Integrity of Auction Houses ?

[MingmehDorji]

Hi,

How honest are Auction Houses ? In your opinion, are they helping the sellers or helping the buyers or more for themselves ?

I have a case in point. An associates placed pieces for auctioned and got burnt and vowed not to do it again.

In Auction Houses, for value below $1,000,000- the commission is 15%, and over that value one has to pay only 6%.

When a piece, auction closed to $1,000,000- the Auction House in questions has prior arrangements with buyer. If Buyer agreed to pay $150,000- reserved fees extra, Auction House will stop the auction in time.

Hence, Auction House benefit by ;

1) Still received 15% commission instead of just 6% if it goes beyong $1,000,000-
2) They get extra money $150,000-

Hence, it is a win win situation for Auction House to prior arrange and ask buyers to bid via Telephones.

Please give your comments.

 

[denverappraiser]

I think you’re wrong. The auction houses, especially the ones that can get million dollar hammer prices, are subject to a lot of scrutiny. Most, but not all, are public companies, which makes them subject to SEC reporting and regulation. They are very dependent on repeat business from both buyers and sellers and they take their reputations VERY seriously. What you are suggesting would be a clear breach of contract with the seller and collusion with the buyer. At the very least, this would get them sued and possibly even subject their employees to criminal charges. It would be easy to spot with a routine audit of their books, something that’s done on a consistent basis with every one of them and there is no way they could pull this off as a company policy.

Neil Beaty
GG(GIA) ISA NAJA
Professional Appraisals in Denver

 

[Richard Sherwood]

What auction houses are you wondering about? When you use the term "auction houses" you''re covering a wide gamut of establishments. Like humans, they cover the full range of integrity.

If you''re talking about Sotheby''s or Christies, I would agree with Neal. Additionally, you''re protected by a reserve which you agree to upfront.

 

[MingmehDorji]

Denverappraiser and Richard,

I totally concur with both of you, the regulations are there. If everyone being a law abiding citizen then it is heaven on earth indeed. How about enron ? isn''t it also regulated by the same regulations ?

That poor miner having got the fine stone, face this facts of life and would he then use his new found fortune to go to court with these giants ? No way man!

Dorji.