Maine Antique Digest March 2015

2-B Maine Antique Digest, March 2015

- FEATURE -

Moving on

This is another installment in a series

on auction consignments—the nuts and

bolts consignors need to know, along with

the practices they should follow, to find

the best-suited auctioneer for their con-

signment and position it for a successful

outcome. If this process were easy, con-

signors would simply pick up the phone

book, turn to “auctioneers,” and pick the

one that looked most appealing for what-

ever reason, but that’s fantasy. Intelligent

consigning is not nearly as simple as

throwing a random dart at a list taped to

a wall.

February recap

Last month, we noted that consigning

is far too important to leave to chance.

The process requires that a consignor

hand over the equivalent of a large chunk

of money to a stranger who happens to

be an auctioneer. The period piece, rare

art, or ancient relic is an object today,

but, once an auctioneer gets it and works

auction “magic,” what comes next from

behind the drape is a pile of cash—the

consignor’s cash. Consignors need to

keep close the thought that they are not

dealing with auctioneers simply about the

things that they consign but, rather, about

all of the money these things represent.

This emphasizes that a consignor should

proceed slowly before placing a consign-

ment, just as an astute investor would

proceed prior to committing a large sum

of money to a capital outlay. The central

question for a consignor should be “Who

do I trust to collect, hold, safeguard, and

pay me my money?” The answer is an

auctioneer who is both competent to han-

dle the consignment and trustworthy to

possess and timely remit the money.

What’s at stake with a consignment

emphasizestheimportanceofaconsignor’s

practicing due diligence in the search for

and selection of an auctioneer. Due dili-

gence is the elbow grease of research and

analysis that is needed to wade through a

list of auctioneers who might do the work

in order to identify the best of the bunch to

handle the consignment. This is important

work that must be done correctly to avoid

an error that could cause damage, loss, or

diminution in the value of the property

consigned.

Due diligence should begin with a

consignor’s creating an “auctioneer pro-

file” to describe the characteristics of the

practitioner that the consignor wants to

engage. Using the profile as a guide, the

consignor can comb through a multitude

of candidates and compile a list of those

who might be suitable. Seven bedrock

requisites that a consignor should insist

upon for all candidates are (a) integrity,

(b) competence, (c) capability, (d) exper-

tise, (e) experience, (f) strength, and (g)

professionalism.

Compiling Information

With a list of candidates in hand, the

consignor should start gathering as much

relevant information as possible. Request

a copy of each auctioneer’s brochure and

other information intended for consign-

ors, but understand that much of what is

provided will be the self-serving aggran-

dizement of advertising. A consignor

needs much more, and trade publica-

tions, various Web sites and other Internet

resources, news articles, and the like can

be fruitful sources from which to glean

facts and opinions from others into each

auctioneer’s qualifications and record of

performance.

The consignor wants to find all that rea-

sonably can be located and used to make a

sound top-to-bottom assessment of a can-

didate’s qualifications and suitability to

handle the consignment. Here’s a useful

yardstick—the extent of the research to be

performed, and the analysis that follows,

should be tied to a sliding scale commen-

surate with the value of the property. The

greater the value, the more expansive

and intensive the due diligence practiced

should be to try to identify the best-qual-

ified and most suitable auctioneer for the

assignment.

Horse’s Mouth

Working through a list of auctioneers

in a careful and methodical manner will

enable the consignor to pare the candi-

dates down to a small group. Once this

has been accomplished, a rich vein of

additional information can be mined

by contacting the remaining candidates

directly. While that can be done with

telephone calls or by going to meet with

the auctioneers in person, my strong pref-

erence is to send written questions that

solicit written answers. This is because

writings of this sort are far more likely to

produce worthwhile information in a con-

crete form that the consignor can review

and analyze over and again.

Writings

I’ve been a writer for a lot of years.

I’ve long been a speaker too. I recognize

that I’m more thoughtful and careful with

what I write than with what I speak. I

don’t mean to imply that I’m careless with

the latter, but, unless I work from a script,

my speaking is usually far more extempo-

raneous. In my experience, most people

do the same as I do. This makes the spo-

ken word prone to being more rambling,

imprecise, and unfiltered than a written

response. The process of writing often

involves starts, pauses, and restarts, which

are not allowed for in coherent speaking.

A writer has the time and opportunity to

refine a written message into a polished

and final form.

Maybe you’ve noticed that to be true

about yourself when you merely give

a quick answer to an oral question, as

opposed to completing a written ques-

tionnaire. Do you think Jefferson’s Decla-

ration of Independence would have been

the same if he had just spoken to its key

points off the top of his head? Of course

it wouldn’t. History tells us that Jefferson

spent 17 days writing and rewriting before

he completed his draft. This emphasizes

the point that we typically think and

respond more carefully when we write

our thoughts than when we speak them.

This is a primary reason that consignors

should use written questions to seek writ-

ten answers from the auctioneers included

in the small group.

