Part II- Selling Alternatives
This is Part II of our topic of “What is the best approach to use to sell your collection?” In Part I we looked at questions to ask yourself. These questions are pointers to help determine which approach best fits your needs, now I want to look at the pros and cons of the different approaches.
In general, a knife is only worth what someone is willing to pay. We must ask ourselves what factors/set of circumstances can I create to create the ultimate buying environment so that when that “offer” comes in it is the maximum offer I could/can expect.
As both an auctioneer and a knife collector, I have been asked on numerous occasions which is more advantageous to sell through, the auction method, or the one-on-one negotiated sales approach. This question typically then leads to online auction, such as eBay compared to the traditional live auction format.
To look into the answers involved here we examine several aspects; first, we must examine each method’s pros and cons.
One-on-one Sales (Private Negotiations)- Collector to Collector
Advantages:
- Seller retains decision whether or not to sell at any given offer
- If time is not an issue, offers the potential to obtain a price above the market (if collectible is rare and buyer is very motivated)
Neutral:
- If a higher price is realized because of an over motivated buyer, yet required substantially longer time on market, seller may not in actuality net more money considering the time invested and costs incurred (travel, advertising, etc)
Disadvantages:
- Potential for significant time and energy investment on the part of the seller
- Inability to control the market price or terms. Negotiation is usually required
- Inability of the seller to effectuate the sales process; lacks the ability to motivate the buyers.
- Inability of the seller to make the buyer act
- Number of buyers directly related to how it was effectively it was marketed
- Seller may be required to invest in advertising in magazines, newsletters and mailing list to make buyers aware of collectible offered
Auctions of all types (from a seller’s perspective):
Advantages:
- Eliminated the dilemma of where to set the price
- Effectuate the sale on a definitive time frame
- Potential to obtain the highest sales price possible
- Control the sales process
- Eliminate negotiations
- Pre-determine all terms and conditions
- Exposes the auction to the greatest number of buyers
- Uses a competitive bidding format to arrive at the final sales price
- Eliminate wasted time with insincere lookers
- Little, if any, investment of time and energy on the part of the seller
- The auction concept serves as a motivator of the buyers to inquire
- Auctions actually increase buyer interest
- Accomplish sale in one day
Neutral:
- Knife ultimately must stand on its own
- Natural forces of supply and demand take effect
Disadvantages:
- Seller relinquishes control over the price
- Seller may be required to contribute to marketing plan
Allow me to begin by saying, a properly marketed auction does in fact realize the true real time value of the item being auctioned, much like the stock market, which is in fact a big auction where seller and buyers consummate sales through competitive bidding everyday. .
Online auctions have come of age with and become extremely sophisticated sales forums through some of the rules can negatively affect price.
Online Auctions (from a seller’s perspective):
Advantages:
- Potential for the greatest amount of exposure that wouldn’t be possible or cost effective for a live auction event or one-on-one method.
- The other eBay auctions can expose buyers to your auction
- Buyer friendly allowing buyers to proxy bid, and receive email notifications automatically from eBay.
- Relatively inexpensive.
- Bidders can bid more conveniently
Disadvantages:
- Auction is artificially ended allowing bidders to wait and snipe without the other bidder having the opportunity to bid again
- Sellers are disadvantaged they lack auction experience and auction psychology in determining Buy it Now, or Reserve amounts.
- Bidders aren’t as influenced by other bidders’ value due to bidding at the end
- No marketing for the specific auctions
- Computer, Internet and email skills required
- Without independent seller marketing, inability to drive non-ebay buyers to auction.
- Greater potential for buyer not completing the sale
- Seller needs basic writing/marketing and photography skills
- Seller required to answer questions for additional info
- Seller required to have continual access to email for questions during the auction
- Seller required to complete transaction and fulfill shipment
- Reputation/Feedback of seller can have impact on prices/participation
- If a large collection is involved, the seller must factor in a considerable amount of time to complete the auctioning of the complete inventory; likely to require several months, unless seller is a very experienced ebay seller or has a lot of time to commit to this project
Traditional Live Auctions
Advantages:
- Direct marketing to knife collectors nationwide through knife publications and mailing list
- Email auction announcements to collectors
- Provides flexibility depending on the collection, could be a catalog sale with other collectors knives, or a stand alone auction
- Almost 100% transaction completion
- Allows for “cross-over” buyers; bidders who came to bid on one item and who bid on a different item because he was exposed to it and it sounded like a bargain
- Allows for heated bidding wars
- Auction rounds continue until bidders drop out
- Auction Personal to assist buyers with questions
- Buyers inspect the knife prior to bidding
- Perceived more creditable bidding than online auctions
Disadvantages:
- If scheduled live auction is not a regular event arranged around a knife show or some other event, or a phone auction, bidder travel is required. Some auctions allow write in bids, though they have a predetermined limit
- Buyer pool is limited to bidders in the area or region, unless inventory is extremely rare and in very high demand, or proxy (remote) bidding arrangements
- Higher fees to seller
- Auctioneer/auction company may lack knowledge of toenails
- Unless collection is fairly substantial in terms of value, auctioneer may require your knives to be included in upcoming event in the future.
- Reputation of auctioneer/firm can have an effect
There is one other approach that should be mentioned, as it is a viable alternative and it is a bulk sale of the entire collection to a dealer or individual collector
Bulk sale of collection to a dealer:
Advantages:
- Complete sale at one time.
- Many dealers have the financial capability to take down the entire collection.
- Generally knowledgeable about many of the brands.
- Number of dealers as potential buyer.
Disadvantages:
- Requires the seller to have a pretty good idea of value of the collection before hand
- Dealer may not be up on toenail values
- May want to cherry pick the collector for the best (or doesn’t attribute value to the less known brands or knives)
- Requires negotiating against a professional knife “trader”
- Price is measurably less than could be obtained by selling the knives individually to collectors
- May adjust offer due to condition after given you a price (once he inspects them at the time of delivery).
- More likely to be picky about condition of each knife
- May refuse to purchase certain knives when inspection occurs, ie. celluloid handled knives, or knives the dealer thinks are a rework or are fake, etc..
- You are required to take collection to dealer in most cases for inspection.
Collection sale to a collector:
Advantages
- Knowledgeable buyer
- Motivated buyer
- Potential for realizing prices comparable to individual sale prices (less of a discount for entire collection than dealer bulk sale price).
- Potential for “creative deal”
Disadvantages:
- Depending on size of collection, may be limited demand for entire collection
- Limited buyers with the financial wherewithal to take down the entire collection
- May require a longer period of time to sale
- May discount price similar to dealer
- May require negotiated terms (buyout and take down over time).
- May want to cherry pick collection
- May want to discount any duplicates resulting from purchase
In conclusion, the approach a seller takes is a function of motivation, price sensitivity or lack thereof, risk tolerance level, time frame for accomplishing sale, if any, and the like.
My goal has been to provide you with tools to assist you in determining your objectives and the pros/cons of the different approaches for you to consider.
Next up is the conclusion of this series on how to best sell your knives - “Does the sales method used affect the prices?”
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