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Since 1981, he has been writing about rare Mormon documents. Since 1991, half of all new discoveries in Mormon history have been by him.” Specializing in the (Palmyra, 1830) first edition Book of Mormon. |
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Losing Money at an AuctionAuctions and middlemenThe biggest mistake that you can make is to send your rare book to an auction. I have written this page to help you eliminate the middlemen. If you sell your book at an auction, the auctioneer is a middleman making a profit. Further, most bidders at your auction will be other middlemen—dealers buying your book for further resale at a higher price and more profit. I would rather pay the full amount to a private individual like you, and eliminate the time, uncertainty, risk, and anxiety that keep me from bidding at auctions. Auctions do not determine the market priceAuctions average only two-thirds of the market price for a book, because it is not a perfect market where supply equals demand. In a perfect market, all interested buyers would have to be present at the auction. Instead, the auction determines a segregated market price only among those participating—a fraction of the entire field of collectors. Most Mormon auctions have only have a dozen regular bidders, and a dozen bidders cannot be the whole market, nor can a dozen bidders determine market value. Further, the number bidding on a typical high-end book in an auction is usually only about three people, all of them dealers bidding at wholesale prices for resale at a profit. Also, it is difficult for them to allocate scarce cash resources in advance, especially with no guarantee that they will be the successful bidder, and so they are likely to bid only whatever funds they have available. Finally, dealers discount heavily for anticipated risk, including the uncertainty of bidding absentee on something unseen, or traveling to attend and then not being successful. Therefore, even if the auction did determine the market value, it would be a wholesale market value rather than the retail market value, and a deeply discounted wholesale price besides. Instead, if you sell your book directly to me, I will show you past auction records and pay you more than auction prices, so there is no risk for you. Why auctions are wholesale marketsAuctions are basically wholesale auctions to dealers for resale, rather than sales directly to affluent collectors. This is because the end-collector of Mormon books is usually an officer of a multi-national corporation, or a venture capitalist, or an entrepreneur, or a doctor, or a lawyer, or an athlete, or an entertainer, or a celebrity—or somebody else who places a premium price on his or her time. These people:
These are additional reasons that auctions average only two-thirds of the market price for a book. Bidders must discount their highest bid in consideration of many of these risks. Personally, I rarely find out about auctions until after they are over, to my disappointment. For example, recently a Joseph Smith-period Book of Mormon sold to a dealer at the largest auction for $3,500, who then resold the book to another dealer for $10,000, after which it was reoffered by the successive dealer for an even higher amount. Currently, the most successful individual bidder on Mormon books is a used car salesman and body shop owner in Utah, not the final collector to whom he will resell your book. Lack of expertise at auctionsIf you sell your book at auction, there is an immense amount of work and research in preparing your description. If you miss any element in your description, the book will sell for only a fraction of its potential value. Sadly, most books sold online are incorrectly described, and sell to eager dealers who snatch them up for resale at their real price. Further, auctioneers are generalists who do not have experience in Mormon books, and they would not be expected to fetch as high a price for a book as a specialist—who usually buys the book at the auction for less than he would have paid directly. I am not aware of any auction house employing any person remotely familiar with Mormonism or Mormon books. They know nothing about the value of Mormon books, or how to properly describe them, or how to reach the Mormon market. Therefore, auctions invariably cause the seller to lose money. Trying to collect your money from a dealerThe best potential price is never realized at an auction, and mostly only dealers bid at them for books to resell privately to their better clients like me. If you do successfully sell your book at auction, the bidders on expensive books usually back out after the auction for one reason or another, usually “buyer’s remorse” or anxiety about sending a check to a stranger, and in many other cases want to receive your book before payment. Usually the winner is a dealer from Utah, and some of them will never send your money to you. Instead, to distinguish myself from those dealers, I will pay you the market price or more, in a cashier’s check, in advance. Costs of selling at an auctionThe biggest online auction will cost you as much as 35% or more in hidden commissions, and usually additional fees and charges, plus as much as 8.5% in sales taxes, plus another 37.3% in state and federal income taxes. [Update, I wrote this when fees were 17.5% for the buyer and 17.5% for the seller. These have recently risen in the auction market to 25% the buyer and 25% for the seller.] On a large sale, income taxes may be due immediately since the IRS searches for high bid amounts. Most auctions charge their commissions and fees on the reserve price even if the book does not sell. That totals as much as 65% of the selling price of a book at auction. You will have to wait until an auction is scheduled, and a catalog is printed, and then you will have to wait 35 days after the auction to be paid. Instead, I will pay you immediately with a cashier’s check. Riskily, there may not be an interested buyer present at the auction to bid, as happened earlier this year when a first edition Book of Mormon was sent to auction—and the book might either sell for a small percentage of its retail value, or you as the seller will be forced to pay the commission and costs (or buy-in charges) on a reserve price (minimum price below which you refuse to sell the book) without even selling the book. Basically, if the book does not meet the reserve price, you bought it back yourself at that price. Based on the facts above, if you had a book for which I would immediately send you $15,000 in a cashier’s check, the auction would only reach $10,000 including the buyer’s premium. But before deciding how much to actually place as a bid, the bidders will have to mathematically or intuitively back out in the buyer’s premium, sales taxes, and shipping from the $10,000 that they are willing to pay, reducing their bid to $7,500 (rounded to the nearest increment, their bid is $7,500, which will be the amount they can bid and still have to pay no more than their limit of $10,000). After paying your own commissions and costs, you will receive about $5,750 from the auction, and only have about $3,600 left after taxes, about 1/4 of what your book was worth.
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