I spent one year inside an auction company. In that single year I brought in $30 million of consignments to be sold — and the 5% commission I was promised on them never arrived. I had helped found the company's Art department, its Native American department, and its Civil War department. From the outside it looked well organized. Inside, it was complete chaos: no teamwork, and items were constantly lost and damaged.
The float
The company floated its auction proceeds from one consignor to another as "cash advance" loans, charging a new consignor 12% interest on what was, in essence, free money. They did not borrow that cash from a bank as they claimed — they simply loaned out money that already belonged to other consignors.
An auction house that pays itself first and everyone else eventually has built a back door into your money.
What the chapter covers
- Consignment terms — and the commissions that quietly evaporate
- How proceeds get "floated" between consignors as interest-bearing loans
- Catalog language that shifts the risk onto the buyer
- Why a buyer who later finds a problem rarely has the standing to fight a major house