Short-term Vs Long-Term Jewelry Consignments
Understanding the Difference Between Short-term and Long-term Jewelry & Gem Consignments
by David Atlas, GG, Certified Senior Member, NAJA
A consignment is an agreement on your part to leave the item(s) with a trusted company or individual for a reasonably set period of time. It might be for a day, or it might be for any length of time parties agree to. I suggest you do not leave items “until sold” because that day may never come or you may need the money or lose patience long before a sale happens.
I call a short-term consignment something in the 1 day to 2-week period. By using a short-term consignment, you can often work mutually and informally to set an initial agreed price with the middleman/buyer. The buyer will need to pay their costs of sale, shipping and overhead plus make some level of profit. It may range from 5% to 20% overall, but it should not be an amount you feel is unfair for the effort, trust and risk involved.
Long-term consignment, such as what retail stores want may last months before there is a sale although if you have a great item, it might sell right away. You can’t predict. An auction typically needs several weeks and up to three months to properly photograph, describe, publish their catalog and advertise their upcoming auction event. Distribution of funds from sold items can be from 30 to 45 days after the auction, so many months of consignment are to be anticipated.
Long term consignment often comes with a 25% to 50% fee for a retail store seller. Retail firms, especially those with brick and mortar establishments have overhead which cannot be forgotten or ignored. Maybe such a middleman/buyer can obtain a true full retail price for you item(s), but the cost of sale with the large consignment fee works against you actually getting more than a faster turn-over with a dealer/buyer on a short-term consignment in many or most cases.
Long term consignment of rather ordinary jewelry to an auction house generally is a very safe way to get things sold and paid for, but the sellers premium, buyer’s premium and any other added costs of auction subtracted from the end price obtained will also have to compete with the far more rapid and low overhead cost of dealer/buyers who work on shorter time frames and have lower overheads. Truly unusual and rare items are the main exceptions for major auction galleries. Certain classes of really special items and gemstones of true importance and rarity are likely best sold in such well-advertised and secure events. The competition for the finest items cannot be ignored and sometimes two or three bidders with no limit in their budget compete to own an item beyond anyone’s expectation. Likely, you will never own such an item or win the Lottery, but we can’t say it never will happen to a few lucky sellers every year.
With all consignments, get the deal in written form which clearly spells out the time frame and an agreed sales price. It is nice to trust someone, but GET IT IN WRITING.
What are the risks of consignment?
Items can become damaged or lost. Likely there will be insurance coverage, but you need to assure yourself in advance that such is the case. Ask to examine the official documents showing coverage.
A dishonest dealer or auctioneer may steal an item. It is extremely rare, but therefore we suggest you read their reviews online before placing your trust in someone or some business.
The final risk is getting payment once the item is sold. We live in times of some economic turmoil. There may be unforeseen reason why the sale has been made yet the buyer does not get paid. The dealer you trusted may simply not have the funds to pay you if he has not been paid as agreed. Patience is needed in such situations as it generally can be resolved in a few days, but it is scary and not good for being a confident seller.
Selling your Jewelry and Gems
In the quest to do the best possible job you can in selling jewelry and gems, you need to make a series of correct decisions. You must follow the steps suggested elsewhere in these articles in finding a buyer or a selling situation which meets your needs as well as one which fits the kind(s) of jewelry and gems you are responsible for trying to sell. Some items are best scrapped, some items can be sold to dealers or left with local auctioneers who specialize in buying or auctioning diamonds, gems and jewelry which may have somewhat more or occasionally a lot more value than scrap. Important name Brand jewelry items, especially those items in good condition, may command surprising premiums from buyers or at auctions. At the top end of the jewelry and gem business are major auction galleries. Such worldwide venues expose major pieces to important and wealthy clients often at locations around the world. If you have something special and they want to offer it for sale they will surely express that interest to you. Such interest on their part is a clear indication worthy of being investigated.
Every transaction has a certain element of risk. Dealing with folks and businesses with long and fine reputations is a most important element in deciding where to place your trust, your jewelry and your business.
David Atlas is a respected GIA Graduate Gemologist and Certified Senior Member of the National Association of Jewelry Appraisers. He provides jewelry consulting and jewelry appraisals for clients in Pennsylvania, Delaware and Maryland. For more information about David and his services go to: www.datlas.com.
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