Discover the fascinating arena of collectible auctions. This article guides you through the process of what to look for when participating in collectible auctions.
We unpack the different platforms and bidding strategies. We also provide tips and strategies for identifying and assessing valuable items. Make informed decisions and enhance your collecting and investing experience.
Taking part in a collectibles auction, whether physically or online, has an aura of intrigue and mystique around it. The place where the rarefied worlds of finance and fine art, memorabilia and money, Banksy and bank notes meet up.
What do you need to know to take part in real auctions? The strategies are similar, whether buying or selling art, memorabilia or coins, whether you are a rookie bidder or an expert collector. Once you have read through this article, you can have some fun and take an online auction Test Drive to practice your online bidding skills.
First things first. Find an Auction House.
Auction houses can be world-famous brick and mortar houses, or more niche houses specialising in certain types of collectibles. Online auction houses and platforms, brands and markets have taken the collectible and investment worlds by storm. It is vital to research auction houses that cater to what you are interested in buying or selling. Popular and historically famous auction houses include Sotheby’s, Christie’s, Heritage Auctions, Bonhams, and more local, niche, or online auction sites like eBay RR Auctions, or Catawiki. For fractional ownership in collectibles, there is aShareX, who often partner with established auction houses.
Buying or selling through auctions can be exciting and lucrative, as no one can be exactly sure what is to transpire. It also gives those who are not necessarily insiders in the collectible world, the best options. Negotiating with dealers more knowledgeable than yourself can mean you miss out.
Top auction houses do a lot of the work for you if you are selling, and present everything to you if you are buying. This includes descriptions, research and history of the item, photography and presentation.
If you are the seller:
Look at the house’s commission structure and percentage of your take. The highest is around 20% but many will work on about 10% and possibly nothing if you have a unique or special item or large collection to sell. The auction house may still charge a buyer’s premium, so the house will always make their money. If you want to speak auction house insider lingo, you can discuss the ‘juice’ (the buyer’s premium!)
Make sure authentication costs (if any) are discussed and revealed if they are additional. They might be part of your deal, but it is best to ask to avoid any surprises after the item is already auctioned. Be sure any type of hidden cost is discussed at the outset, such as storage or insurance.
Make sure agreements are discussed upfront, such as a reserve or starting price, and that you reserve the right to edit any descriptions or photographs of items provided by the auction house.
If you have quite a few items to sell or are looking to expand your collectible buying and selling portfolio, it is best to nurture great long-term relationships with auction houses that you trust.
If you are a buyer and have chosen an auction house, it is time to register to bid:
Before any auction of items you might be interested in purchasing, you will have to prove your interest by registering. This sometimes requires providing ID, a credit card or deposit or an actual deposit of investment, for fractional bidding for investments you will need to pass a federally required KYC (Know Your Customer) check.
Online registration is done for both online and brick and mortar auction houses and you will need to agree to the auction houses or online platform’s terms and conditions. aSharex has a simple and secure registration system where you can create your account, register for specific auctions and bid the amount you want to invest, whether it is a fractional bid or 100% bid.
Being a buyer, you will probably register at quite a few auction houses, depending on your interest and investment areas and the items available at a particular time.
Next up: The Fun Part! Look through the online listings or the auction catalog to find the items you are interested in investing in.
Auction houses usually provide excellent historical descriptions, photos, condition reports and authentications for each item or lot. For example, look at the information available on this art piece: Hulk Elvis Modern, Jeff Koons. You can really learn a lot about what you would like to invest in and do your own research and comparisons to make sure you have all the knowledge you need to make wise and financially savvy decisions.
Take heed of any small print and additional fees, such as the buyer’s premiums, shipping costs and taxes. In the case of fractional bidding, it is wise to make sure you are au fait with the way you would receive shares in the asset, asset storage, and voting procedure when selling the asset.
Pay attention to any additional fees, such as buyer’s premiums (usually a percentage added to the winning bid), taxes, shippin, storage and insurance costs.
Be savvy and set a budget
By their nature, auctions are exciting and fast-paced, and it is quite easy for even the most jaded investor to get caught up in the moment. Set a clear budget for yourself prior to the auction and stay within your limit.
The Live Bidding Process – time for the rubber to hit the road
If you are participating in an online auction, you place your bid through the auction website. You can manually set a bid or set a maximum bid and allow a system to bid on your behalf.
If you are bidding at a brick-and-mortar auction, you raise your paddle or bid card when you want to place a bid, and clearly state the amount. Auction houses often do cater for telephone bids, with a representative for you bidding on the floor.
If you are not able to be present in person or online, you can set a maximum bid as an absentee bidder and the auction house will bid on your behalf up to the set amount.
During the auction, monitor what is happening and pay close attention, you don’t want to miss your lot being called or get an online time zone incorrect!
