflaged among consignments in a manner that could be interpreted as a deliberate charade of deception.”

End of quote.

We think our policies are very clear. They are always evolving. We are pleased to see serious attention to topics that we consider to be among the most important and overlooked in the field. REA cannot solve these issues, but by calling attention to them by formally adopting and communicating our policies, we have always felt that we were playing an important role in encouraging and heightening awareness. It is our hope that these discussions will result in greater awareness and play a role in promoting significant change where it is needed.

Sincerely,

Robert Lifson
President
Robert Edward Auctions LLC
www.RobertEdwardAuctions.com"



2) Do you allow your authenticator (one who's services you pay for) to consign items to your auction?

Yes, we do allow authenticators to consign items to the auction; however, it is our policy that this is done with full disclosure right in the lot description. The text from our terms and condition pages reads as follows:

"Robert Edward Auctions does not prohibit authenticators from consigning lots. Robert Edward Auctions’ formal policy regarding consignments by authenticators is the requirement that ownership or financial interest of all such lots be clearly communicated in the lot description in all cases where such authentication is cited in the lot description."

David Bushing, for example, has several lots in the current auction which have been authenticated by MEARS. Since David Bushing is one of the MEARS authenticators, the fact that he is the consignor is communicated clearly right in the auction description. If anyone was not comfortable with the fact that these items are owned by David Bushing, with this full disclosure bidders have the ability to either: choose to have confidence in the MEARS authentication process and guarantees, choose not to bid, or choose to arrange to have another authenticator look at these items (a process that we would always be very happy to cooperate with).

3) Are members of your auction house allowed to bid on the items in your auction?

Answer: ABSOLUTELY NOT. Not only are employees and executives prohibited from bidding, so are their family members. Section 13 of our terms and conditions is very clear regarding this issue:

"13. There is no circumstance under which Robert Edward Auctions, LLC may execute bids on its own “house account,” thereby unfairly competing with bidders. In fact, to be clear, Robert Edward Auctions does not even have a “house account,” unlike many other auctions. Under no circumstance may any executive or employee of Robert Edward Auctions, LLC place bids in the auction for their personal accounts. Under no circumstance are consignors permitted to bid on their own lots. This is a consignment auction, conducted on behalf of consignors, by Robert Edward Auctions, LLC. Under no circumstance will any lot be offered in any Robert Edward Auctions, LLC auction which has been purchased or is otherwise owned outright by Robert Edward Auctions, LLC. Executives and employees of Robert Edward Auctions, LLC may consign their personal property to the auction. Any and all lots consigned from the personal collections of any executive or employee of Robert Edward Auctions (or any relative of any executive or employee) will be explicitly and formally identified as such in the lot description. All bidding records are archived, as always, indefinitely, and will forever be available for auditing purposes, if necessary."

We always welcome inquiries about our policies and procedures which are always evolving. This has always been a priority with us and we thank you for your interest.



Sincerely,





Robert Lifson
President
Robert Edward Auctions, LLC
P.O. Box 7256
Watchung, N.J. 07069
908-226-9900
908-226-9920 fax
www.RobertEdwardAuctions.com (http://www.robertedwardauctions.com/)

Mike Heffner
04-13-2007, 09:09 PM
Eric,

Since I saw the post before the email I will give my responses directly.

Our auctions contain mainly consignments in which we get a percentage of the selling price and the consignor gets the rest. We also offer consignments where the consignor receives a cash advance on an item; then after the sale, the cash advance is returned to us from the proceeds of the sale along with a percentage of the sale price. We also own items in our auctions and retain the entire sale price. These are not marked in any fashion but if anyone is interested in bidding on an item in our auction and would like to know which of the above scenarios applies to that item, please feel free to call me and I will disclose that information.

We do not use authenticators and rely primarily on the expertise that exists within our own auction house or a consensus of opinions. If we are proven to be wrong on an item that we have sold we offer a full refund for a period of three years from the date of the sale.

Members of our auction house are not allowed to bid in our auctions.

Mike Heffner
President-Lelands.com

Eric
04-13-2007, 11:35 PM
Robert and Mike,
Thanks for the quick responses. This is all good info.

Eric
04-14-2007, 10:40 AM
Thank you to Grey Flannel who responded this morning. Here's how they answered.


