Auctions can be somewhat intimidating for the first-time attendee. But, auctions are easy to understand and once you have some knowledge of how they work, you can be successful buying at auction.
Auctions are fast-paced events where one must pay attention to the floor bidders, the phone bidders, the clerks, the ringmen and of course the auctioneer with their often fast-paced chant filled with non-sense words, yelps and finger-pointing. With all the excitement, it is easy to miss a bid cue and sometimes easy to overbid.
The first rule for any auction buyer is to have a price in mind for each Lot (see glossary) you plan to bid on. You don't want to go over that price during the excitement of the bidding because when the auctioneer's hammer falls, the high bidder owns the Lot. That is not the time to reconsider or rethink your bid. So make absolutely sure before you raise that bidder's paddle that you want the Lot and are willing to pay for it. There are no second chances or bid retractions and you are making a binding contract to pay for the Lot.
The second rule for auction buyers is do your homework on value and inspect each Lot you plan to buy. All inspections should be made, and all questions asked before the Lot heads to the block. GoodLife Auctions does not guarantee the consignor's information and cannot be held liable for incorrect information. All information must be verified by the bidder prior to bidding.
The last rule is to have your funds available prior to the auction whether in the form of available credit, cash or a line-of-credit established between your and our banks.
Online Auction Lots are timed sales which gives buyers days or weeks to bid on those lots until they close. When you leave an online bid on an Auction Lot, it is considered an absentee bid - you do not need to be present to win with your bid. Once your bid is placed, it is good until the auction closes. If the bid is higher than any other bid, you win the lot.
Note that other interested buyers may come after you place your bid and leave a higher bid. In this case, your bid is no longer high enough to win the lot and you will need to increase your bid. Our online system will send you an email notification alerting you to new, higher bids when they occur.
If when you place a bid the Auction system displays a warning "You have been Outbid" this means someone else has already left an absentee bid and it was higher than yours. If you receive the warning "You have been Outbid", you will need to increase your bid until you receive a "High Bidder" confirmation.
To ensure that your bids are high enough to win an auction lot, it is recommended that your bids are placed for the 'Maximum' amount that you are willing to pay for an item. When other bidders place a new bid, you will outbid them automatically up to your maximum amount.
As the timed auction nears it's ending, many absentee bidders will show up to bid live. This is when the auction gets truly exciting so don't miss out! Oftentimes, these bidders try win in the last few seconds of the auction. Their hope is that the clock will run out before anyone else can increase their bid. To ensure a fair system and to mimic our Live Auction system, the timeclock will add 45 seconds whenever a bid is place during the last 30 seconds. We want every buyer to have a fair chance to win and avoid unhappy buyers.
Buyers and sellers of fine art and collectibles need to be aware that their official status in the eyes of the Internal Revenue Service can have a great effect on tax advantages or liabilities.
A collector is someone who buys primarily for personal enjoyment, not for the purpose of making a profit. The collector is considered an ultimate consumer and therefore has to pay sales tax on all purchases, unless they are shipped from an out-of state auction house or other vendor. No special tax deductions of any kind for the maintenance of the collection can be claimed. However, if a collector makes a charitable donation of an item that has appreciated greatly since the time of purchase, the full current Fair Market Value can be claimed.
Dealers are people in the business of buying and selling; they hold valid re-sale certificates and therefore do not pay sales tax when making purchases. Instead, they collect sales tax from their customers and remit it to the state. Ordinary and necessary expenses related the business can be deducted, but they cannot qualify for long-term capital gains tax of long-held appreciated property, the way collectors and investors may. Instead, that revenue is treated as ordinary income. If a dealer makes a charitable donation, the amount he could claim would only be his cost, not the Fair Market Value.
Investors are afforded some of the benefits of each of the other categories, and it can be a difficult status to establish. An investor puts money into fine art or collectibles for the purpose of producing income or profit; his interest in the property must be more "passive" than a collector's. Investors pay sales tax, but can also deduct related business expenses, such as insurance, storage, etc.
IRS scrutiny of the art and auction world has increased markedly over the last 25 years, so it behooves all buyers of art and collectibles to understand their tax status. Dealers and Investors should formalize their businesses through discreet bank accounts, appropriate licenses, and consistent buying and selling behavior. As always, seeking proper professional advice is critical.