A Windfall Too Good to Be True - selling items through auction houses - Brief Article

Kiplinger's Personal Finance Magazine, March, 1999 by William Giese

An auction brings an easy fortune, but getting hold of the money is not so simple.

It's a shame the top is warped," said the auction man who came to inspect my antique chest for possible sale. The chest, passed down by my eccentric Aunt Boo some years ago, was a pretty thing, about 3 feet high and 4 feet long with lots of intricate inlaid wood. But its joints were loose and not far from collapse. City heat had warped the chest surface into an M shape, and my cat was forever clawing off bits of inlay.

The man guessed my chest would sell at auction for $7,500, but that in good condition it might have fetched twice as much. "A shame," he repeated.

7,500? Dollars? I was a starving writer, I needed the money, and the chest was doing me no good. So I quickly signed the consignment contract--to heck with the fine print--and the chest was soon gone.

Weeks later came a glossy antiques auction catalog, including my chest, now described as an Italian Neoclassical Marquetry Inlaid Walnut Commode. Late-18th to early-19th century. It carried a $3,000 to $4,000 sale estimate. So much for the $7,500 but, heck, I'd expected them to exaggerate at first.

TO SIR. They held the auction on a sunny Sunday last March before 20 or so retail bidders, plus a smaller group of professionals sitting to one side with special desks and telephones. One foreign woman talked into a cell phone to her boss. Another pro whispered to a friend that she liked the "Italian stuff." That was my chest.

The sale began. The auctioneer began his plummy mantra, and bidders blasted past the catalog sales estimate within the first ten seconds. "Sir, they are now at $4,500," the Cell Phone woman confided into her fist. "Now at $5,000, now at $5,500." I needed to change my shirt.

"Sir, they are now at $11,000. Now at $12,500, sir. $15,500, sir. $18,000 now, sir." Bidding stalled there in the high teens, but then the auctioneer really began earning his money, moving prices hypnotically upward in even larger increments. "$20,000, sir. Now $25,000. Now $30,000." $42,500. Everybody clapped.

Floored, I left, not knowing who had bought the chest or why it was worth so much. In the parking lot I let loose a "ya-HOO!" It felt so good I did it all the way home. I knew what I'd do with that lovely $42,500 windfall: Spend another year writing a book.

REALITY CHECK. Then I waited. In April I called the auction house and asked when, uh, my money would arrive and was told to expect it 35 business days after the sale. That took us into May. No check, so I called again. They said there'd been a delay. Read the contract, they said. I read the contract--the fine print this time--and wished I'd read it earlier. I'm no lawyer, but it appeared to me that I had no rights whatsoever. I supposed, for example, that they might pay me with a 30-year note. They might void the sale or rework the terms. "That's some lulu of a contract," I told a company executive. Selling at auction, he agreed after a low chuckle, "isn't quite a seamless environment for the consignor."

I finally pried out of the auction people that they had given a special deal to a favored customer, who had paid 10% for my chest at sale time with another 40% to come in 30 days and the rest 30 days after that. I begged and threatened until finally they sprang loose $20,000 in partial payment. That took us into June. I called about the rest of the money. Any day now, they replied. Uh-huh.

At last the check arrived. The second and final payment of $17,576.12 reflected deductions for the 10% sales commission and charges for insurance, catalog, photos and trucking.

After taxes I guess I'll clear enough for half a year and half a book. Or a trip to Italy and a novella. Or maybe just a long stay in Italy and to heck with the book.