1) Does your auction house list items in which you have a financial interest? (Either you own it, or have a stake in?)

If the answer is 'yes,' are these labeled in any way? (For Example "House Lot")

No

2) Do you allow your authenticator (one who's services you pay for) to consign items to your auction?

No

3) Are members of your auction house allowed to bid on the items in your auction?

Yes

Eric
04-15-2007, 01:45 PM
Here's where we are at so far....

3967

Eric
04-16-2007, 11:18 AM
Thanks to Vintage Authentics who has chimed in to our question.

1) Does your auction house list items in which you have a financial interest? (Either you own it, or have a stake in?)

If the answer is 'yes,' are these labeled in any way? (For Example "House Lot")

1. We list items that were not paid for in the previous auctions. We don’t make a point of disclosing them because we didn’t buy them to sell for profit, we pay the consignors whether their items are paid for or not (as long as the item sells for reasonable market value) and just re-run the items that don’t get paid for. I would like to label the item as “not paid for by customer name” but our attorneys advised us against that. We just blacklist the customer for life and move on.

2) Do you allow your authenticator (one who's services you pay for) to consign items to your auction?

2. We allow anyone to consign items to our auction. Any authenticator or company who says they or their employees don’t do so is probably not being 100% truthful.

3) Are members of your auction house allowed to bid on the items in your auction?

3. We don’t allow employees to bid in our auction.

Eric
04-16-2007, 12:51 PM
I would also extend the above questions to Chris Cavalier and GUU Auctions. I will add them to the grid.

Eric

kingjammy24
04-16-2007, 03:16 PM
can someone explain this to me:

"We don’t make a point of disclosing them because we didn’t buy them to sell for profit, we pay the consignors whether their items are paid for or not (as long as the item sells for reasonable market value) and just re-run the items that don’t get paid for"

as i understand this then; someone consigns an item to vintage, the item technically receives a bid above the reserve and eventually the auction closes. if the buyer does not actually end up sending payment to vintage, vintage will still pay the consigner?

if an item is not paid for, vintage still pays the consigner and keeps the item. the item is then re-run, but the original consigner has already received payment? is this is the case, then it seems the vintage has bought the item from the consigner and becomes the new owner. if they are the owner and they re-run the item, then they're offering items in their auction that they own.

do most auction houses pay consigners if payment on their item is not received?

do most keep the items and re-run them?

thanks,

rudy.

ChrisCavalier
04-17-2007, 03:20 PM
I would also extend the above questions to Chris Cavalier and GUU Auctions. I will add them to the grid.
Hello Eric,

Thank you for extending the questions to GUU. Here are my replies:

Does your auction house list items in which you have a financial interest? (Either you own it, or have a stake in?)

If the answer is 'yes,' are these labeled in any way? (For Example "House Lot")

I have actually read some of the previous replies and the GUU policy is most analogous to REA auctions in this regard. In fact, I think Robert Lifson did a nice job identifying some of the existing problems in the industry that GUU also hopes to address. GUU will be as transparent as possible, something I believe we have already shown collectors. There will be no GUU “house account” where items can be sold by the auction house with the bidder thinking they are coming from an outside consignor.

As with REA, those involved in any capacity with GUU will have the ability to personally consign items. However, these items will be subject to evaluations other than that of the consignor and the identity of the consignor will be explicitly disclosed. Personally, I don’t think we should penalize those involved with GUU from consigning items to our auction if they believe in our model and business practices. However, the bidder will always know who the consignor is and the consignors will not be allowed to bid on their own items.

Do you allow your authenticator (one who's services you pay for) to consign items to your auction?

I believe this is covered in the second paragraph of the response to question #1 above. I also think the transparency and outside evaluation components mentioned above will be very evident when we launch of our first major auction in July.

Are members of your auction house allowed to bid on the items in your auction?

Given the stage our company is in, we may be set up slightly different than other existing houses. To be very clear, no one with access to bidding information will be allowed to bid in our auctions. Those peripherally involved with GUU may bid in the auction if: a) they do not have any financial interest whatsoever in the item being sold, and b) they do not have access to any bidding information that could give them an unfair advantage in the auction.

