Do Homework Before Selling at Auction

Question: I was at an auction the other day and found it fairly confusing. I didn’t have anything up for sale, but I’m contemplating selling a number of items in an estate left to us by relatives. What does some of the jargon mean--such as “reserve” and “hammer price”?--D.P.

Answer: Spend as much time as you can talking to people in the auction industry and attend some auctions to acquaint yourself with the oftentimes fast-paced action of an auction event.

“Reserve” refers to the lowest price the seller will accept for goods that are being consigned to the auction house.

Some of the top auction firms with which we’ve spoken say the reserve is usually calculated only on the higher end of the price spectrum but can be used by anyone who wants to establish a price floor for the sale.

Generally, reserves are set at so-called “big city auctions,” where expensive merchandise is on sale.

Typical country auctions don’t have such formulas. This is why people with a nose for collectible bargains frequent such auctions.

Seller’s Estimate

The reserve formula might evolve from the seller’s estimate of the lowest price an article or package of items might bring. Then the owner would calculate the reserve floor somewhat under this low estimate. Sometimes the reserve could be as much as a third under the low estimate.

If the reserve price isn’t achieved, then the items for sale are “bought in” by the auction house. This means that they can either be returned to the owner or, under an agreement with the owner, offered at a subsequent sale.

There’s nothing mysterious about the “hammer price.” That’s simply the final price at which the auction “lot”--a group of works offered for sale at one time--is sold. Naturally, the auction house is going to encourage the highest price possible for the lot, because the house gets a commission on the sale.

Sellers, in auction jargon, often are called “consignors.”

Auctions can be complex affairs unless you do your homework. One basic rule to always follow: Inspect the merchandise before you offer a bid. Any reputable auction house will make the items available for public inspection a day or more before the auction takes place.

Additionally, higher-priced auctions usually generate a catalogue in which the public can review what will be offered for bid.

Buyer Beware

A note of caution on auction catalogues, however--they may not always be the last word on the merchandise going on the auction block. Buyer beware is the rule on any catalogue errors regarding an item’s authenticity, history, condition, price, etc.

Although it’s possible, the odds appear against the “little guy” making a killing at an auction in terms of a major collectible find.

For one thing, consignors who engage auction houses usually have some sophistication and have screened their offerings. If the lots have significant value, then the seller has undoubtedly called in professional appraisers before putting the merchandise on the auction block. And if the buyer is careful, at least two appraisal opinions will be sought. Additionally, the auction house’s staff will comb through the material as part of the price-setting process.

The novice--or even more experienced collectors for that matter--shouldn’t be reluctant about gathering information about items to be placed on the block; reputable dealers, other collectors and people you meet at auctions often can be helpful. Such contacts will help build a reservoir of information about collectibles and keep the collector aware of trends in the marketplace.

Ronald L. Soble cannot answer mail personally but will respond in this column to questions of general interest about collectibles. Do not telephone. Write to Your Collectibles, You section, The Times, Times Mirror Square, Los Angeles 90053.