I thought I would take some time this week to cover some updates related to my role as the Policy Director at MEARS. While MEARS Auctions is a separate entity from the evaluations division, I do provide support to both and work to ensure each stays nested to core principles under which MEARS was founded and continues to grow and evolve. These topics are important to address publicly now well before our next auction and grand opening in concert with Reggie Jackson next month.
The issues I would like to cover involve the audit of MEARS Auctions for 2009 and the way ahead for 2010. MEARS Auctions remains the only auction that has made an internal audit of its business practices a self-imposed requirement. Last year, MEARS Auctions requested that the independent accounting firm of Komisar Brady & Company (LLP) conduct an audit to ensure two key things were not taking place at MEARS Auctions. Those being “In-House” or Shill Bidding and that every sale seen on the auction site was in fact a legitimate sale. In our minds, these two things are deceptive business practices and we wanted to make sure the collecting public knew MEARS Auctions would have no interest in condoning or subsidizing them. Other Auction venues can simply continue to offer excuses about costs and “this is the way things have always been done.” That’s their choice, but not one we are going to make.
With the audit complete, the finding on both of these issues was just as you should have expected. No employees or their family members bid on any items during their time of employment and all legitimate sales were consummated with an actual payment.
The audit did help us refine some of our internal record keeping for those collectors who paid for high end items with bank/wire transfers. This was something that delayed the final audit report. MEARS will voluntarily this same process in 2010, with one notable addition. That 2010 report, like the one for 2009, will be on hand at MEARS Auction’s to examine should they wish.
Since its inception, MEARS Auctions has operated under a No Hidden Reserve policy. We have always felt and still feel that collectors should not be left to labor under the illusion that their bid of $2500 will bring them a $75,000.00 Babe Ruth bat. While this has worked well for auction houses and consigners that allow for undisclosed reserves, MEARS Auctions has always felt this is a deceptive practice and one that provides a false read on market value for items. Be that as it may, MEARS has also been listening to collectors who wish to consign items to MEARS and we also want to address their issues and concerns about placing reserves their items. In order to accommodate as many facets of the auction industry as possible and still stay nested to our core beliefs, MEARS Auctions is modifying its policy on reserves for select items. These exceptions to policy will be at the sole discretion of Troy Kinunen.
Here is how this reserve pricing will work. All lots subject to this policy will have a minimum opening bid and clear language included in the lot description identifying it as such. For example:
“This item has a reserve price that is within the estimated value of the lot. This lot has an estimated value of $58,000 to $65,000.” In some cases, we expect the language to read that the reserve is below the estimated value. In any event, if a reserve has been placed on an item, the collector will know two things up front:
1. There is a reserve in play.
2. What is the approximate level of action it will take to garner the winning bid.
This policy and language will accomplish a couple of things. For the bidder, it will give them some idea of what it will take to win the item. For the consigner, it will offer them the security they seek while still allowing them to gage and assess market demand for their item. Please know this IN NO WAY changes the MEARS Auctions policy prohibiting consigners from bidding on their own items or MEARS employees from bidding on ANY lot in a MEARS Auction.
As I said, this is related to the audit we will have conducted in 2010. Besides having an independent source look into the issue of shill bidding, this same source will be requested to audit this practice and the nature of those transactions as well.
We hope that as you look to add to your collections in 2010, you look to a number of things offered by MEARS Auctions and MEARS Auctions alone as a complete package:
-Voluntary independent 3rd party scrutiny of internal business practices
-Industry low buyers premiums and consignment fees
-Reasoned and well communicated lot descriptions and evaluations
When you do, we think you’ll be happy with what you see. We know we are.
As always, collect what you enjoy and enjoy what you collect.
MEARS Auth, LLC
For questions and comments on this article, please feel free to contact me at DaveGrob1@aol.com.