By Chuck DeLaney
In the first three installments (Part 1,
Part 2 and
Part 3) we discussed how auctions work in general terms, and how to
inspect merchandise that you might consider bidding upon. Now it's time to
get ready for the auction, so we'll start with a discussion of auction terms
and rules, and how to bid.
Step One: Register
Every auction I've ever attended (and that's hundreds of them) requires that
you register and get a bidder's number before you can make a winning bid.
Usually this means that you supply some form of identification, such as a
driver's license, and often your address as well. Chances are the auction
house will use this information to add you to their mailing list, and they
also have contact information should you make winning bids on stuff and then
disappear without paying. That's something I've never tried because I like
the stuff I bid on and I'm usually very happy with the price I pay.
Step Two: Get a catalog if there is one.
Some auctions have a written catalog that gives you an idea when various
lots will come up. When I first started going to auctions, I would jot down
the winning bid price for each item and then review those figures and look
at collector's books to see how the prices compared to the "book value."
Smaller country auctions don't have catalogs and sometimes even the lot
numbers are disorganized. In this kind of setting the auctioneer may just
grab an item and auction it off. While this may seem haphazard, the
auctioneers are generally pretty savvy. They start with some small pieces to
warm up, and then select items of greater value when the bidding starts to
pick up. But if there is a catalog that describes each piece (however
briefly) and the order in which items will come up, it's worth purchasing.
Step Three: Make sure you understand the rules for the
auction and common auction terms.
Generally, the auctioneer will recite the terms and conditions of the
auction at the start of the sale. In addition, the basic terms may be set
out in any newspaper advertisement for the auction, or listed at the top of
any flyer or printed catalog.
Let's look at some of the basic provisions you'll probably encounter
Payment. Usually auction houses will accept cash and some credit
cards. Frequent visitors may be able to pay by check and take merchandise
with them. Strangers will generally be asked to leave the merchandise until
after the check clears.
Terms. Each object is sold as is, where is, and when the winning bid
is announced, the bidder owns the object. That means most often if you
discover after the fact that the lamp you thought was a vintage bronze was
actually made in China a month ago, you own it. It also means that if you
drop that precious vase on the way to your car, you own the pieces.
Auctioneers who run a reputable shop try to describe each piece accurately
as they auction it. That includes describing any damage to the item. Many
better auction houses will take back an item if there is obvious damage that
was not disclosed when the piece was auctioned. This comes up most often
with chips on pieces of glassware and pottery.
So the fact that you own the item upon the declaration that the object is
"sold," means that you had better know what you're bidding on. That's why
the inspection period is so important. There's also the drawback that you're
responsible for anything that happens to the object thereafter.
However, there are some plusses. If you buy a "box lot," a group of items,
usually inexpensive ones, that are sold as a group (often in a box, hence
the term) for one bid, you may find from time to time that there's a really
precious item in the lot that the auction house missed. You own it.
Similarly, if you buy a dresser with a drawer that won't open, and when you
get home you find there's something valuable inside that drawer, you own
whatever that is as well. Remember, you bought the item you bid upon "as is,
Reserve or Upset Price. In some auctions, particularly very high-end
art and furniture auctions, some or all the items sold may have a reserve
price. This means that the owner of the item being auctioned has told the
auctioneer that the item can only be sold if the bidding goes above the
reserve price. This is sometimes called an "upset" price as well. Generally
the auctioneer should announce that there is a reserve price, but won't say
what the price is.
Buyer's Premium. Today many auction houses charge what is known as a
buyer's premium, often 10%. That means that the buyer's premium percentage
will be added on to the final bid price. So, if your winning bid is $110 for
a bronze lamp, when you go to pay, if there's a 10% premium, you'll be
charged $121, or the $110 that you bid plus $11 (10 percent of $110), for a
total of $121. And don't forget there's also possibly sales tax.
