The Arrival of the $300-Per-Lot Minimum
I attended my first auctions in the 1960s just as the Golden Age of the Country auctioneer was drawing to a close. Most auctions took place on site. The auctioneer sold from the porch or a portable box that he moved from outside location to location. In a few instances, I followed the bidders from room to room as the auctioneer sold goods inside. Although this type of auction still occurs, it has been decades since I attended one.
By the 1970s, many auctioneers opened auction barns where they conducted once-a-week or twice-a-month auctions. Others rented fire halls and other civic facilities. These auctions featured objects that came from combining estates and/or consignment. Hard core group dealers had reserved seats in the front two or three rows. Large pieces were located in an area beside or behind the auctioneer’s podium. Smalls and box lots were laid out on tables along the outside walls.
When it was time to sell smalls, runners would select objects from the tables, place them on a tray, and take them to the auctioneer. The auctioneer would select an object and offer it for sale. Occasionally, the auctioneer would sell by choice. Bidders would compete for the right to select one or more objects from the tray for the final bid price. Once the sold item(s) was removed, the bidding started again. The process continued until the remaining items on the tray were offered as a lot, one price takes them all.
Even in the 1960s, objects at Country auctions sold for hundreds and thousands of dollars. These were the exceptions. More than half of the offerings brought less than $50. Many box lots sold for dimes or quarters. A box lot realizing more than $5 was unusual.
Several key changes occurred within the auction environment in the 1970s. Sotheby’s and Christie’s entered the picture. High-end merchandise gravitated to New York and other large city catalog houses. While the small local auction barn survived, several developed into strong regional auction houses. These captured a portion of the high-end and most of the middle market. The American Bicentennial called attention to the importance of collecting and living with antiques and collectibles. The Country Look and the antiques and collectibles associated with it were prime beneficiaries.
As Americans became collecting conscious in the 1980s, prices of antiques and collectibles rose. Increased competition at regional and national auctions drove up prices. Trade periodicals, as well as the national media, began reporting auction results. The general conception that there was no limit to what an object was worth proved a boon to auction prices.
The recession of the late 1980s-early 1990s and the growth of electronic accounting software encouraged auctioneers to evaluate their sale practices. Auctioneers began to focus on the average lot price and cost of sales. Christie’s spun off Christie’s East and Sotheby’s its Arcade to sell lots valued below $1,000, reserving high-end items for specialized and single-owner catalog sales.
Although never in dispute, local auction houses and auctioneers became more aware of the fact that it cost just as much to sell a $5 lot as it does to sell a $500 lot. Once the unit sale idea was firmly implanted, auctioneers began to establish per-unit sales goals. Initially, these goals were modest and not discussed openly. Most bidders were unaware they existed. The increasing practice of grouping objects into lots went largely unnoticed.
Although Christie’s and Sotheby’s never published their per lot minimum, the amount was openly discussed in the trade. A $1,000 per-lot minimum was in place by the mid-1990s. It rose to $2,000 as the century ended. Today, the minimum is either $5,000 or $6,000 per lot, depending on the source. Christie’s closing of Christie’s East and Sotheby’s abandonment of its Arcade had wider implications. In essence, Christie’s and Sotheby’s conceded the sub-$5,000 per-lot material to the regional auction houses. Further, Christie’s and Sotheby’s reduction in their specialized divisions allowed this material to gravitate to the strong specialty auction houses.
[Author’s Aside #1: It is expensive to run an auction house or gallery. By the early 1980s, the percentage charged the seller no longer provided sufficient income to meet costs. This resulted in part from the lowering of the selling commission to attract material in a highly competitive marketplace. Auction houses instituted other fees, such as charging for the placement of photographs in catalogs and sharing advertising costs. The auction buyer’s premium penalty—a payment for the privilege of buying—was the most egregious invention. It provides a cash guarantee for the auction house when an object is sold. The institution of a per-lot minimum is just another attempt to achieve profitability.]
When the per-lot minimum at local, regional and specialized auctions was $50 or $100, it drew little attention from the collecting community. Many lots were sold individually. Grouped lots consisted of two or three items. Large lots were being sold as boxed lots.
This recent Great Recession caused many local, regional and specialized auction houses to examine their per-lot minimum. In 2010, $300 is starting to replace $100 as the per-lot minimum. The amount of objects involved increases exponentially when considering the number valued under $100 versus the number valued under $300.
If you are a collector, examine your collection. How many objects are worth $300 or more? How does this number compare to your collection count?
The $300 per-lot minimum is a serious threat to how business is done within the antiques and collectibles trade. If auctioneers are no longer willing to sell objects unless their individual value or lot value exceeds $300, the average collector is faced with finding an alternative to selling the majority of his collection.
[Author’s Aside #2: I am not being judgmental. Auctioneers have every right to institute a $300 per-lot minimum. There are times when they must place their interests ahead of their customers. This is one of them.]
If the $300 per-lot minimum has dire consequences for the collector, it has catastrophic consequences for the person who needs to dispose of household contents. Auctioneers of household contents have been in a quandary for more than a decade. It is becoming increasingly more difficult to meet expenses, let alone make a profit, when selling household contents. Household auctioneers have developed per sale minimums, a number today that exceeds $10,000 ($25,000 in some instances) and is becoming more and more difficult to reach during the Great Recession.
What is the fate of low-end material, whether household goods or part of a collection? The fate of most household goods is likely to be the landfill or “free” boxes placed alongside the curb or road. Garage salers are junking far more than they are selling. Collectors have no choice but to become dealers, either setting up at flea markets, malls and/or shows or selling on the Internet until their material is dispersed.
While the Great Recession has accelerated this process, it is not the cause. This trend has been blowing in the wind (it is a cliché, but appropriate; hence used) for more than a decade. It appears irreversible.
The general public and the small collector are the market segments that are hit hardest by a $300 per-lot minimum. Since the introduction of this minimum is in its initial stages, it will take five to eight years for its full impact to be felt. Now it is in place, there is no reversing it—a sad truth.
For the moment, antiques and collectibles investors are safe. However, the $300 per-lot minimum will eventually rise to $500. When it does, the investor will lose his/her immunity.
Is the Internet the only sale option remaining for the sub-$300 item? I want the answer to be no. However, I have not been able to identify other viable alternatives. Any suggestions?
Rinker Enterprises and Harry L. Rinker are on the Internet. Check out his Web site.
You can listen and participate in Harry’s antiques-and-collectibles radio call-in show “Whatcha Got?” on Sunday mornings between 8 a.m. and 10 a.m. Eastern Time. It streams live on the Genesis Communications Network.
“Sell, Keep Or Toss? How To Downsize A Home, Settle An Estate, And Appraise Personal Property” (House of Collectibles, an imprint of the Random House Information Group), Harry’s latest book, is available at your favorite bookstore and via Harry’s Web site: http://www.harryrinker.com.
Harry L. Rinker welcomes questions from readers about collectibles, those mass-produced items from the 20th century. Selected queries will be answered on this site. Harry cannot provide personal answers. You can e-mail your questions to firstname.lastname@example.org. Only e-mails containing a full name and mailing address will be considered. Please indicate that these are questions for WorthPoint.
Copyright © Rinker Enterprises, Inc. 2010
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