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If you are a poster collector, you've probably already participated in a poster auction. The most simple and straightforward auction is eBay where a time is established for the auction to end and upon that exact second, the auction ends with the winner being the highest bidder. Since eBay is fully computerized, there is little room for errors as to who won the auction. In the past few years, however Ebay has largely turned into a listing service where a "buy it now" or purchase price is established by the Seller with sometimes making the statement "make an offer" which obviously means the Seller is willing to take less that what he has the item listed for.
The more established or traditional auction houses are for the most part true auctions where bidders compete until the end of the auction when the final hammer goes down with the highest bid taking home the prize. Unfortunately auction houses often use less than transparent or unethical techniques to allow the Seller to receive the highest possible price. Perhaps the most common technique is the use of "hidden reserve". A hidden reserve is a minimum price the Seller will allow the item to be sold for which means that even though the bidding may have a very low starting bid there is no chance a potential buyer will win the auction unless they reach this hidden reserve price. A very unethical technique of some auctions is the use of shill bidding, where bids are placed that have no intent of actually purchasing the item or to bring the bidding up to just under the hidden reserve price, with the hope a true bidder steps in that will take it to the minimum reserve and the item gets sold.
So why not just let everyone know what the minimum reserve actually is? Well auction are emotional events and buyers are always looking for a good deal. They see an amazing rare and valuable poster listed at a fraction of its worth and hope they will be able to make the buy of the century, so they make their small bid and the next thing you know an outbid notice is received; however since the item is still a great buy they bid again. Before long they are now emotionally involved with both the item and winning the auction, so they keep bidding with prices that often far exceed the value of the item.
As an example, I recently was monitoring a Christies Auction for Tiffany Lamps. As the lots were presented, I watched the Auctioneer rattle off the received bids until he would say, final bids, do I hear any further bids? Final bids, Sold! to . . . . Upon the closing of the lot for realized prices, however the lot number would show nothing - meaning the "Sold" was really not sold at all, but rather the item did not meet the hidden reserve. Ethical? Not in my book, but apparently it is a legal and established practice. Nothing really needs to be said about shill bidding, other than to say it is a dishonest way of running an auction.
With that lead in, let's get to the real subject and that is: are auctions a good place to buy and sell or should they be avoided? Let's look at some of the pros and cons:
Pros:
1st, auctions are a great place to find things you likely would never have a chance in acquiring. As a result, if you're looking for something extremely rare, you would do well in monitoring auctions for that item to surface. All collectors know how hard it is to find really rare items and this is one place they will often appear.
2nd, good buys can actually happen. While for the most part you will end up paying more than the item is worth in an auction, good buys can be found at an auction. In order to get such good buys, one has to know the market very well and have a good sense of where that market may be tomorrow. I could give endless stories of posters or other items I wished I had purchased at auction and for the most part it was not a case of not having the money, but rather not having the foresight as to realize what a great bargain that item would have been if purchased. That being said, keep in mind even if the item sold at a low price, you more than likely would not have won that item with the next bid, so what looked like a great price may have been, but only to the other seller as they may have been willing to pay a much higher price for the item.
3rd, it is a good place to judge the market - assuming the auction house is not unethical and is reporting true sale results. Collectable are temperamental, always changing and an auction is a good place to get a sense of what is happening in the market.
Cons:
For the most part you will typically pay a lot more for an item in an auction than if you would have if purchased directly from the Seller. Auction fees, sales taxes, shipping, etc. all add up very quickly and often you find these costs far exceed the value of the item purchased.
Auctions can discourage many potential new collectors to the hobby. Not too long ago I saw an FD27 poster sell for approximately $4,700. Now anyone who knows the poster collecting market knows that such a price in terms of real value for that item is totally absurd. I'm going to assume at some point the buyer who paid this price will eventually find out it not anywhere worth that amount of money and nothing is worse than finding out you got taken on such a purchase. If the person was new to the hobby, they would most likely abandon it in the future.
Auction houses can go out of business leaving you in a no-win situation for both the buyer and seller. Not too long ago a very high profile auction house "Its only Rock n Roll" was reporting record sales for most anything associated with pop music. Both Sellers and Buyers flocked to their auctions to list and buy. Unfortunately Sellers soon found out they were not receiving payment for their items and buyers would pay for an item and not receive it. It was a very big mess and ultimately resulted in a bankruptcy filing and left many Sellers and Buyers holding the bag.
These are just a few of the pros and cons; I'm sure there are many I have left out, so in the end let me say this:
Auctions can be a great place to find the truly rare items, but be more than prepared to pay a high price, often much more than the than the market value for such an item. In order to avoid "getting taken" on a unrealistic price, do some research prior to bidding and establish an upper end price you are willing to pay.
Do not get emotional in an auction, you may win the battle, but end up loosing the war.
Finally make sure who you are dealing with are reliable, what appears to be may not necessarily be the real situation. If you are going to consign something of significant value to an auction house, do some reference checking prior to giving them your item.
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