Sales Tax. In states where there is a tax levied on goods sold, the
auction house will be obliged to collect sales tax unless you are a
registered dealer with a sales tax resale certificate. The theory here is
that the sales tax is only charged to the final user, so if you're buying
something to sell to someone else (as is the case with antique dealers) then
you should be exempt from paying the sales tax, but as a reseller, you'll be
obligated to collect the sales tax from the final purchaser.
If you are a dealer, or more likely a designer or decorator, and have a
resale certificate, you should make that fact known to the people at the
front desk when you first register and get a number.
Don't be angry that you have to pay sales tax. It's not a decision made by
the auction house. An auctioneer explained this succinctly to a very upset
woman in front of me in the pick up line not long ago. Seems she was from a
state that didn't charge sales tax and she was angry that she was expected
to pay it in the state we were in. She just couldn't understand why she had
to do that. "Lady," the auctioneer said bluntly, "I don't charge sales tax,
the state government does that, I'm just obligated to collect it for them."
This means that your final price for an item will include the amount that
you bid, plus any buyer's premium, with any applicable sales tax added on
based on the total sale price, including any premium. To go back to our
bronze lamp example, the auction house would charge me $121 (my winning $110
bid plus the $11 buyer's premium) and then figure sales tax on the $121. In
New York City that would add another 8-1/4 percent!
No Children. This is a rule that you'll often see posted in auction
houses. The auctioneer needs to maintain a semblance of order in the room,
and kids who cry or talk can often create a distraction that interferes with
the activity. I find that this rule is not fully enforced. For example my
six-year-old daughter has been coming to auctions with us all her life. She
understands how to be quiet and I even let her pick out something that
interests her and I'll bid on that object for her. It's cheaper than a baby
sitter and not long ago she spotted a great cast bronze dog that has become
a family treasure.
These are the most common rules that you'll encounter. In most auction
settings, it makes sense to keep the rules simple and they stem from a
common tradition. Obviously, the most important item for you to know
beforehand is whether or not you'll be paying a buyer's premium on top of
your bid price, and if so, what percentage that is.
We are nearing the end of the fourth part of our Special Report on Auctions
and we still haven't gotten the auction started and discussed bidding
strategy and technique. The good news is that we'll start the auction (and
the action) at the beginning of the very next section. But for now, to
complete this installment, there are several other auction terms that we
need to define, so you'll know what the auctioneer is talking about. These
aren't really rules as such, but they're important.
Left Bid. Some times, individuals attend an inspection session, but
for whatever reason cannot attend the actual auction. In the case of
dealers, they may be at a different auction that is taking place at the same
time. In this case, the auctioneer should announce that there are left bids
and that the auctioneer or a member of the staff will bid for that absent
person. Now this might be an area for auction trickery, using a non-existent
"left bid" to push the bidding in the room higher. However, auction houses
that want to try to push the bidding higher can use the same technique with
"shills," or people who bid but don't actually buy, in the room.
As I mentioned in an earlier installment, and as we'll discuss at length in
the next installment, the defense against unscrupulous tactics such as this
is to have a top price in your head for each item you will consider bidding
upon. You simply stop bidding when that price is reached.
At the auction houses I frequent, the auctioneers are very honest with left
bids. They will tell the audience when the bidding has exceeded the left
bid, and also, if the winning bid is a left bid, the auctioneer will
identify the bidder by some type of name. "Mark that sold to Tommy," for
example. Some auctioneers will also tell the audience when the maximum left
bid has been reached. After all, if you're bidding on a beautiful rug and
the "left bid" is at $500 and that's the maximum amount the person left,
then it is in both your interest and the auctioneer's to let you know that
if you bid $550, it's yours. Of course, $550 is really $605 if there's a 10%
buyer's premium in effect. But then, the left bid would also pay a 10%
One Money. This simply means that a group of items, say a bedroom
suite, is being sold for a single price. Perhaps there are two beds (each
bed consisting of a headboard, footboard, and rails most states prohibit the
resale of mattresses),
two end tables, two dressers and a vanity with a bench. These seven items
are put up for "one money," rather than auctioning off each piece
individually. The theory here is that they're a set and should stay
Choice. Sometimes an auctioneer will have several similar items, let's
say five stained glass windows, none of which is an exact match. He may
elect to sell them "choice," meaning that the bidding is for any one window,
and the highest bidder can select one or more of the items. So, if the top
bid for "choice" on five stained glass windows is $75, the winner can take
his/her choice for $75 (plus any premium), or take two for $150, or take all
five for $375. If the winning bidder takes one or two windows, the
auctioneer may offer the rest to the back bidder for the same $75 price, or
may put all the remaining items together and sell them for "one money."
