Collusion, Shill Bidding, and Side Deals!

You’d think that a country auction would be a safe place to be!

One of the first things you learn when you become an auctioneer, is that nothing is more important than having an honest reputation.  One little indiscretion, one sketchy episode, one little shady deal can ruin you. And while tonight’s auction may last only a couple of hours, the scandalous gossip and embellishments of any questionable transaction, will go on for weeks.

The good news is, that in my experience so far, people are pretty honest.  Maybe they’re just ethical people, and want to be honest, or maybe they are horrified at the thought of being blacklisted in whatever circle of collectors they are in. But either way, most people tend to go out of their way to be honest, so I don’t want my writings here to darken your thoughts of antique dealers and auctioneers.

But in reality, a full book could be written about the side dramas, scandals, and shifty characters you will run across in this business.  For decades, I’ve been way, way out of the loop, just showing up at a local auction once a month, or maybe going to a regional antique bottles auction once a year. You get a much different perspective, the closer you get to the action.

I had heard of “shill bidding,” of course. This is where an unscrupulous auctioneer has someone in the audience bidding items up, with no intention of buying the items.  If this happens, and the auctioneer gets caught, he would lose his license, which he could renew at some point, and lose his reputation, which he could not renew.

The scuttlebutt that is usually going on in the whispering corners of the auction hall parking lots involves more of a sort of “soft shill,” meaning something may not be formally arranged, but a couple of the high end wheeler/dealers bidding out in the audience are bidding things up just to keep the prices of each other’s items high, even if it means they wind up buying the other guy’s stuff!  For example, if you’re a license plate collector at a big national auction, and you consign 20 rare plates to an auction, but the prices tank, it adversely affects the value of the other 500 high value license plates you still have at home.

So many people think and gossip about the idea of collusion by the “rich guys” to keep the prices high.  The culprits agree, with a wink and a nod, to bid up each other’s stuff, without the auctioneer even knowing that it is happening.  Both bidders/consignors wind up going home with more license plates than they had been trying to sell at the auction.  But now they have some new ones to add to their collection, and they have bumped up the price ceiling of the values in their field of collectibles.

Although this practice is not illegal, and maybe not even unethical, it is frustrating if you’re one of the run of the mill collectors the next week, trying to sell your items at antique shows, with poor results. There you sit in the auction wondering why prices other than yours are soaring!

About twenty years ago, I found myself in “side deal” at an auction.  It felt “wrong, ” but still to this day, I’m not sure if it was or not. I’ll tell you one thing, it was interesting to say the least.  It tested my math skills, and I’m not talking addition and subtraction.  This little side deal involved calculating the “value” of an item as a moving target, with multiple other factors needing to be taken in to account.

This happened innocently enough, as I showed up randomly at a very nice local estates auction that had lots of good looking stuff.  As usual, I was looking for antique bottles, which usually show up in box lots, near the end of the auction. As I entered the huge ballroom, my eagle eye instantly saw something awesome.  Sitting by itself on the bright white table cloth was a gorgeous 8 sided hand blown ink bottle, with a pontil marked base, in COBALT BLUE glass.

Sitting by itself on the bright white table cloth was a gorgeous 8 sided hand blown ink bottle, with a pontil marked base, in COBALT BLUE glass.

This bottle, back at that time, was red hot in the bottle world.  I decided its value then at about $1,200.00.  But I was on a “young Dads’ budget,” and would not pay near that much. But if I could scoop it for $750.00, I might do it. Immediately, I start scanning the room of 200 or so people walking around at preview, seeing if I could see any other “bottle guys.”  Any general antiques dealer worth their salt would know it was a good bottle, and would pay $200 or so, for sure.  But you can’t know everything, and you’d really need to know the current market for antique bottles to bid much more than that, with confidence.

I didn’t see any other bottle guys, and the clock was ticking. The gavel was set to drop to start the auction at 6pm.  At 5:50, I looked up at the door in time to see my bottle collecting acquaintance Daniel walk in.  He had been there earlier, and he knew the ink bottle was there. He saw me, and kind of rolled his eyes.  “You saw it?” he asked.  “Yeah,” I said.

Without hesitation, he told me to follow him, and that he wanted to work out a deal, so that we wouldn’t bid against each other. This is what he said, as I remember it:

“Look, it looks like you and I are the only bottle guys here, and there’s no sense in us driving the price up just bidding against each other. So here’s what we do.  We are going to have a little auction here, right now, out here in the hallway.  We’ll bid against each other here, and the winner here wins the right to actually bid on the ink later, but, he has to pay the other guy ONE HALF of what he wins the bid here for.”

I was completely confused.

“Ok, for example, out here, we bid up, 150, 175, 200, then let’s say you win our little auction for 400 bucks.  That gives you the right to bid on the ink once the real auction starts, and if you WIN the ink, you buy it from the auctioneer, but you also pay ME $200, for “not bidding” against you.  So, you think if I was bidding against you, we might have bid the ink up to 8,9 hundred bucks, right?  So instead, in this example, maybe, without me bidding out there, the ink sells for $375.00.  You pay the auctioneer the $375 plus commission, and pay me $200 for not bidding. You wind up with the ink for $575, instead of maybe $900, and I wind up with $200 in cash for doing nothing, except not bidding.

The numbers spun in my head, and almost made sense.

So that is exactly what we did, and those numbers are pretty close to how it all played out.  I remember how weird it was to be standing there, face to face, whispering out in the hall, and starting our auction.  He started with “Ok, $50, and we went up in $25 increments.  At about $300 he hesitated, and I remember panicking in my head, trying to add up what I would then be paying the auctioneer, plus commission, plus the cash I’d pay him for not bidding, PLUS how much the actual ink might wind up selling for, PLUS how badly did I really want or need the ink, and all while trying to guess what the actual interest in the room would be, for this single little ink bottle. So I bid that one more increment, and “won the right to bid” on the ink.  I remember being very unsure of what I was doing, but knowing that it was pretty fun (I’ve done a bit too much of that in my life!).

I enjoyed the gorgeous little ink bottle for a year or so, then sold it at a show for $1000.  I always felt like that little experience would make for an interesting college thesis, but it would have to involve psychology, sociology, and calculus.

Just another sleepy country auction!


Bram Hepburn collects 19th-century New England bottles and glass, having spent the last 30 years digging and diving for bottles in New England and upstate New York. He has just founded an estate liquidation company and auction house, Hepburn and Co. Antiques in Eliot, Maine. You can send an email to him at askus@hepburnandcoantiques.com.

WorthPoint—Discover Your Hidden Wealth

 

(Visited 619 times, 1 visits today)