Here's a question for you Mr. Julia. If I put a gun into your auction and my reserve is say $6000 and it hammers for $4000 do I get my gun back as it didn't make the reserve i wanted for it?

Mr. Julia and family are currently out of the country for a short time. Upon his return he will respond to the pending questions.

Answers to Posted Questions by PGCA Members
 

Dear C.O.B. and Phil C.,

Since both of your questions deal with reserves I thought I would answer them in one response. First of all, thank you very much for these terrific questions. There has been a little bit of misinformation on reserves and some incorrect speculation about how they are handled at my auction and thus I am grateful for an opportunity to clear them up.

Many but not all people request reserves when they are consigning valuable guns. Reserves, when used, can have a critical impact upon the success of the sale. It of course provides protection but if the seller wishes too high a reserve, it will generally assure that the gun won’t sell. As I’ve indicated in my previous letter, reserves at my auction are usually below low estimate, and in the very worst case, at low estimate. Therefore the reserve impacts upon the estimate. High reserves mean a high estimate.

There are always at least two reasons a buyer bids on a gun at auction, a) It is something he wants; and b) the estimate is reasonable and realistic and thus he feels he might have a chance at buying it. Therefore a high reserve will almost always disparage bidders and those usually result in no bidders at all. Whereas an enticing and conservation estimate will almost always drive the interested party to participate. Success at auction is based on a simple formula which goes like this: The greatest participation = the greatest competition which = the greatest rate of return. Therefore, (1) if the estimate in the catalog is rather conservative, a number of people will participate all with the same idea in mind, “I’m going to own that gun”, and this is the formula for success. Low reserves and highly conservative estimates usually equal the greatest participation and strong and sometimes spectacular sale prices. (2) Less than enticing reserves result in minimal participation and rarely is there a frenzied participation and aggressiveness that occurs in scenario number 1, and therefore if the gun sells, frequently it is right at the reserve or a little above. (3) High and aggressive reserves will almost assure that few or no bidders participate at all. Thus a no sale and you get the gun back.

When a client requests a reserve we always try to encourage them to go with the most conservative reserve possible because we know the likelihood of a sale and the potential of the gun selling for
a lot of money is dependent upon a conservative and realistic reserve and thus estimate. Based on our recent past experiences with similar guns we will usually suggest (if asked) what an appropriate reserve should be. If the client is satisfied with our suggested reserve and should the gun not sell at auction, there is no cost to the seller except for the 1% insurance charge (the gun had to be insured whether it sold or not) and whatever the packaging and shipping charges are for return (unless he picked it up himself). If a client’s required reserve figure is far above where we think it will sell, we generally decline the consignment. Obviously anything we offer costs us a fair amount of money to process and promote, and if we’re certain it is not going to sell, everyone loses.

Sometimes if a client wants what we consider to be a high reserve and is insistent on including the gun in an auction, in some cases we might acquiesce but tell them that if we offer it and it does not sell that there will be a special buy in fee that they will have to pay us if it doesn’t sell. (This rarely happens.)

On very rare occasions a client might not request any reserve at all or agree to an appropriate reserve, but later after we have paid to photograph it, catalog it, print it in the catalog, promote it and insure it, etc., for some reason might request a much higher reserve. Technically the terms of our original agreement are already outlined in the contract and can’t be changed after the item is consigned, however in such case, there is a clause in our contract that allows for this but it also stipulates a special buy in fee will be charged if it does not sell. Obviously if the reserve is raised, we would also have to change the estimate to reflect the new, higher reserve. Since the catalog is already printed, it’s too late to put it in the catalog so we make a note online, make an addenda on our online catalog explaining that there is a new, higher estimate, we put a note beside the gun on display with the same information, we put a note in the catalog to remind the auctioneer to announce it at the time of sale, and we will contact anyone who set up for an absentee bid on this gun and alert them of the change also. (All of this is very rare.)

