On the rare occasions when cost is a secondary consideration, say a dream house in a choice location, or a charity auction, your bank balance may be the only limit. However, most things up for auction are far from unique and so a cold heart is required.
I hate to be a killjoy, but the first page to be looked at in the auction catalogue is the one detailing commission charges. Most salerooms charge 30% buyers commission on the hammer price, some more, few less.
Auction lots will usually each have a brief description and an estimate. The description has to be factual because goods can be returned if they turn out to be not “as described”, so look out for what the description omits. There is no requirement for an estimate to be accurate, but there are rules. The lower estimate cannot be less than the item has been reserved for. When there is no reserve, a probate sale for example, then the estimates will typically be pitched very low in order that the ‘trade’ should know that the lots will definitely sell.
Since we have no way to tell what reserves have been left, any auctioneer’s estimates must be treated with a degree of skepticism.
Most people, including me, when looking through auction catalogues, subtly start to form an attachment to the objects coming up for sale. Be it a house or just a trifle on Ebay, we are tempted to start to assume ownership before the auction is even over. This emotional draw can become a dangerous and expensive enemy.
I ignore estimates completely and base my bids on a rather boring formula. There is almost always a maximum price in mind – even for the dream cottage – which must be used to work backwards from.
Max Price – less commission = Hammer Price.
I can’t emphasise enough how vital it is to do this calculation before the sale begins. Attempting the mental arithmetic while the gavel is raised, in the hot blood of a saleroom, is a a feat fat beyond my slow brain.