Breaking Up a Collection
by Rob Hoffer

Recently I got into a conversation with a fellow collector who was contemplating the logistical nightmare of breaking up and selling off his father's collection. I know that stuff like this happens from time to time, and this got me thinking... maybe a tip sheet would help smooth some of the bumps that folks may encounter with the break up of a large collection. Sooner or later, all of us will be going off to that big roundhouse in the sky (or the big firebox). Or, we may want to do some downsizing. Some advance planning now could not hurt. After all, we don't know what tomorrow will bring.

I do not envy anyone the job of disposing a large collection. It can be a huge responsibility as well as a colossal undertaking. Pointing out the pitfalls may make this unpleasant job somewhat easier. There are several well beaten paths to pursue in this matter, including...

  • selling in private, individual sales,
  • selling the collection as a lot,
  • selling at shows,
  • selling at a live auction,
  • selling through a catalog auction,
  • selling through an internet auction, or
  • making a donation to a museum or organization.

Each has its own set of positives and negatives, which are discussed below. But first here are a couple of general points.

Make a Plan

Unless you are planning on taking your collection off to the pyramid with you, the time to make a plan is now! The first, and most important thing to do is write it down, then turn that plan into a set of instructions! You are the person who knows your collection the best, knows the value of the items, and can give your spouse or children the direction they will need -- what the values are, who to contact, how to sell, etc. Particularly in the case of an unexpected or sudden death of the collector, the confusion that results can lead to unwise or hasty decisions that rob the survivors of fair values for their items. Sometimes stuff gets thrown away, given away, ripped off or sold for pennies on the dollar. Having a good and trusted friend that can be relied on is a big help. A knowledgeable and trusted person's advice and council is always valuable, and in this matter, you really are your own best friend! So the time to act is now while you are hale and hearty. Write an 'unbinding' "Letter of Intent" and attach it to your will. Name names and leave behind some "bread crumbs" for your family to follow.

Set Values

The first question that you have to ask yourself is how much do you expect to get for all of this stuff? You have to think about this realistically. Like most investments, not everything we buy goes up in value. Another consideration is that not every piece in the collection is going to realize top dollar.

Setting a price can be very difficult. If you set the price too high, it won't sell. If you set it too low, well, you don't want to go there either. Pricing is difficult even for the experienced collector. This is especially true of the extremely rare items, because comparable's almost never hit the open market.

Some people think about getting the services of an independent, professional appraiser. After all, this is a common thing to do in the general antique world. However, there are few professional appraisers who know railroadiana well, and there are few people within the hobby who are willing/able to perform this service. Leaving survivors/inheritors the task of finding someone to appraise a collection is a real challenge and exposes them to the possibility of dealing with unethical or self-interested individuals. So setting values yourself is a critical task and worth the time that it will take. Attend shows, talk to experienced collectors, and educate yourself on the values of the items in your collection. And write all this down!

Beware of the "Vultures"

Something has to be said about the "vultures". In a highly competitive hobby like railroadiana collecting, first strike capability is everything. So the term "vulture" can apply to anybody who got to a sale before you, as in the phrase: "I didn't get the good pieces because the vultures beat me to it". But the real vultures are those disreputable people who are happy to come in the back door as the body goes out the front door. They will offer to "help" your family by carting the collection off for pennies on the dollar.

Keep in mind that after losing a loved one, those left behind, especially a spouse, can be emotionally drained, scared and very vulnerable. The best way to beat the "vultures" is to know the prices and values of the collection before letting anyone get their foot in the door. Then take the time to explore all of the available avenues before letting go of anything.

The Options

Selling in Private, Individual Sales. Private individual sales can be a good source of quiet income for the family, provided that they have some idea of what the items in the collection are worth and they are dealing with respectable people (angels versus vultures). The railroadiana collecting hobby is small community. Most knowledgeable collectors know who has the big collections and who has the better pieces. Once word gets out that you are selling or are considering selling, serious collectors will take note and will swoop in like angels (or vultures). Some may even be interested in buying the entire collection outright (see the section below on Selling the Entire Collection). Others may not have the means to do something like this but may be interested in "picking" the collection. That is to say, they will want to pick out and buy certain pieces that they feel are significant to them.