First Impression

It might be disputed who originated the

saying “You never get a second chance

to make a first impression,” but we do

know the message to be true. We also

know how important a good impression is

in every serious interaction that we have

with strangers. With that in mind, just as

a consignor is looking for an auctioneer

who will make a favorable impression,

an auctioneer will form an impression,

favorable or not, of a consignor. The con-

signor wants each auctioneer-candidate to

come away with a favorable impression

of both the consignor and the property.

This is another reason for a consignor to

use writing to more closely control the

message sent to an auctioneer and ensure

that it makes a positive impression.

Consignors who come across as smart,

informed, organized, focused, decisive,

and businesslike will project a serious

tone to an auctioneer that requires a com-

parable response. The image such a con-

signor conveys will set a high bar that will

earn the respect, and often deference, of

an auctioneer. This can be an extremely

valuable benefit throughout their dealings.

RFQ

Aconsignor can use any form of writing

to submit questions to an auctioneer, even

an informal email, but a carefully drafted

letter would be preferred, because of the

first-impression qualities that it would

carry. In some circumstances, something

even more formal might be worth pre-

paring—an inquiry akin to what I have

advised clients to style as a “Request for

Quotation” (RFQ) package. I like that

term because it signals that the consignor

sending it is very serious about conduct-

ing a high level of due diligence to gather

the information needed to make a sound

decision in selecting an auctioneer.

Here’s an important distinction between

this form of RFQ and a traditional one. A

customary RFQ is a commercial vehicle

employed by a purchaser to seek written

bids from vendors for a proposed pur-

chase of goods or services. The vendor

that submits the most favorable quote is

awarded the contract. That is not what I

am referring to for an auction consignor.

Aconsignor’s RFQ should include a range

of questions and seek answers and related

information that can be analyzed and used

to pare down the auctioneer-candidates

remaining in the small group identified

to just a few “finalists”—perhaps the best

two to three candidates.

The RFQ would advise the finalists

that their responses will be used for this

purpose and be subject to further nego-

tiation. This would create an incentive

for interested auctioneers to give a good

quote in order to make the final cut. The

quality of the responses received from

auctioneers would also show a lot about

their respective level of interest in the

consignment. The information provided

could be extremely valuable to the con-

signor completing due diligence before

attempting to hammer out a favorable

deal with the best overall candidate. So,

let’s look at how the consignor’s inquiry

letter or RFQ should be prepared.

Back to Inventory

The consignor should have already cre-

ated a detailed inventory of the property

to be consigned. That was one of the ear-

lier steps we noted. The inventory is the

centerpiece around which the consignor’s

inquiry and questionnaire to each auction-

eer-candidate will be structured.

The inventory is a valuable record for

listing the items and their descriptions.

In addition, it will serve as a “pitch” for

the consignor to sell an auctioneer on the

attractiveness of the proposed consign-

ment. The more desirable an auctioneer

views the property, the more interest he

or she can be expected to express to try

and win the business. This would promise

more and better information for the con-

signor to receive.

Topics

After introducing the inventory and

stating that the consignor is considering

an auction to liquidate it, there are certain

topics on which the consignor wants to

ask questions and solicit the auctioneer’s

answers. These include the auctioneer’s

(a) background, qualifications, and expe-

rience, (b) suggested method of auction,

means for protecting the consigned prop-

erty, (e) marketing campaign, (f) required

bidding procedures, (g) conduct of the

auction, (h) handling of the sales revenue

and security for the money, and (i) pro-

posed documents (i.e., consignment con-

tract, terms of auction, absentee bidders,

etc.). We’ll look further at these and other

topics next time.

Conclusion

Engaging the right auctioneer is cen-

tral to gaining a successful result. It is the

auctioneer who will serve as an agent for

the consignor to promote and protect the

consignor’s interests. It is the auctioneer

who will execute the marketing plan. It

is the auctioneer who will conduct the

auction and liquidate the property. The

consignor’s correct decision in selecting

the auctioneer will be a giant step toward

realizing the goals for the auction. A care-

fully planned and conducted course of

due diligence is the compass and means

for realizing this result.

That’s it until the April issue of M.A.D.

Until then, good bidding.

Steve Proffitt is general counsel of

J.P. King Auction Company, Inc., Gads-

den, Alabama. He is an auctioneer and

instructor at the Reppert School of Auc-

tioneering inAuburn, Indiana, and at the

Mendenhall School of Auctioneering in

High Point, North Carolina. The infor-

mation in this column does not represent

legal advice or the formation of an attor-

ney/client relationship. Readers should

seek the advice of their own attorneys on

all legal issues. Proffitt may be contacted

by e-mail at

<sproffitt@jpking.com

Auction Law and Ethics

Prepare to Inquire

by Steve Proffitt

The nuts and bolts

consignors need to

know.

earching for the answer: this pretty much summarizes every area of serious human

activity. Be it geographic exploration, scientific investigation, medical research, space

probes, religious study, legal analysis, academic education, political thinking, marketing

focus groups, or the like, what we do in most endeavors usually is aimed at finding the answer

to some question. Certainly that’s true for a consignor looking for an auctioneer to handle a

consignment of valuable property. Which auctioneer is best? That’s “the question.” Finding

“the answer” is the trick.