So what happens when a major auction purchase goes unpaid.
Coinstartled
Posts: 10,135 ✭✭✭✭✭
Does the auction house make good and pay the consignor or is the coin simply re auctioned or returned?
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I had a 5 figure coin consigned to be sold in a Heritage auction. The coin had no reserve and sold for $11,000. I was later contacted by Heritage and they said the buyer did not pay. They offered to have the coin sold at their next auction. I told them to just send the coin back to me. A few months later, I received an invoice for $77 for the failed sale of the coin at their auction. I told them no as it was their problem. To this day, 3 years later, I still occasionally receive a $77 invoice from them. I guess they think they should be paid for their failure.
Guess I have my answer. How did they figure $77 though?
I beleve shipping fees, insurance, marketing, picture taking etc.
Great...so the option would be to run it 6 weeks later with little advanced marketing and folks scratching their beards why the coin was relisted.
I had not thought of this issue with major auction houses...Of course it does happen, just always thought it was a problem with ebay and other minor players. I do agree with your action... send the coin back to me. Cheers, RickO
It depends, Sotheby's had this happen with the "Pink Dream" diamond that sold for over $80 million. In this situation, the buyer defaulted on payments and Sotheby's assumed possession and was on the hook for paying the consignor $60 million because that was what they guaranteed the seller originally.
Andrew Blinkiewicz-Heritage
@Coinstartled : You aren't trying to back out of that Jackie Robinson gold commem now are you?
Latin American Collection
Ahem......Ian's money is safe.
Heh heh.
I would have told them that maybe they should market to people who pay their bills. ¯\_(ツ)_/¯
Bidders who don’t pay for their auction lots really get under my skin. Back when the Worthy Coin bid wall was operating in Boston, some guys ran up tabs on lots for which they never paid, or paid only if it was to their benefit. For example, of there was a lot of junk silver coins and bullion went up they paid for them so they could make their profit. If bullion went down they didn’t pay. I was not into bullion, but that situation still stunk.
For “real coins” I’d have guys bid against me who won’t pay their bills. It was my hard money against the hot air from their mouths. This was an ongoing issue for me, but I kept going back to the boards because I ended up with a lot of really nice coins.
Then the shilling and nonpayment situation got worse. The house shill was so obvious it was impossible to miss him. I stopped going to those auctions the last couple of years that the store was still in business.
I don't know how common it is in coin auctions but my experience with trying to auction oriental rugs and artwork has left me very suspect of the auction business in general. I sat through the auction of my oriental rugs and saw, or so I thought, all of the rugs sell. A short time later all of the rugs were returned with the explanation that the bidders had not paid. I am certain what actually happened was that the auction house was protecting their own market (they were active in oriental rugs) by establishing false prices realized. This was the last time I set foot in that auction house ... they are still in business ... and this happened more than 30 years ago.
I attempted to sell some more oriental rugs in 2001 at a different auction house. Again, it appeared that everything sold but I ended up getting a couple of items back ... simply being told the bidder did not pay. This case had a happy ending, however, as I auctioned the rugs a few years later on eBay and did better than the auction house by a good margin.
In the case of artwork, well done but by artists the "market" had never heard of (or promoted) nothing sold. I still have them. I may someday just reuse the frames. (Framing is expensive.)
If you are a minor consignor, once the auction house has your signature on its submission form, you are pretty much at their mercy.
How can and why do people bid things up, win, and walk away? Can't the auction firms force them to make good?
Isn't there some kind of legality involved with this?
Unless the legal system is just too expensive to pursue these things, it is a sorry person who gets away with walking away after bidding. It's just not right.
OK......criticize me for being on the moral high ground if you want.
I would not, and never have reneged on a bid, even if it was stupid impulse and I ended up winning.
It's just something that shouldn't be done for any reason.
Pete
Auction firms can force specific performance through the legal system. Easier to just block them and send the item back to the consignor I suppose.
Use of the legal system is expensive, very expensive. It is also time consuming. Unless something major is involved and an actual payment seems likely if they win the case the legal system is of no real use.
Sometimes people get confused and bid on the wrong lot or buy sight unseen and don't like it on arrival.
Things happen.....
Just ensure that if you have any special terms not listed that they are added in signed by both parties. That happened to me at a major coin auction in 2004. I had them include the auction locations I would agree to as well as page size, reserves, etc. When they tried to slip them into a less-traveled auction I was able to have them pulled out. Whatever special terms you want, get them in writing. No one says you have to sign the contract as written which gives the auction house free reign as to venue, time, etc.
Yeah, and sometimes the Auction House sends you a different coin than the one you saw in person. That happened to me at a major auction in 1984. Bid on a toned gem unc bust quarter that was wonderful. The coin they sent me had rail track gouges across the obverse....not the same coin I spent 10 minutes pouring over.
Big advantage today bidding on coins where most everything is photographed and documented. That dealer from 1984 ended up serving a few years in jail for coin fraud 22 yrs after this. Things do catch up to you eventually.
https://forums.collectors.com/discussion/512049/coin-dealer-convicted-of-ebay-fraud/p1
Read your consignor contract. That tells you what happens to you. Also, read the bidder contract, that describes the auction company's remedies and sometimes refers to the consignor.
Back in the early 80's Dave Bowers, then President of the ANA, was at the Summer Seminar and was sharing stories with the students at one of the evening sessions. He told how dealer Kenny Fretwell bought I think it was three coins at one of the Garrett Sales for around $225,000, arranged to have the coins shipped to him after he paid for them, and when he got home from the auction was murdered as he opened his shop to drop some stuff off.
Bowers and his company offered to the widow to try to sell the coins to the underbidders and wipe out his debt, but she insisted that if Kenny bought the coins they must be good and she would pay for them as soon as she could. Then the market crashed and of course she never paid for them. Eventually Bowers re-auctioned the coins and they realized just under $100,000. They gave the entire proceeds to Johns Hopkins and tried to collect the balance from the estate on behalf of the consignor, but I doubt they ever did.
Wow, Henway. That story sort of gives me a stomach ache.