A possible way to handle this in a somewhat organized manner is to make a list of trusted people who have made inquiries about particular items. Leave this with your notes. Then offer the pieces to the people on the list first. If they pass, for whatever reason, then it goes to auction and may the best man win.

Positives: The upside of selling items by the piece is that presumably, you'll be getting a good price for each and every piece that is sold in this manner. This could be the time when your collection really is "money in the bank" to your family. You also can control who gets what and for how much.

Negatives: Every silver lining has a cloud, and the fear is that after the collection has been "picked" and you've sold off the better items, you'll be stuck with all the lower end, harder to sell stuff (junk).

Notes: You don't really know how much disposable income any one person has to spend on a collectible at any one time. So don't be offended if they turn down a sale or tell you the price is just too high for their budget. It's also important to be able to "bargain" a little if necessary to close the deal (especially if your angel is a big buyer). And when the deal is done, don't be ashamed to take the money!

Some folks don't want to bother with this sort of thing, and I can't say that I blame them. Thankfully, there are other options. The key is to remember: at some point, it's all about the money. No matter how nice your buyers are or how good a friend they may be, selling is business and not personal! The object of the game is to come away with a win/win situation. That is, both parties should come away feeling that they have made a good, fair, and square deal.

Selling the Entire Collection. Selling the entire collection at one time is basically the opposite of "picking a collection" as the buyer takes everything. There are people in the hobby who may be interested in purchasing the entire collection. People have been known to take out a second mortgage on their homes to buy railroadiana. Dealers will buy collections for resale. Serious collectors will do it because they are obsessed with building bigger and bigger collections. The general consensus is that a collector will pay more than a dealer. But, don't count on it.

Selling the entire collection to a reputable dealer or collector may be your best option. This is especially true if you need quick cash, don't have the time, or don't want to mess with selling things a little bit at a time. We call this the "Clint Eastwood method" -- the buyer takes "the good, the bad, and the ugly", and the seller doesn't get stuck with the junk.

Positives: The advantage to the seller is the convenience of getting rid of everything all at once. It is the quickest, easiest way to a cash settlement. Getting rid of the collection may also be a big part of the healing process for those left behind after a death.

Negatives: It may be disturbing to know that in all likelihood the collection is going to be broken down and resold for a profit. However, that is the compromise for the convenience of quick cash and a fast turnaround. The other even harder part is setting a value on the collection as a whole. This may take some trust as well as some amiable, give-and-take negotiation. This can be made a lot easier if the original owner has his documentation in order!

Notes: If you are going to go this route, It's best to get a couple of offers. Having a second or even third offer can be helpful. If you rely on an offer from only one buyer, do you know that he is an angel as opposed to a vulture? If he is a trusted friend, maybe so. But this gets back to letting the potential heirs of your collection know exactly who you consider to be an angel.

Selling at Shows. Railroadiana shows are a major route for buying and selling. They occur throughout the country, although there are few like the Gaithersburg, Maryland show, held every November, that are considered the "national conventions" of the hobby.

Positives: Doing shows can be a lot of fun, especially if you enjoy the camaraderie and the one-on-one interaction with people. Standing behind the table also gives the seller complete control over the prices and negotiations while giving prospective buyers a chance to examine the items. The key is to know what you are selling and have an good idea of the prices you want for your items. Shows are also a golden opportunity to make new friends and have some fun.

Negatives: This avenue is definitely not for everyone. Selling at shows is a lot of work and sometimes requires significant out-of-pocket expenses (table space, hotels, meals, gas, etc.). The seller also needs to have a starting price and some bargaining skills. Then there are the problems associated with packing, setting up, possible breakage, theft, negotiated sales, tearing down, and the long trip home. A thousand other distractions can get in the way like the guy who will burn up your time talking your leg off about nothing while the real customer passes by. The aggravations of dealing with the public are sometimes enough to make a preacher cuss.

