Breaking
Up a Collection
by Rob Hoffer
Recently I got into a conversation with a fellow collector
who was contemplating the logistical nightmare of breaking up and
selling off his father's collection. I know that stuff like this
happens from time to time, and this got me thinking... maybe a tip
sheet would help smooth some of the bumps that folks may encounter
with the break up of a large collection. Sooner or later, all of
us will be going off to that big roundhouse in the sky (or the big
firebox). Or, we may want to do some downsizing. Some advance planning
now could not hurt. After all, we don't know what tomorrow will
bring.
I do not envy anyone the job of disposing a large collection. It
can be a huge responsibility as well as a colossal undertaking.
Pointing out the pitfalls may make this unpleasant job somewhat
easier. There are several well beaten paths to pursue in this matter,
including...
- selling in private, individual sales,
- selling the collection as a lot,
- selling at shows,
- selling at a live auction,
- selling through a catalog auction,
- selling through an internet auction, or
- making a donation to a museum or organization.
Each has its own set of positives and negatives, which are discussed
below. But first here are a couple of general points.
Make a Plan
Unless you are planning on taking your collection off to the pyramid
with you, the time to make a plan is now! The first, and most important
thing to do is write it down, then turn that plan into a set of
instructions! You are the person who knows your collection the best,
knows the value of the items, and can give your spouse or children
the direction they will need -- what the values are, who to contact,
how to sell, etc. Particularly in the case of an unexpected or sudden
death of the collector, the confusion that results can lead to unwise
or hasty decisions that rob the survivors of fair values for their
items. Sometimes stuff gets thrown away, given away, ripped off
or sold for pennies on the dollar. Having a good and trusted friend
that can be relied on is a big help. A knowledgeable and trusted
person's advice and council is always valuable, and in this matter,
you really are your own best friend! So the time to act is now while
you are hale and hearty. Write an 'unbinding' "Letter of Intent"
and attach it to your will. Name names and leave behind some "bread
crumbs" for your family to follow.
Set Values
The first question that you have to ask yourself is how much do
you expect to get for all of this stuff? You have to think about
this realistically. Like most investments, not everything we buy
goes up in value. Another consideration is that not every piece
in the collection is going to realize top dollar.
Setting a price can be very difficult. If you set the price too
high, it won't sell. If you set it too low, well, you don't want
to go there either. Pricing is difficult even for the experienced
collector. This is especially true of the extremely rare items,
because comparable's almost never hit the open market.
Some people think about getting the services of an independent,
professional appraiser. After all, this is a common thing to do
in the general antique world. However, there are few professional
appraisers who know railroadiana well, and there are few people
within the hobby who are willing/able to perform this service. Leaving
survivors/inheritors the task of finding someone to appraise a collection
is a real challenge and exposes them to the possibility of dealing
with unethical or self-interested individuals. So setting values
yourself is a critical task and worth the time that it will take.
Attend shows, talk to experienced collectors, and educate yourself
on the values of the items in your collection. And write all this
down!
Beware of the "Vultures"
Something has to be said about the "vultures". In a highly
competitive hobby like railroadiana collecting, first strike capability
is everything. So the term "vulture" can apply to anybody
who got to a sale before you, as in the phrase: "I didn't get
the good pieces because the vultures beat me to it". But the
real vultures are those disreputable people who are happy to come
in the back door as the body goes out the front door. They will
offer to "help" your family by carting the collection
off for pennies on the dollar.
Keep in mind that after losing a loved one, those left behind,
especially a spouse, can be emotionally drained, scared and very
vulnerable. The best way to beat the "vultures" is to
know the prices and values of the collection before letting anyone
get their foot in the door. Then take the time to explore all of
the available avenues before letting go of anything.
The Options
Selling
in Private, Individual Sales. Private individual sales
can be a good source of quiet income for the family, provided
that they have some idea of what the items in the collection
are worth and they are dealing with respectable people (angels
versus vultures). The railroadiana collecting hobby is small
community. Most knowledgeable collectors know who has the big
collections and who has the better pieces. Once word gets out
that you are selling or are considering selling, serious collectors
will take note and will swoop in like angels (or vultures).
Some may even be interested in buying the entire collection
outright (see the section below on Selling the Entire Collection).
Others may not have the means to do something like this but
may be interested in "picking" the collection.
