Question about advances verses reserves at auctions

Longacre

Here is a quote from the Market Talk column at Albanese Rare Coins about the FUN auctions: "Yes several super coins brought record-breaking prices but many didn’t and fell through the cracks!! That isn’t good for the consigner for sure as many took large advances and were not able to protect their lots with reserves. In cases like that most of the time “YOU LOSE”; it's not all gravy for sure."

I am not sure what they mean by taking an advance and not being able to protect their lots with reserves. What is the relationship between these two items? Do you get an advance based on what the estimated selling price will be, which is treated as a reduction to the reserve between you and the auction house? Can someone explain? Thanks.

elwood

If they took an advice on the value (estimated value) of the coin and failed to put a reserve on the coins (coins sell for less than the advance), then they could actually end up owing the house money.

A margin call so to speak.

Conder101

Some acution houses will give you a percentage of the expected hammer price when the collection is consigned if you request it. This is called an advance. If a consigner takes a lage advance against the expected final price but the sale doesn't do well, he may find himself owing money to the auction house after the sale.