So Much A Piece. Sometimes identical or near identical items are
auctioned so that you're bidding for one item but the understanding is that
you'll be purchasing the entire set. If there are six dining room chairs,
the auctioneer will announce that he's selling the set, but the bidding is
for "so much a piece." This is also sometimes called "Six Times the Money"
or three times, or two times, or whatever the number of items. This way, if
the winning bid is $100, the total you will owe is $600, plus any premium.
This tactic has two benefits. First, it makes the price seem less, and
second, it makes calculating how much you're paying for each item easier.
After all, if the bidding for the whole set was at $825, how much is that a
chair? Another benefit to this method is that it sets a single price for an
item where there may be some differentiation. For example, a set of six
dining room chairs may include two chairs with arms and four without. If
your winning bid is $100, that's what you'll pay for each chair, even though
two have arms and four don't.
Bidding Increments. In a live auction, unlike eBay, time is money.
That means the auctioneer wants to sell as many lots as possible before
people start to leave. Hence, there are generally accepted increments, so
the bidding doesn't grind along from $72, to $73, to $74, etc. In most
auctions, the increment may be One Dollar from $1 to $10, Five Dollars from
$10 to $25, Ten Dollars from $25 to $100, Twenty Five Dollars from $100 to
$500, and Fifty Dollars above that. Naturally, when you get to fine art that
sells in the millions of dollars, the increments get higher and higher.
Generally the auctioneer won't bother to set out the increments, but he/she
will cue them in as the bidding progresses. "I've got $25, do I hear $35,
$35, $35? Will you offer $30, $30, $30? Thirty bid and now $40, $40, $40, do
I hear $40, $40, $40?"
This unusual vocalization is known as the auctioneer's "chant." It's one of
the most interesting parts of the entire auction process, and there are as
many different chants as there are auctioneers. A good auctioneer, with a
good chant, can move a lot of objects and raise the prices a bit by keeping
the auction house excited. The chant, the bidding, and knowing when to bid
(and when to stop) is where we'll begin next time.
Pick Up. What if you buy some gigantic armoire that you can't take
with you? Generally an auction house will hold items for a period of time.
They may also offer delivery services, since if you buy a bedroom suite and
a dining room suite, you probably need some help getting the stuff to its
However, there's one final step before the action begins.
Step Four: Find a seat where you'll be comfortable.
Many auction regulars like to sit in the back or to the side of an auction
so that they can keep an eye on other bidders. Others like to sit right up
front so they can look at the merchandise one more time when it comes up for
bid. I don't have any particular preference, other than a comfortable spot
with an unobstructed view. When I arrive at an auction, I set my jacket on
the chair of my choice and then go spend all the rest of the available time
prowling the merchandise and inspecting the stuff that interests me. I wait
to register until the auction starts. I can do that while the auctioneer is
going over the terms of the sale and talking to the audience. I don't want
to waste valuable inspection time standing in line.
What if something comes up that I want to bid on while I'm standing in line
to register? I go ahead and bid. If I win, and the auctioneer asks me for my
number, I just yell out, "Next number" and go to the head of the
registration line. I confess I've used this trick more than once to buy a $3
warm up box lot and cut to the front of a long registration line. Who says
the tricks at an auction are all reserved for the auctioneer?
Reprinted with permission from the Sheffield School of
Design web site at
Part Two Part Three Part Four