Auction Houses
Disadvantages of major auction sales:
1. No immediate payments – Possibly six months or more between sending them your jewelry and getting paid.
2. Auction house commission – Typically 10% taken from the sale price (hammer price).
3. Auction house fees – Insurance charge (typically 1.5% of sale price – if no sale, 1.5% of reserve). Also, there are photo, shipping, and other fees.
4. Your piece might not sell – If your piece does not receive a bid equal to your reserve, it will be returned to you. After months of waiting and no sale, you still will be charged fees for photos, insurance, and shipping.
5. Buyer’s premium, although paid by buyer, is a huge fee that hurts the seller’s bottom line. This fee is typically 25% of the sale up to $20,000 and 20% of the sale price up to $500,000.
Example: A diamond ring submitted to a major N.Y. auction house on April 15 is placed in the Sept. 20 auction. The reserve is surpassed and the ring sells for $10,000. The seller will generally get paid by the end of October (six months after submitting). The seller can expect a check for the hammer price ($10,000), minus 10% commission ($1,000), minus 1.5% for insurance ($150), minus $300 for photography. The seller receives $8,550. The buyer must pay $10,000 plus 25% commission ($2,500) (plus applicable sales tax) or $12,500.
Note: Six months after submission (assuming the reserve was met), the seller received $8,550 and a buyer had paid $12,500. Had the seller found an immediate buyer for $9,000, the seller would have gotten more money immediately for a ring that sold for one-third more. An even less desirable outcome could have resulted had the reserve not been met. After six months (and still paying some auction house fees), the ring would have been returned to the owner.
Conclusion: Auctions are not always the best option.
Dealers
Dealers of gems and jewelry can be useful for liquidations depending on your circumstances. Unlike auction houses, there are no fees and sales and payment are immediate. Dealers who specialize in a particular type of stone or period are often the most knowledgeable when it comes to current market prices. It’s recommended to get bids from a few different dealers to ensure you get a fair offer.
Private Parties
Selling to private parties, however, is not without difficulty. Typically, private parties do not have the gemological expertise to properly value gems or jewelry, which can make completing sales difficult. Consumers often prefer to purchase gems or jewelry in a more credible setting (such as a jewelry store or auction) where the authenticity of a piece can be verified. Security can be an issue and there is also the difficulty of finding private parties in the market for your particular piece.