That is to say, they will want to pick out and buy certain pieces
that they feel are significant to them.
A possible way to handle this in a somewhat organized manner is
to make a list of trusted people who have made inquiries about particular
items. Leave this with your notes. Then offer the pieces to the
people on the list first. If they pass, for whatever reason, then
it goes to auction and may the best man win.
Positives: The upside of selling items by the
piece is that presumably, you'll be getting a good price for each
and every piece that is sold in this manner. This could be the
time when your collection really is "money in the bank"
to your family. You also can control who gets what and for how
much.
Negatives: Every silver lining has a cloud,
and the fear is that after the collection has been "picked"
and you've sold off the better items, you'll be stuck with all
the lower end, harder to sell stuff (junk).
Notes: You don't really know how much disposable
income any one person has to spend on a collectible at any one
time. So don't be offended if they turn down a sale or tell you
the price is just too high for their budget. It's also important
to be able to "bargain" a little if necessary to close
the deal (especially if your angel is a big buyer). And when the
deal is done, don't be ashamed to take the money!
Some folks don't want to bother with this sort of thing, and
I can't say that I blame them. Thankfully, there are other options.
The key is to remember: at some point, it's all about the money.
No matter how nice your buyers are or how good a friend they may
be, selling is business and not personal! The object of the game
is to come away with a win/win situation. That is, both parties
should come away feeling that they have made a good, fair, and
square deal.
Selling
the Entire Collection. Selling the entire collection at
one time is basically the opposite of "picking a collection"
as the buyer takes everything. There are people in the hobby who
may be interested in purchasing the entire collection. People have
been known to take out a second mortgage on their homes to buy railroadiana.
Dealers will buy collections for resale. Serious collectors will
do it because they are obsessed with building bigger and bigger
collections. The general consensus is that a collector will pay
more than a dealer. But, don't count on it.
Selling the entire collection to a reputable dealer or collector
may be your best option. This is especially true if you need quick
cash, don't have the time, or don't want to mess with selling things
a little bit at a time. We call this the "Clint Eastwood method"
-- the buyer takes "the good, the bad, and the ugly",
and the seller doesn't get stuck with the junk.
Positives: The advantage to the seller is the
convenience of getting rid of everything all at once. It is the
quickest, easiest way to a cash settlement. Getting rid of the
collection may also be a big part of the healing process for those
left behind after a death.
Negatives: It may be disturbing to know that
in all likelihood the collection is going to be broken down and
resold for a profit. However, that is the compromise for the convenience
of quick cash and a fast turnaround. The other even harder part
is setting a value on the collection as a whole. This may take
some trust as well as some amiable, give-and-take negotiation.
This can be made a lot easier if the original owner has his documentation
in order!
Notes: If you are going to go this route, It's
best to get a couple of offers. Having a second or even third
offer can be helpful. If you rely on an offer from only one buyer,
do you know that he is an angel as opposed to a vulture? If he
is a trusted friend, maybe so. But this gets back to letting the
potential heirs of your collection know exactly who you consider
to be an angel.
Selling
at Shows. Railroadiana shows are a major route for buying
and selling. They occur throughout the country, although there are
few like the Gaithersburg, Maryland show, held every November, that
are considered the "national conventions" of the hobby.
Positives: Doing shows can be a lot of fun,
especially if you enjoy the camaraderie and the one-on-one interaction
with people. Standing behind the table also gives the seller complete
control over the prices and negotiations while giving prospective
buyers a chance to examine the items. The key is to know what
you are selling and have an good idea of the prices you want for
your items. Shows are also a golden opportunity to make new friends
and have some fun.
Negatives: This avenue is definitely not for
everyone. Selling at shows is a lot of work and sometimes requires
significant out-of-pocket expenses (table space, hotels, meals,
gas, etc.). The seller also needs to have a starting price and
some bargaining skills. Then there are the problems associated
with packing, setting up, possible breakage, theft, negotiated
sales, tearing down, and the long trip home. A thousand other
distractions can get in the way like the guy who will burn up
your time talking your leg off about nothing while the real customer
passes by. The aggravations of dealing with the public are sometimes
enough to make a preacher cuss.
Notes: Shows can get you hooked on this hobby.