When a gun has a reserve, it stipulates in our contract that the reserve will be confidential and thus we will not divulge the exact reserve to anyone (however we will admit if asked that there is a reserve on that lot). “If for any reason the item is sold less than the reserve, the auctioneer will pay the consignor an amount equal to what the consignor would have received (on a net basis after deductions of commissions and all costs, fees or charges).” Therefore, if you consign a gun with a reserve of $6,000 and by accident the reserve is not executed and the gun is subsequently sold at $4,000, you will be paid the same monies you would have had the gun sold for $6,000, so our contract guarantees and protects you along those lines. Rarely does this happen and so if a gun was reserved at $6,000 and the bidding only got up to $4,000, our clerk, executing the reserve bids, would “buy your gun in” and the gun would be a no sale and returned to you as outlined above.

In regards to the return of a modern shotgun which has been offered at auction. As a licensed federal firearms dealer we are required to specifically follow federal law and your home state mandates. By federal law if we ship the gun, it must be delivered to an FFL holder. If you do not have an FFL, it is a simple procedure to make arrangements with a nearby gun dealer who will receive the gun for you, log it into his books, then log it out to you. This procedure must be followed by all federally licensed firearm dealers – there are no exceptions. If you drive to our facilities to pick up your modern shotgun, and if you are not an FFL holder, you will need to fill out Form 4473 (the same form you would have had to fill out at the gun dealer’s had you picked it up at the gun dealer’s), and then by law we are required to comply with background check requirements and then you are free to take the gun with you.

I think I have covered all of your questions. I am sorry for such a lengthy reply but I’ve tried to make sure to cover everything so hopefully there are no misunderstandings. Thanks again for your great questions.

Sincerely,

Jim Julia

Mr. Julia

Great explaination - I am certain many of us have learned a bit from it.

So what your saying is if I put a gun into your auction at a $6000 reserve and it sells for $4000 I'll get the gun back as the clerk would "Buy in" for the reserve and therefor there would be no sale.

If I understand this correctly and this is supposed to be how it works I know of one instance where that didn't happen and the gun wasn't returned to the owner. It didn't meet the reserve he set and was subsequently sold on the side to another person. He did not get his gun back.

If I read this correctly, the gun must have been sold to someone other than the the person bidding for Jim while bids are below the reserve. So, if he makes a mistake and sells the gun for less than the reserve to Joe Average bidder, Jim will make up the difference to insure the consignor gets the reserve amount. At least that is the way I read it?

I think the long and the short of all this wordsmithing is if your gun goes to auction you arn't ever going to see it again.

It looks to me like you will either receive at least your reserve or the gun back. If you are worried about it selling low, just make sure your reserve is high enough.
Seems pretty simple to me.
My question is what if the bidder stiffs? Let's say you reserve your gun at 5K, it sells for 7K ....but the buyer stiffs. Do you have the option of getting the gun back or do you just get the reserve payment of 5K less fees?

I'll hold my thoughts for one more day to see if Mr Julia responds to my response (I sent the email on Wed night) to his email to me which did not answer my only question that I had for him. We'll see.....

As I previously stated in my explanation regarding reserves, reserved guns are handled just exactly the way I stated in my letter, and all sold the way that Bindlestiff interpreted. The gun either sells at auction, and in such case, the owner is paid the full proceeds less commission and expense charges. If by accident, the gun is sold for less than the reserve, then I have to make up the difference, and I do. If the gun is bought in by the clerk in executing the reserve, and therefore does not sell, it is not my gun, it is still the consignors, and the gun is returned to the consignor unless the consignor makes other arrangements with us. We do not arbitrarily sell anyone’s guns to anyone. That is a fact, and there are no exceptions. If C.O.B. would please e-mail me at my e-mail address, and give me the details on the issue he has been referring to, I would be glad to investigate it, but there is no situation in which I or my staff ever sold a client’s gun after the auction on the side and refused to give it back to them.