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The Arrival of the $300-Per-Lot Minimum

by Harry Rinker (05/12/10).

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.

Harry RinkerWhen 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.

Ask A Worthologist[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?

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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 harrylrinker@aol.com. 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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5 Responses to “The Arrival of the $300-Per-Lot Minimum”

  1. Nick Ryan says:

    Harry, that’s the downside of auctions in America !!! We have regular Local auctions in Australia, they are thriving, you can pick up bargains, everything is sold although there are reserve prices on certain pieces.

    Don’t let Auction houses dictate to the public, we are the buyers, Auctions need buyers. I can understand the top end houses needing more money to host high end auctions.

    Fortunately the country auction is alive and well & thriving in rural Australia.

    Nick

  2. Tracie says:

    At a $300 minimum per lot, I would never even set foot again in an auction house. If they go under it’s their own damned fault for being stupid and greedy.

    The only reason to go to an auction is to try and get deals; this negates that possibility.

    There is a small store-front auction house near me. Their overhead is not insane and they do a ton of business. There is no reason in the world for local auction houses to have enormous overhead “justifying” these sort of minimums. No one I know gives a damn if there is plush carpeting and glossy brochures (especially since an internet website can be used as the “brochure” and costs nothing) or an address in a chic part of town. All we care about is the possibility of getting a nice deal or find.

    The only things auction houses need is a storefront (or even just a warehouse), 2-3 employees cataloging and grouping a few days a week (where I live these employees are paid $10-12 an hour, just like an ebay lister job only they don’t have to write long descriptions and photograph every single angle), an auctioneer for auction night and free craigslist advertising.

    Thanks to the internet with free websites and craiglist, the cost of running an auction house has actually gone way down since now there is no need for expensive ads in the newspaper and glossy brochures.

    $300 minimums is just bad business thinking and greed. Anyone that knows anything about auctions knows that if you set the minimum too high, you will attract fewer potential buyers and get fewer bids from those buyers that do show up.

    You can move ALOT more product and attract ALOT more potential buyers if people think a deal is a possibility. Often they’ll even end up paying more because they get caught up in bidding fever while chasing a deal.

    Like I said, stupid and greedy. On the other hand, as these idiots put themselves out of business, this leaves a very nice opening for anyone that wants to run an auction house the sensible way. No glitz, glam or gloss; just potential deals.

  3. Donna Moore says:

    Our auction house in Danbury Connecticut has a $50 per lot minimum (it has to be antique or vintage, clean and in great condition). The biggest problems are getting buyers to the auction- advertising is expensive and getting sellers to let go of their super high expectations. With the $50 per lot minimum we have the confidence that the market will take care of the pricing. Things will sell for what they are worth. What we can not take is dirty broken junk and we see lots of it!

  4. This is an interesting topic which brings to mind something else I’ve been pondering of late regarding the world of antiques. What about all the natural disasters occuring all over? Even in inland Tennessee! With so many large areas being completely destroyed, so are all our inheritated antiques; not to mention the amount of folks no longer able to afford them. My personal opinion is that dealers like myself are setting on a gold mine with few places left to “cash in”.

  5. Nick Ryan says:

    Susan, don’t worry, If you are sitting on good antiques, a Gold Mine as you call it, you will always have a market for them. We are experiencing record prices the world over for good quality ‘proper’ antiques.

    The world has experienced natural disasters since time began, thus creating antiques in the first place. A reduction of supply causes increased rarity. More of a threat would probably be reproductions or worse, fakes, the quality of these items is at a level where even the experts are fooled, often!!!!

    Kind regards, Nick

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