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In-Depth
Oh, I Really Shouldn’t Have…
What happens when you buy a piece at auction and change your mind? What happens to pieces that fail to sell?
By Ettagale Blauer
The hammer comes down and the lot is yours! But now you’re having second thoughts. The price was a little more than you wanted to spend and you didn’t
figure in the buyer’s premium, the fee added onto the hammer price by the auction house. It is
based on the final bid price and can add a whopping 12 percent to 25 percent to the sale price. What are your options?
Very few, according to virtually all the auction house jewelry experts consulted on the question. “When you raise your hand,” says Gloria Lieberman, Skinner’s vice president of jewelry, “you are entering into a binding contract.” Ann Lange, director of the jewelry department at Doyle New York, echoes that notion
with an acerbic reference: “This isn’t Bloomingdales,” meaning, you don’t
just return things after you’ve taken
them home and tried them on.
Susan Abeles, head of U.S. jewelry for Bonhams, agrees, “Once the hammer falls, it’s a legal obligation.” However, when a winning bidder does get a case of buyer’s remorse, Abeles says she will make an effort to find another buyer for the lot. “We will approach the underbidder; we will re-offer it in another sale.” She notes that
her approach “is on an individual basis.”
Lange also may place the sold goods back on the auction block for a future sale but in general, she says, “We try to be tough on it. Sellers have to wait months for the sale. It’s not fair to them if the buyer reneges.”
Nazgol Jahan, Phillips’ worldwide director of jewelry, says that buyer’s remorse “happens rarely,” but when it does, “we chase the payment. We are relentless.” If the buyer is still reluctant to pay, Phillips gives the seller an option. “The seller can ask for the piece back or leave it for re-offer in a future sale. We also may contact the underbidder” to see if there is still interest in the piece.
One of Lieberman’s buyers at Skinner took care of her own buyer’s remorse. “We just had a woman who bought a bracelet. She was disappointed with it and resold it herself. Now she’s back to buy something else.” Lieberman points out that the buyer “never saw
it in person,” and that’s a big problem for inexperienced buyers. “If we feel the buyer has made an honest mistake, we may resell it for them without commission. We discourage taking something back. We are careful who we sell to. You can tell if someone is hesitating” in the auction room. Lieberman points out one of the unique aspects of
bidding at auction. “It’s a psychological battleground. There are a lot of egos.”
Joseph DuMouchelle, president of the auction house bearing his name, says buyers who change their minds are “not an issue for us. The way we are structured, our estate items are really desirable. People want the items they have purchased. We have almost 100 percent collection on bids. It’s rare that we have an item that isn’t paid for or picked up.” In the rare instance it does happen, he notes, “It might be an economic change in a client’s life. We are very willing to work with people.”
In all but the most star-studded A-list sales, there are some lots that fail to find buyers. These so-called buy-ins are lots that are passed over because they don’t meet the reserve price, the lowest amount the consignor will accept, an amount that is not revealed to bidders. Bidders are guided by the low and high presale estimates made by the auction house, which indicate the price the lot is expected to achieve at auction. Lots are passed over for a number of reasons, including an unrealistic reserve price, too many similar
lots on offer at the same time or a sudden downturn in the economy.
What happens to these items after the sale? “The first call is to the owner,” says Lieberman. If bids were placed on the lot but at a lower price, Lieberman says she
might ask the owner, “‘Do you want to sell at that level?’ Some say ‘yes.’” One of
the new factors affecting reserves is the historically high price of gold. “You don’t
want to sell below the metal value,” she adds.
Phillips’ Jahan says that buy-in lots “go back to the consignor unless a buyer emerges who, for one reason or another, missed the auction and who agrees to pay the low estimate plus the buyer’s premium.” Jahan will offer the piece in the next available sale if the seller agrees to a revised reserve price. Most of the time, she says, unsold pieces are returned to the sellers.
Consignors at Heritage Auctions are presented with a wholly different option for their unsold lots. Jill Burgum, Heritage’s director of fine jewelry, says the auction house “has
a ‘Post-Auction Buy’ period that runs for two weeks following every auction. During this time, unsold lots remain available on our website. Clients may push the ‘Buy It Now’ button, or make offers on items. We direct the offers back to our consignors in the hope
of converting opportunities into sales.” After that generous time period, consignors of lots that remain unsold have two additional options: They may re-offer the items in the next available auction or reclaim personal possession of the item. “The majority of our clients decide to re-offer,” says Burgum.
But there also is a third option for Heritage clients. “We can arrange a Private Treaty sale. This tends to occur more with higher-value items. In the event a consignor still wants to sell, but prefers not to wait for another auction — which might be four or five months out — we contact a small number of our most affluent buyers to see if they have any interest in property acquisition. It is truly about connecting with the right client for a specific item.” Article from the Rapaport Magazine - February 2013. To subscribe click here.
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