Auction Drag: The bane of auctioneers

I had a wonderful experience last weekend: I attended an old-fashioned onsite country estate auction.

This auction was “way back up in the hills,” so there were no cell phone signals or WiFi connections available. Consequently, no credit or debit cards could be accepted: Cash or check only. Everything was sold absolute to the highest bidder. There were no lot numbers; items were auctioned individually or grouped on an ad-hoc basis. There was no catalog. There were no buyer’s premiums and no Internet bidding. There were no smartphones for checking prices online and no browsers calling partners for a consultation. It was like stepping back in time.

As I sat in my Coleman camp chair waiting for my lots to present, I had time to watch the crowd and reflect on how much the auction business has changed in the past 20 years. It should come as no surprise to anyone that the changes – buyers’ premiums, credit card fees and simultaneous online bidding – have benefitted the auctioneers first, consignors second and bidders last.

It was with great pleasure that I watched a first-rate auctioneer work the crowd in front of him to get the best possible prices for his consignor. No online bidders would thwart the plans of the local crowd.

Despite the hard work exhibited by the auction crew, eventually “auction drag” set in, and prices plummeted. “Auction drag” is the term I use to describe an auction where supply outstrips demand by a considerable amount. “Auction drag” is a lever that bidders can use to squeeze the best deals from an auction. Auction drag is what auctioneers strive to avoid and bidders patiently wait for. This particular auction continued for almost 10 hours, and the shift from Big Bucks for the estate to Big Savings for the bidders came about halfway through the auction.

I knew when I read the auction flier that there would be some great deals to be had at this auction. The flier advertised “over 200 collectible dolls” plus hundreds of vintage Hot Wheels, G.I. Joes, Star Wars figurines and other collectibles “brand-new in the original packaging.” Also advertised was a large selection of jewelry plus “dozens of pieces of Capodimante, Fenton, Franklin Mint, Hallmark and hundreds more manufactured collectibles. Also, there was the usual assortment of household goods offered.

Since I attend such auctions regularly, I figured that the crowd wouldn’t be much bigger than 100 people. The remote location plus the lack of wide-area advertising options guaranteed a limited, local crowd. There were thousands of popular collectibles offered, but how many dolls, etc., can such a crowd absorb?

When I arrived about 8:30 a.m., the auction crew was still setting up. Many of the estate’s collectibles were stored in shipping containers about 100 yards downhill from the auction site, and the crew continued to bring up trailer loads of collectibles until almost noon (this was the estate of a former dealer). The supply to be auctioned was overwhelming; I knew that this was going to be a long day.

The auction began at 10 a.m., and bidders continued to arrive all morning. By noon, there were about 130 people in attendance; about half were couples who would likely be bidding as a unit.

When the real estate had been sold, the auctioneer started on the personal property, offering single items: a doll here, a piece of Capodimante there. Single dolls were bringing in the $200 range, Capodimante about $75 or more for a single piece. Box lots of toys (8-12 pieces) were bringing about $60.

As the sun rose in the sky, the crowd began to thin out. Once the concession stand closed at 2 p.m. there were no cold drinks or food available. By 3 p.m. the crowd had thinned to about 30 bidders. That’s when the “big shift” came. Auction drag set in.

I could sense the change: Bidders who had started the auction with the mindset “I have to have that and I will keep bidding” devolved into the mindset “I don’t really need it but if I can get it cheap enough I’ll buy it.” Dolls that started at $200 each were suddenly selling 2-for-$25; Capodimante was selling for $15 apiece and box lots of collectible toys were going for $10-$15. Bags of costume jewelry were being sold by the handful.

The sun was going down on the other side of the mountain, and the auctioneers were running out of time. Box lots were emptied onto table tops and sold as “table lots,” and multiple boxes were offered as a single lot. Household goods were being liquidated for fractions of pennies on the dollar: A five-piece bedroom suite for $25 and an attractively upholstered sleeper sofa/loveseat set sold for $5.

Supply exceeded demand by a considerable amount; in fact, demand had all but evaporated. Even the dealers had enough and were heading home. About 4 p.m., the six lots I had been waiting on were presented. I bought them for half of what I had budgeted (which wasn’t very much to begin with).

Who were the winners/losers at this auction? It would seem at first glance that the auctioneer didn’t maximize the return for the estate, but to draw that conclusion would be a disservice to the auctioneer. This auction can’t be taken out of context. In this rural, blue-collar Bible-belt community, auctions aren’t held on Sundays and they are not very well attended on weekday evenings, either. A multiple-session auction could drag on for a couple of weeks. I know this auctioneer is trustworthy and conscientious, and I’m sure the decision to go all-out on one day was arrived at with the consent of the estate executor.

Certainly, the bidders came out ahead on several counts. They paid what they bid (no buyer’s premium), they weren’t saddled with credit card fees and there were no out-of-town online bidders to compete against. Auction drag worked in their favor.
In the end, everyone was happy. I sat next to the executor, and we had a pleasant conversation. She was pleased with the results and glad that it was over. The auctioneers did a fine job under difficult circumstances. The bidders who persevered got some great deals. Even I got more than I bargained for, if I account for my sunburn.