Fancy the latest Samsung smart television for £300 to £700? Or an iPhone 5, where starting prices are £150? Auction houses are now using Facebook to advertise forthcoming “fast sales” of items that have previously been owned by bankrupt individuals or insolvent firms.
These “guide prices” certainly look attractive. A similar Samsung television is currently selling on Amazon for upwards of £1,300. Other lots have included an 80in Sharp 3D Smart television, with a guide price of £1,500 to £3,000 – in John Lewis a similar model is selling for almost £4,400. The latest iPhones sell for £300-plus online.
There seems little doubt that the promise of cheap electronic goods will attract customers who may not otherwise have thought of visiting an auction room. Using social media, alongside advertisements in local newspapers, is also likely to promote these sales to a far wider audience.
It isn’t just electronic goods under the hammer at these “fast sale” auctions. Other lots include designer Swiss watches, fine wine, art, antiques, furniture and carpets.
But are buyers always getting a bargain?
It’s important to remember that these sale prices are a guide only. Once bidding is under way prices can quickly rise, so the eventual “hammer price” may bear little relation to the original guide.
Some of these companies don’t publish their final sale price, so there are concerns that these are “teaser” rates, designed to get people into sale rooms and bidding on items they may know little about.
Nor is the final “hammer price” what you pay. On top of this there will be commission and VAT – potentially bumping prices up by a further 25pc.
One company that is advertising heavily on Facebook at present is WLC Auctions. Wayne Cooper, the director of the firm, said around 60pc of its lots were bankrupt stock, while the rest were from other companies, such as pawnbrokers and memorabilia dealers.
There have been numerous criticisms of the company online, in forums such as MoneySavingExpert.com and WhatConsumer.co.uk.
Most complain that cheap electronic goods are few and far between – and the “guide prices” given on fine wines, jewellery and antiques are “optimistic” – so customers aren’t always getting the bargain they think they are.
In one case a woman complained after buying a set of lamps for £140, which had a price tag of £795. When she later had them valued they were worth just £200. Mr Cooper said that in cases such as this the customers were offered full refunds. (There are numerous cases online where customers confirm they have secured a refund.)
Mr Cooper said the firm did not employ its own valuers, so its lots don’t have a guide price or a reserve price – all items are sold on the day. The prices given on the firm’s Facebook pages are only what they expect them to sell for. However, the firm does use external companies – such as Safeguard – to certify items such as jewellery and watches.
Mr Cooper said the firm was completely separate from Coopers Auctions, which was run by his father and was subject to a BBC Watchdog investigation.
WLC isn’t the only auction house running these “pop-up” sales. While it has regular sales in six London hotels, other firms will run one-off auctions in church halls and provincial hotels – sometimes on a “cash only” basis.
But whether you are buying at one of these flash sales, or from a more established auction house, do you have any consumer protection? Or is it a case of “buyer beware” once you step into the sale room?
Samantha Lilley is the director of valuation at Borro – an upmarket pawnbrokers. She said the law did provide some protection for consumers, but she said prospective buyers should always do their research first.
“Look at what you are buying, and where you are buying it from,” she advised. “Get a clear idea of what similar items have sold for, both at auction, or elsewhere, if applicable. Know what the maximum is you can afford to bid – and stick to this.”
In most cases customers are protected by the 1979 Sale of Goods Act.
This stipulates that an item should be “as described”. So, for example, if you bid on an item that is listed in the sale catalogue as a “silver teapot” you have a right to a refund if it subsequently turns out to be pewter. This legislation applies to goods whether they are new or second hand.
This legislation is of less use when it comes to “guide prices”, which are subjective.
Many customers don’t realise that their contract is with the seller, not the auction house itself. But the auction house is not obliged to give you any details on the seller. However, it does have some responsibilities, such as making no false statements about items.
A spokesman for Manchester Trading Standards pointed out that in certain circumstances the Sale of Goods Act might not apply. In such cases, though, the auction houses must make this clear to customers. And even here, if the item has been falsely described, you may still be entitled to compensation.
He said his office had received a “rash of complaints” about auction houses a couple of years ago, but there had been far fewer complaints recently. But he said it paid to “deploy a bit of common sense” when buying at auction.
SAFE BUYING AT AUCTION – READ THIS FIRST
• Are you dealing with a reputable company? How long has the auction house been trading? Check whether it has its own sale room or head office where you could apply for a refund.
• Buy on credit card. This may give you additional protection under the Consumer Credit Act. Tread carefully if buying from a cash-only outfit.
• Check the refund policy. These terms and conditions should be clearly stated at the back of any sale catalogue. This should cover items that have been wrongly identified or catalogued. Many established regional or national auction houses offer extended guarantees of up to five years. Don’t buy if you cannot find this information.
• Can you view lots in advance? Ms Lilley of Borro (see main story) said most auction houses gave prospective buyers the opportunity to view sale items. She added: “Make sure you read the catalogue carefully, and also ask for an auction condition report.”
• Check commission rates. The T&Cs should also explain the commission charges. Typically buyers pay commission in the region of 20pc, plus VAT. However, if the item is being sold on behalf of a private seller, the VAT is only payable on the commission charge itself; if it is a trade sale then the VAT is on the total sale price. This should be clear before the lot goes under the hammer.
• Does the auction house belong to a trade body? Ask whether the auction house – and it valuers – are members of the Royal Institution of Chartered Surveyors, the Society of Fine Art Auctioneers and Valuers, or the National Association of Valuers and Auctioneers. If not, take any “estimates” of value with a strong pinch of salt.
• Fakes or forgeries can be a big risk, particularly when dealing with antiques and painting. Similarly beware of “phantom” designer goods, designed to look and feel like famous brands. These are usually worth very little.
The picture is further complicated for those buying via online auctions. If you are buying from a private individual, they only have to ensure they item is “as described”.
But some sales on auction sites aren’t auctions at all. If the item is “Buy It Now” – and you are buying from a company or trader (someone who sells items regularly) – then you also get additional protection under the Distance Selling Regulations. This means you have the right to a cooling-off period of seven days, and the trader should inform you of this. You can cancel your order in writing, and the trader must return your money within 30 days.
Read the full article at The Telegraph