Recently, I purchased jewelry and semi-precious stones at a live theater style auction. I frequently attend auctions at Sotheby's and Christie's. But never before did I participate in an auction as a serious contender. This time was different. I was a serious bidder and wanted to buy a few jewelry pieces that I liked. Below are the tips that I followed to bid for jewelry and stones.
1. Attend the Jewelry Auction Preview
You have to inspect jewelry pieces or stones that you are going to bid for. Without knowing the quality of the jewelry piece or stone, you will not be in a position to bid accurately and may eventually end up loosing.
2. Know the Auctioneer
It is very important to know who the auctioneer is and what is his style. Except high end auctions, most liquidating or auctioning companies are owned by auctioneers. It is very likely that an auctioneer will be present at the time of preview. You have to strike a conversation with the auctioneer and get to know him. This is where small talk will come in very handy. Auctioneer holds all the decision making power including the right to eject bidders from an auction theater.
3. Understand the Rules of Auction
It goes without saying that you will not play a game without knowing its rules. Auction is a game and you have to know the rules. It will help tremendously if you go above and beyond in understanding the auction. For example, if the auction is a chapter 7 liquidation then the auction takes place in the presence of a trustee. It would be a good idea to explore the situation of what happens if something does not get auctioned. There can be many examples like this. You have to understand that auction is a competition and there are professionals who attend these auctions and make financial decisions not jewelry business decisions.
4. Make a List of Items You Want to Bid on
The purpose of the preview for you is to generate that list. You will not be able to bid successfully in that auction if you do not have that list prepared.
5. Set a Maximum Bidding Price on Each Jewelry Item or Stone
Discipline is very important when it comes to bidding. You have to set a maximum bidding price and not bid in excess of that price at any cost. Too often, people get swept in the swelling emotions and competition of the auction. In business schools they teach the outcome of this behavior as "Winner's Curse". When you win a jewelry auction, you most likely have paid more than the jewelry item deserved. However, if you are disciplined then you can stand a chance of avoiding this "Winner's Curse"
6. Take Advantage of Mistakes During Auction
In a big auction where there are hundreds or thousands of lots, the auctioneer and the bidders are going to make mistakes. It is not a question of if but when. The amount of mental concentration required to conduct a flawless auction or bid flawlessly is too great. This is where information and smarts will set you apart. If you can take advantage of these mistakes by either auctioneer or bidders then you will certainly come out as a winner. For example, in the most recent auction that I attended, the auction went on for 15 hours as they were auctioning about 2000 lots. I pounced on mistakes of auctioneer and bidders several times and captured valuable items for much less.
7. Prepare a Bidding Strategy if Multiple Lots In One Bid are Involved
If the auction is of the type where multiple lots are being auction in a single bid, then typically the winner of the bid gets to choose the number of lots he/she wants. You have to prepare a smart strategy where you should NOT choose more than 1 lot of the winning bid since there is a possibility that the other lots which go for a lower bid.
8. Verify Your Winnings
In order to close the loop on your winning bid, collection of items is the single most important thing that you should do after successful bidding. You have to verify if the jewelry items or pieces that you are getting are the same as the ones that you bid on.
The Winner’s Curse can be a new thing to most bidders to know. This has been a common mistake to conceive that the highest-paying bidder gets the competition, but actually it’s not. Thank you for integrating this business idea to auctioning!
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