The good news here is that you'll have some stock to sell which
means you'll already be off to a good start! For heirs of a collection,
though, shows can be daunting, unless they have someone (an angel)
to help them with the whole scene.
Selling at a Live Auction. I have seen sellers do very well by
putting their collections up for sale at auction. I have also seen
people take a bath. Once you consign to an auction house, you basically
lose control over what happens to your things. The auctioneers
will also take their cut out of the bottom line, usually 20% or
more of the total. However, they are earning their cut by organizing,
cataloging, advertising and generally taking care of things for
you. A lot of the success or failure of an auction depends on how
much advertising is done before hand. With a large group of people
in the audience, bidding can become quite lively, and prices can
go up in a dramatic fashion! But if nobody bids, the items will
sell for nothing.
Positives: A live auction can be a social event or form of entertainment.
I once went to an estate auction where a note from the deceased
was read to the crowd -- something along the lines of: "Welcome
to my auction. I hope each and every one of you in attendance has
as much fun here today as I had building this collection. Have
fun and be good to one another." It was almost like an old
time wake, where everyone remembered the old boy and drank to his
memory.
Negatives: Picking a good auctioneer is a problem.
Ideally it should be someone who has had some experience and is
familiar with the railroadiana market. This can be difficult in
some areas of the country. Then there is the task of getting the
collection to the auction. Usually transportation is the seller's
responsibility; however, there are auctioneers who will pack and
ship the goods for you -- for a fee, of course. The total fees
and commissions can seriously reduce the return. And remember the
crowd has only so much money to spend. Once one or two big ticket
items have sold, bidders may not bid on other lots if prices go
beyond a certain point. Once again, having a large pool of bidders
is critical to success. So the key to running a good live auction
is advertising the sale beforehand to attract bidders. Not investing
in advertising is penny wise and pound foolish. Another pitfall
to watch out for is the disreputable auctioneer who may hope to
keep the crowd of bidders down. His intention is to buy the estate
himself for later resale.
Notes: Unlike some antique-collecting areas, there is currently
no national, live (as opposed to mail/internet) auction venue for
railroadiana. So finding an auctioneer basically means picking
from local candidates.
Selling
Through a Catalog Auction. There are professionals who
specialize in mail-based (and email-based) railroadiana catalog
auctions. In most cases, obtaining the catalogs requires paying
a fee or subscription. Bids are sent in by mail or email by a certain
date, and winners are notified by mail with an invoice. Items are
shipped upon receipt of payment. In most cases, consignment fees
are around 20% and cover all expenses with no additional hidden
charges.
New: See Auction List.
Positives: Catalog auctions give the seller
access to a highly targeted, national audience. A couple of these
have developed a reputation for dealing in top quality items,
so many busy collectors look to these auctions a a main avenue
for collecting.
Negatives: Catalog auctions are only run a few
times a year. Because the major auction services prefer to only
deal in the high value, premium items, those collectors with lower-end
items are not really welcomed with open arms. But, lower-end items
are normally taken when higher-end items are offered as part of
a collection. The catalog format does not allow prospective buyers
to make a hands-on inspection of the items offered, which is a
turnoff for some collectors.
Notes: As I understand it, the return policy
is very liberal for the major catalog auction services -- if items
acquired in the auction are returned within a reasonable time
and before the consignors are paid. Normally items can be returned,
with no questions asked, within one month after the close of the
auction.
Selling Through an Internet Auction. In the last
couple of years, internet auctions have become one of the main avenues
for collecting railroadiana. Items are shown on a web page, bids
are submitted over the internet, and the highest bid at closing
time gets the item. All subsequent parts of the deal -- billing,
payment, shipping -- become the responsibility of the seller and
buyer, not the internet auction service. A small fee is charged
to the seller by the auction service.
Positives: Some people believe that internet
auctions are the best way to go. Your items easily reach a large
and diverse market (provided they are listed correctly). If the
seller does all the work himself, it comes down to a one-on-one
deal, and all of the profits (minus the auction fee) go into the
seller's pockets.
Negatives: Selling via the internet is labor
intensive, time consuming, impersonal, and can require a lot of
tedious work. Selling a large collection can also take weeks or
months. As one guy said, "Selling over the internet is a
pain in the neck. Frankly it is too much work, and the various
costs eat into profits. It could easily turn into a full time
job. It's not just the selling part but the follow-through, packing
and shipping that is also a major headache."
