AMERICAN PHILATELIC FOUNDATION
A NON-PROFIT ORGANIZATION SERVING THE PUBLIC
AUCTION PITFALLS
I have been an active appraiser, buyer and knowledgeable philatelist for fifty years now. In that time period I have come to know the pros and cons of the stamp World. If you are a novice or inherited a valuable stamp collection it can be very dangerous to sell or consign a large collection for auction or even worse to one of the large stamp clubs.
The auction “STING”: Scenario #1 is when someone who inherits a collection will usually call in the local dealer or dealers for an offer. As you are not the collector you do not know if the offer from the dealer is legitimate. Some people will go on their instinct and sell the collection. The happy dealer walks away with that famous grin knowing he has just ripped you off.
Scenario #2 is your instinct says no I think I’ll get another opinion not aware that dealer # 1 has called all the local dealers to describe your collection and what he or she offered you, bingo after the second or third dealer tells you about the same price you finally sell. The successful dealer walks away and all three dealers have the smile as they divide up your collection between them usually for about ten percent of its cash value!
Scenario # 3 you are still suspicious and tell one of the dealers “I think I’ll contact an auction house. ”With a very serious look on the dealers face he says” good idea and let me tell you who to call.” Of course the dealer receives a finders fee and the auction house comes to your door, suit and tie of course looking very formal. The auction house has been told of course what was offered and within a very short time doubles that figure! How say you? It’s been going on for decades. When I was twenty one I worked for a major auction house and left them when they told me I was to double all offers verbally and have the consignor sign a five passage contract that stated in fine print “we can’t guarantee the final results.” It was just that simple. The auction house takes out their check book and gives you an advance the size of the dealer offer. What you see is what you get and no more. No more you ask, the final statement sent to you will in some cases show the sales did not even match the advance check and asks you to mail them back the difference. Over the years I have had numerous complaints to this result and conclude only a very few do not practice this and to be very careful on the west coast especially.
THE AUCTION HOUSE
The average auction house collects a commission of 30%, 15% from the seller and 15% from the buyer. Most collections are bought by dealers who have been known to collude prior to the auction to set prices way below wholesale value. If you are not familiar with the US and International auction houses and some stamp clubs your collection if consigned may not even end up the way it was given. Yes, missing stamps, substituted stamps are common with some auction firms. Unfortunately for legal reasons I can’t provide you with names of the buyers or firms. One of those firms located on the West Coast uses a team of highly trained snoopers (stamp dealers) who at first will try and buy your collection at a fraction of market value. If you turn them down they refer you to a particular auction house that will split the commission profit with them for the referral.
I have tried unsuccessfully to both educate the dealers to be fair with the public and have in the past recommended certain dealers over the years (geographically of course) and all to no avail. I find for the most part the public is just “ripped off.” After forty years our Board has decided we will do these appraisals at our cost (time wise) and help sell the collection if feasible and with your approval.
You can protect yourself! What we can do if you have a serious collection is appraise it for you and if I feel you have rare stamps recommend the firm best suited to maximize your return. A few legitimate Auction houses in the US and abroad are known to specialize and my knowledge of their specialty is important for the seller. You can actually send the collection or photo it to a disc. A donation of $200 is appreciated. Just send your collection or digital pictures to us by using UPS or FedEx or registered mail to The American Philatelic Foundation Appraisal Center. If you have any question please call my private office (310) 275-3256
STAMP CLUBS-TAMMANY HALL
Yes, Tammany Hall or what I also call "the good old boys." When I was eighteen I joined one of these so called clubs. After acquiring about ten years of knowledge as a buyer I requested my name to be used as one of their recommended appraisers. It was not to be. Over the years I had the pleasure of being called in from my own yellow page ad to make an offer on estates where the official club appraiser-buyer had already been. In every case including one collection where $10,000 had been offered (I bought it for $20,000) I was always 50% higher or more. A very scary organization has the audacity to send out preprinted labels that are placed in every album with the name and address of the collector and instructions to contact the "club" if the collector is deceased! A local club is certainly OK if you want to smooze with other collectors just beware of selling or consigning your lifelong investment to one of its official buyers.
HOW TO AVOID THIS STING
Avoiding this rip off is simple; after hearing their pitch and looking at their contract just state boldly: What is the minimum guarantee? The auction representative will look startled; this is the worst possible situation for them, the time of truth. They will then proceed to bull shit you on why that’s not possible using any scenario that comes in their head.
When you finally push them on the issue by firmly stating without a minimum guarantee you will not consign the collection they will state, (keeping in mind Grandpa says it was worth $100,000) “well of course I can only guarantee a small amount to protect my company”. They then will quote you anywhere from ten to twenty percent of what they had originally agreed it would bring, $100,000 or more! Also keep in mind by the time the auction house deducts their various fees and commissions you are likely to end up with much/much less.
E-BAY
Many collections consigned to our organization have been sold by The American Philatelic Foundation on EBay until recently. As a matter of fact for nearly eight years EBay has been a good marketplace to sell. Not any more in the stamp category. It is a great place to buy collections but recently one of the larger stamp club organizations has taken over the stamp division completely changing the concept of auction to retail sale with only warrantees for the buyer and no protection for the seller. The organization has done away with buyer beware and selling as is. If you are trying to sell a Worldwide collection on EBay better carefully identify any dubious item and according to EBay rules mark each dubious item as a forgery right on the stamp. Miss one item out of thousands and as a buyer you can return the collection and EBay will force the seller to refund the full price. As 99% of us do not have the kind of knowledge to identify good forgeries including myself my recommendation is to not sell general collections if you are a stamp dealer on EBay. If you are an active collector and not aware of this take notice. I foresee in the near future other categories falling into the same place. As many bidders suffer "buyers regret" by paying or bidding too much just imagine if you bought a $75,000 Lamborghini on EBay only to have your spouse declare it was divorce time (over the purchase) an unethical party could sabotage the car or any item, claim it arrived "not as described" and EBay would force the seller to take back the item.