When deciding how to sell, stamp auctions are an important option to consider.
We'll get to online auctions (such as ebay) elsewhere but, here, we're talking about attending in person, though these are usually open to online bidders as well.
For an example of a high quality stamp auction, check out Alan Blair Stamps and Auctions in Richmond, VA by clicking on the highlighted link (will open in a new window) and below is an example of a crop of the cover of one of their mail catalogs).
There are many dozens of companies that hold sales on a regular basis located all over the country. There are high-end, rare stamp auction houses offering some of the rarest and highest value stamps ever produced.
Some of these companies have been around for nearly a hundred years and their names are synonymous with some of the great rarities and named sales of the past century. Robert A. Siegel Auction Galleries is probably the most well known but there are a handful of others that also specialize in the rarest of stamps.
If you are trying to sell extremely valuable stamps in the $5,000 with total stamp collection values into the millions of dollars then using a top auction house is an absolute must. They have unique access to the high net worth collectors that can afford to spend tens of thousands of dollars without a second thought...not a bad position to be in, right?
Now, there are many smaller scale auction houses throughout the country that can make sense for stamp collections in the $50 to few thousand dollar range. These auction houses are scattered throughout the country and it may take some research to find the closest one. With a phone call you can find out if they travel to view collections and can talk to the proprietor about their terms and conditions and see if selling your stamps or collection through an auction house is right for you.
1. There is little effort or time required of you. The big benefit of any auction house is that they will take your collection, identify it's contents, determine the best way to sell it (in pieces or as a single unit), market the sale, sell your stamps and then later send you a check. That means little work on your part though you do pay for that service - both with selling fees and a delay in receiving your money after the sale.
2. Both the buyer and seller pay auction fees. The industry standard is 15% on both sides of the purchase goes to the auction house. Here's an example that should help show exactly what this means for you.
3. You won't receive your money immediately. Once you send your stamps to an auction house they have to identify and describe the collection which takes time and is in line with all the other collections to be sold.
Assuming there aren't any delay, it will still take 1+ months on average until the sale occurs. After the sale most auction houses send out payments 45 to 90 days after the sale depending on their terms and conditions. You'll usually receive your money at least a few months after delivering your items to the auction house.
A worst case scenario is having items not sell or some other issue that delays you to the next auction. As most auction houses hold auctions only every few months, this sort of delay can mean you won't receive your money for 6 to 12 months after providing them with your stamps. This is not the norm but you should understand the worst case scenario.
4. Stamp Auctions depend on bidders to drive the price higher so there is a lot of variance in realized prices. Similar to online auctions, in-person auctions can result in items being sold for much more or less than it's 'true' value. In the long run this averages out but if you're only selling a few items this can be very good or very bad for you.
Best case, your sales are very high because a bidding war breaks out between 2 potential buyers. Worst case, your items don't sell at all or sell for much less than expected because, for whatever reason, the bidders just weren't there.
5. The English method of auctioning (aka Open Sale) is the norm. Most companies sell using this format which basically means a minimum opening price starts the bidding and the sale price is the last bid offered.
This simple format can result in bidding wars if buyers get emotional about the items or winning. The emotional allure of winning is why it makes a lot of sense to use auctions for the rare and scarce stamps that may not come up for sale again for years or decades.
The downside of this method is that an English auction won't, on average, result in bidders making their maximum bid as you would get in Second-Highest-Price-Sealed-Bid Auction (commonly referred to as a Vickrey Auction). I won't go into the Vickrey method but a modern example is most Google advertising which is priced using this method.
There are really companies that only auction stamps?
One interesting thing about the philatelic auction community is that there aren't many 'generalist' companies that also run stamp sales. The vast majority of stamp auctions are run by companies that only sell stamps.
Collectors have reinforced this setup with their bidding behavior. About 5 years ago the largest and most successful auction company in the world, Heritage Auctions, entered the stamp market. Even with their scale and expertise in selling and marketing collectibles, Heritage was unable to make inroads into the market. They shut down their stamp division within 2 years.
Stamp auctions can be a great resource for selling your stamps but it is important to understand the pros and cons in order to make the decision that is best for you.
In summary, if you have valuable stamps or just want to sell your stamps with minimal effort a stamp auction may be right for you. If you care more about receiving the absolute highest price, receiving your money quickly or just want to be more involved in the sale of your stamps then stamp auctions are probably not the best option for you.