The seller must pay to list, and if there is a problem, trying
to contact an actual person to resolve an issue can be extremely
difficult. Then there is the prep work -- typing out an accurate
description of each piece, taking pictures, modifying them to
an appropriate size for the web (to minimize download time for
viewers), and uploading all that information to the internet site.
After the sale, the seller has to worry about billing, payment
(including checks clearing the bank), boxing, and shipping. With
a number of auctions going on at any one time, keeping everything
organized is a chore. Hiring someone to do it for you only lowers
the numbers on the bottom line. Another annoyance is the fact
that not every buyer is on the up and up, and some people can
be very slow payers.
Notes: There are professionals who will take
care of all the internet selling details for a commission. Most
of them don't know beans about railroadiana, but, they do know
how to post an item and then handle all of the after-sale rigmarole.
The basic theory is that if they post a good picture and give
an adequate description, collectors will have something to go
on, and the stuff will sell itself. That's the theory anyway.
This website has a page with some additional
advice for selling on the internet.
Donations to a Museum or Organization. You
can donate your collection to a railroad-oriented museum or organization,
and many of them have the necessary legal status to accept donations
as tax write offs. Positives: Some museums handle donated items
better than others. A donation of a piece or two in memory of
a loved one to an established museum may give peace-of-mind to
the giver. The donation may become part of the permanent collection
and possibly go on exhibit. It can also have a positive tax consequence
over outright selling. If the numbers are big enough, you may
want to look before you leap and contact a professional tax consultant,
CPA, or attorney.
In the case of a donation to a railfan club or historical society,
if you really like these people and want to leave them something,
then do it. More than likely you've been involved with the group
and have some personal connection.
Negatives: Making a donation sounds like a noble
thing to do. But, most people need cold hard cash more than they
need a tax deduction. It's nice to think that you will be remembered
forever over an act of generosity. But, once an item is given
away and signed over, anything can happen to it. Museums can close,
and staffs can change. Displays can come in and out of style,
and some things may end up just sitting in storage rooms. The
museum or organization can even sell your stuff to raise funds.
Making a donation of your collection to a reputable institution
sounds like the decent thing to do, but you should know that you
lose control of your donation. The key here is to do your homework
and make informed decisions. Part of this might include asking
the museum coordinator up front: "What would you do with
this item or collection if I donate it?".
As far as donations to railfan clubs or historical societies,
unless you are doing this on a personal basis, my opinion is that
most times these donations simply get lost. Or, they end up in
somebody's personal collection. Or the club sells the stuff to
some vulture for beer money. I've seen this happen.
Bottom Line: If it's your collection....
Keep good records on the stuff in your collection, and let your
potential heirs know what you would like to have done with it. Do
this legally with a will and/or a letter of intent. It's a tough
task, not only because we don't like to think about the inevitable,
but also because we may still be looking for new stuff. But nobody
will know your opinions and wishes unless you tell them.
Bottom Line: If you're helping someone else break up a
collection....
Maybe it's because I live right outside of Washington D.C., but
I am fully aware of the fact that any action, backed by the very
best of intentions, can come back to bite you in the behind sometime
down the road. For example, all it takes is for one person to accuse
you of being a "vulture", and your reputation in the collecting
community will be in question.
If you are asked to help out with the breakup of a large collection,
keep in mind that ethical and above-board behavior must be your
guide. Full disclosure to the person you are serving is essential.
When in doubt, the survivor should be encouraged to get a second
or third opinion as well as your own. Disclose in writing, and demonstrate
on paper that you did what you did without selectivity or prejudice.
In the event of a "family squabble", you can go from "the
trusted friend of the deceased" to "the goat" in
no time. So be sure to protect yourself (C.Y.A.) with a paper trail
as things progress. Keep copies of the papers or documents pertaining
to your role, especially for large, valuable collections. Should
the seller get Alzheimer's or the family question your motives or
some lawyer comes to you 10 years down the road alleging that you
behaved unethically, the burden of proof is on you! Be sure to keep
those records!
Final Note: Many of the ideas in this article
came from a number of experienced, trusted collectors who were generous
with their opinions. While no one is credited with any particular
point, I want to thank everyone who contributed. This is a work
in progress, and comments are welcomed. Email
me.
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