This column will focus on auction costs. For a consignor, the primary cost of selling at auction is the seller's commission, which is a percentage of the "hammer price" (winning bid) of each item. The seller's commission places the auction house's interests right alongside the consignor's -- the more the hammer price, the more both auction house and consignor receive. The amount of the seller's commission varies depending upon the type of item and the value of the total consignment. For example, the usual seller's commission in U.S. rare coin auctions is 10%, increasing to 15% for foreign coins and other numismatic items. However, auction houses compete vigorously with one another for major consignments, and as the value of the consignment increases, the commission rate tends to decline, and a 0% seller's commission for large consignments is not unusual. If you have a major consignment it is worth consulting an expert regarding which auction house(s) will best serve your needs and what commission rates might be available to you.

In addition to the seller's commission, auction houses charge buyers a commission, usually called a "buyer's premium" or "buyer's fee", which ranges from 10% to 15% of the hammer price depending upon the auction house and the type of item being sold. Often, charging a buyer's fee enables the auction house to recoup its expenses and earn a profit, particularly where the seller's commission has been negotiated down to zero. Strictly speaking, sellers do not pay the buyer's fee. Nevertheless, the fee is taken into account by buyers when deciding how much to bid, and a seller should consider this in estimating his or her likely net proceeds from auction. For example, if an item is hammered down for $1,000 and the auction house charges 10% to the seller and 10% to the buyer, the seller receives a net of $900, but the buyer actually pays $1,100. A seller who knew the item was worth $1,100 should understand that $200 of that amount would go to the auction house as commissions.

In addition to commissions, auction houses sometimes require consignors to compensate them for certain additional out of pocket costs. One such cost is photography. The photographs contained in the auction catalogue are very important to mail bidders who cannot view the items personally prior to the sale. Quality photographs help the consignor by inviting more bids, thereby increasing activity on the item and, hopefully, increasing the price realized. Photography is expensive, and some -- though not all -- auction houses will charge a fee of 1-2% of the hammer price to cover those costs. In large consignments, these charges tend to be absorbed by the auction house. Whether or not photography is a pass-along charge, consignors should get an agreement (preferably in writing, as a rider to the consignment agreement) stating which items will be photographed, the size of the photographs and whether they will appear alongside the item's written description in the catalogue or collectively with others elsewhere in the catalogue.

The second out-of-pocket expense auction houses sometimes charge to consignors is insurance. Major auction houses will insure items against loss or damage from the time they are shipped by the consignor to when the ultimate buyer picks them up after the sale. Make sure of this before you do business with an auction house. The consignment agreement usually provides that in the event of loss, the auction house will assign its rights under the policy to the consignor, in exchange for which the consignor releases the auction house from any liability. If the loss occurs after the sale, but before the buyer has picked up the item, the auction house will deduct its commission from the insurance proceeds before turning them over to the consignor. Consignors are entitled to see the insurance policy which will apply to their property. The usual insurance charge is 1-2% of the hammer price, but as with photography some auction houses absorb these costs.

Finally, consignment agreements usually provide for commissions from consignors who buy back their own property at the auction. Obviously, consignors do not consign coins with the intent to buy them back. "Buy-ins" are even more unhappy events for the auction house, which has done all its cataloguing, advertising, and auctioneering, but is deprived of a seller's commission as well as a buyer's premium. Therefore, auction houses usually charge a "buyback fee" is usually in the area of 5% of the reserve price (if the item does reach the reserve). If the consignor actually bids on his or her property above the reserve price, most auction houses will treat the consignor as an ordinary buyer, and charge the full buyer's fee (in New York, a consignor may not bid from the floor over the reserve, although he or she is free to do so as a mail or telephone bidder).