So that people understand our commitment to ethics, in the small pilot auction we conducted on the forum, 5 of the 11 items we sold in the game used section had ceiling bids that were not reached because there were no other bidders willing to bid higher amounts on those items. I think a few of the winning bidders even mentioned this fact in another thread. In addition, 4 of the 7 autographed baseballs also had ceiling bids that were not reached for the same reason. In fact, there was one ceiling bid that was over twice the amount of the opening bid for one of the baseballs and the winning bidder won the item for only the opening bid. I hope this, along with everything else we have done as a company, shows our commitment to putting the collector first and doing the right thing.

Please feel free to let me know if you have any questions about these responses.

Sincerely,
Christopher Cavalier
CEO – Game Used Universe

Eric
04-22-2007, 10:12 PM
Here is the latest

4073

Eric
04-23-2007, 10:35 AM
Thanks to the following auction houses who have answered the questions about their policies

Grey Flannel
Game Used Universe Auctions
Lelands
Robert Edward Auctions
Vintage Authentics

Can anyone help get answers from the others?
I have written American Memorabilia twice- Dave O'Brien- can you help?

Same for Chris Ivy at Heritage. Does anyone know him?

James Brown at Historic Auctions responded to an account problem I was having with their website, but nothing about their auction policy after repeated attempts. Is there anyone who talks with him regularly?

I had good luck with Doug Allen at Mastro talking about the Kellen Winslow helmet, but he did not return emails about their policy. Anyone?

Two attempts at Memory Lane and SCP Auctions went unanswered.

Let's see what we can do here.
Eric

TNTtoys
04-23-2007, 11:47 AM
do most auction houses pay consigners if payment on their item is not received?

do most keep the items and re-run them?

thanks,

rudy.

Rudy,

I think the policy differs from house to house. I have ran into a couple of interesting scenarios out there where the item wasn't exactly re-run but sold after the auction completed.

For example, Heritage lists items that didn't sell in prior auctions at fixed prices after the auction has completed. If you are interested (which was the case for me on an odd occasion), you can simply slick the button (like "buy it now" in ebay) and the item is yours for that price. This would imply that they have cleared an acceptable price with the consignor and that the consignor is continuing to allow the auction house to try to sell on their behalf. You probably would need to check what is really happening behind the scenes -- I never really gave this any second thought.

Recently I purchased an unsold item from Premier. They told me that they would first need to check with the consignor if I can purchase it at the starting bid, and then got back to me with the clearance. They also told me that if the consignor did not agree, they would get it back... hence, one of two scenarios -- either they don't re-run the item or it has already been through their auction house more than once. Again, you'd want to check.

Haven't had any experience with this at any other auction houses... but interesting stuff anyway.

Nick

Eric
05-09-2007, 09:53 AM
Dave O'Brien-

You're close with American Memorabilia- any luck getting them to answer about their policy?

Eric

Eric
05-15-2007, 11:29 PM
Well, Historic Auctions did not respond to my questions about their auction house policies. In reading their catalog that came with my SCD, I noticed an interesting line in their policy listing

"Historic Auctions, LLC reserves the right to accept or reject any or all bids by any bidder and execute any bid on our own behalf."

Does that suggest they are allowing themselves to bid on their own auction listings?

Eric

Mark17
07-29-2009, 01:34 AM
can someone explain this to me:

"We don’t make a point of disclosing them because we didn’t buy them to sell for profit, we pay the consignors whether their items are paid for or not (as long as the item sells for reasonable market value) and just re-run the items that don’t get paid for"

as i understand this then; someone consigns an item to vintage, the item technically receives a bid above the reserve and eventually the auction closes. if the buyer does not actually end up sending payment to vintage, vintage will still pay the consigner?

if an item is not paid for, vintage still pays the consigner and keeps the item. the item is then re-run, but the original consigner has already received payment? is this is the case, then it seems the vintage has bought the item from the consigner and becomes the new owner. if they are the owner and they re-run the item, then they're offering items in their auction that they own.



Wow. If this is how it works, people could really play games with them. Someone consigns an item, two of his buddies from the office, who don't particularly care about memorabilia, register as bidders, and outbid each other to the moon. The winner doesn't pay and is blacklisted (and he doesn't care,) and the consignor gets huge bucks for his item.

Kind of hard to believe an auction house would leave itself open to this type of scam.....