Some bidders and savvy collectors use specific strategies when bidding, such as waiting until the last moment to place a bid. In online auctions, this is known as ‘sniping’. Other strategies involve securing an item early in the bidding scene to ensure being part of it.
The Winning Bid (or Not)
Success will mean placing the highest final bid, whether you are buying an item or lot fractionally or entirely. Celebrate your investment! If you bid but did not win, it was probably not meant to be, get back in the saddle and enjoy the chase of the ultimate collectible investment search.
If you did win, it is time to cough up if you have not done so already in a holding account. Any buyers premium fees or taxes will need to be paid. If you are still to pay, the time frame available to make payment is usually short, a few days or maximum of a week. Make sure you are aware of the auction house’s rules in methods of payment and deadlines.
The auction house will arrange delivery or collection of your treasure, and insurance if it is in transit. If you are a fractional winner aShareX will handle transport, insurance and storage of the asset and issue the shares to your account.
You then decide how to enjoy your collectible investment.
But, lets backtrack a bit here.
You want to bid on collectibles that tick your boxes. For some people, it is the passion project of investing in a collectible that you love, such as an exotic car.
Some people enjoy and have deep knowledge of a particular collectible area, such as art. Some people are purely in it for the stability, appreciation potential and growth of the investment area. Whichever part of the puzzle you are coming in from, you need to be savvy enough to be able to make a sound evaluation on a collectible item.
Collectibles are a great way to diversify investment portfolios
Demand for high value treasures in areas such as art, comic books, sport memorabilia, celebrity culture, rare coins and antiques has consistently grown. What is considered valuable has also broadened and diversified.
Even considering any investment into collectibles means having a good understanding of how the items are financially evaluated and the factors that will help an item hold or increase its value and your potential return.
Deciding what to bid on at a collectible auction
As with any investment, but even more with collectibles, you must understand the demand in the market for the item – what it is now, and what it will be in the future. If there is currently high demand for the item, and its value and rarity have increased over time to this point, it is likely to keep going on that trajectory.
Limited editions:
Whether art prints, books, anything that was restricted in production, can become more valuable over time because of that. But it does not mean that an item that states it is limited edition necessarily has value in the first place or is as limited as it might claim!
Scarcity and rarity can play a crucial role in the investment value of an item if it is an item that in and of itself has significant appeal. An item might be rare or scarce, or a one off, but only have an increase in appeal over time, as when a superhero figure from comic books features in a successful modern movie, or a previously unassuming sports player becomes a star during a championship game and that jersey becomes a collectible.
Mint-condition items are far more valuable than those that are more damaged or worn from time. To take subjectivity from this benchmark, grading systems and professional evaluators are important to give accurate financial and market values.
Authenticity and Historical Significance
Items that have been a proven part of history or are proven to have been owned by someone prominent, or to be part of a famous collection carry high values. Proven authenticity to historical claims is highly relevant when assessing value. Because values on some items are so high, fraudsters can go to great lengths to produce excellent counterfeits. A well-established authentication process is necessary to ensure that the collectible is genuine.
An item that was everyday in its time can prove to become valuable in the future because the item became meaningful in history or synonymous with its time. These items are very likely to appreciate in value – for example signed documents, art that was part of a significant movement, early images or works from artists or others who later became very famous etc.
The higher the proven actual or potential historical significance of an item, the more investment value it has,
Timing and Trends
As with any investment or risk, the market is affected by fluctuating trends and fashions. The general economic climate also dictates value – as collectibles are luxuries – economic booms see their value increase and recessions see a decrease and shrinkage in the market.
Collectibles Liquidity
This is a higher consideration than most if the collectible item is procured as an investment strategy more than anything else. Unlike more traditional investments, their liquidity and sale can take longer. Divesting of the collectible at a good price might entail finding the right buyer, especially if the collectible is very niche. If you plan to sell your collectibles in the future, ensure that there is a good market for them within your ownership period.
Have you ever dreamt of owning a piece of history? That coin, that Happy Meal toy collection, sealed Lego pack, comic from the 1930’s, so many wonderful collectible options?
Imagine buying a share of the iconic 1952 Topps Mickey Mantle rookie card, which Sotheby’s sold in 2022 for a record-breaking (at the time) $12.6 million. Perhaps you’re a Star Warrior who drools at the prospect of owning Luke Skywalker’s lightsabre from Return of the Jedi? Or a Van Halen fan who lusts after Eddie’s Hot for Teacher “Frankenstrat” guitar?
These items are more than mere collectibles; they’re cultural touchstones, illustrative statements of fandom, iconic generational symbols, and - importantly - investable assets.
Armed with this information, the desire to delve deep and the hunt and excitement of the auction, and you are well on your way to becoming an enthusiast investor. And if you don’t have a few million dollars under the mattress, consider being part of a fractional bidding group – making sure you are a part of history.
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