Notes: Shows can get you hooked on this hobby. The good news here is that you'll have some stock to sell which means you'll already be off to a good start! For heirs of a collection, though, shows can be daunting, unless they have someone (an angel) to help them with the whole scene.

Selling at a Live Auction. I have seen sellers do very well by putting their collections up for sale at auction. I have also seen people take a bath. Once you consign to an auction house, you basically lose control over what happens to your things. The auctioneers will also take their cut out of the bottom line, usually 20% or more of the total. However, they are earning their cut by organizing, cataloging, advertising and generally taking care of things for you. A lot of the success or failure of an auction depends on how much advertising is done before hand. With a large group of people in the audience, bidding can become quite lively, and prices can go up in a dramatic fashion! But if nobody bids, the items will sell for nothing.

Positives: A live auction can be a social event or form of entertainment. I once went to an estate auction where a note from the deceased was read to the crowd -- something along the lines of: "Welcome to my auction. I hope each and every one of you in attendance has as much fun here today as I had building this collection. Have fun and be good to one another." It was almost like an old time wake, where everyone remembered the old boy and drank to his memory.

Negatives: Picking a good auctioneer is a problem. Ideally it should be someone who has had some experience and is familiar with the railroadiana market. This can be difficult in some areas of the country. Then there is the task of getting the collection to the auction. Usually transportation is the seller's responsibility; however, there are auctioneers who will pack and ship the goods for you -- for a fee, of course. The total fees and commissions can seriously reduce the return. And remember the crowd has only so much money to spend. Once one or two big ticket items have sold, bidders may not bid on other lots if prices go beyond a certain point. Once again, having a large pool of bidders is critical to success. So the key to running a good live auction is advertising the sale beforehand to attract bidders. Not investing in advertising is penny wise and pound foolish. Another pitfall to watch out for is the disreputable auctioneer who may hope to keep the crowd of bidders down. His intention is to buy the estate himself for later resale.

Notes: Unlike some antique-collecting areas, there is currently no national, live (as opposed to mail/internet) auction venue for railroadiana. So finding an auctioneer basically means picking from local candidates.

Selling Through a Catalog Auction. There are professionals who specialize in mail-based (and email-based) railroadiana catalog auctions. In most cases, obtaining the catalogs requires paying a fee or subscription. Bids are sent in by mail or email by a certain date, and winners are notified by mail with an invoice. Items are shipped upon receipt of payment. In most cases, consignment fees are around 20% and cover all expenses with no additional hidden charges.

New: See Auction List.

Positives: Catalog auctions give the seller access to a highly targeted, national audience. A couple of these have developed a reputation for dealing in top quality items, so many busy collectors look to these auctions a a main avenue for collecting.

Negatives: Catalog auctions are only run a few times a year. Because the major auction services prefer to only deal in the high value, premium items, those collectors with lower-end items are not really welcomed with open arms. But, lower-end items are normally taken when higher-end items are offered as part of a collection. The catalog format does not allow prospective buyers to make a hands-on inspection of the items offered, which is a turnoff for some collectors.

Notes: As I understand it, the return policy is very liberal for the major catalog auction services -- if items acquired in the auction are returned within a reasonable time and before the consignors are paid. Normally items can be returned, with no questions asked, within one month after the close of the auction.

Selling Through an Internet Auction. In the last couple of years, internet auctions have become one of the main avenues for collecting railroadiana. Items are shown on a web page, bids are submitted over the internet, and the highest bid at closing time gets the item. All subsequent parts of the deal -- billing, payment, shipping -- become the responsibility of the seller and buyer, not the internet auction service. A small fee is charged to the seller by the auction service.

Positives: Some people believe that internet auctions are the best way to go. Your items easily reach a large and diverse market (provided they are listed correctly). If the seller does all the work himself, it comes down to a one-on-one deal, and all of the profits (minus the auction fee) go into the seller's pockets.

Negatives: Selling via the internet is labor intensive, time consuming, impersonal, and can require a lot of tedious work. Selling a large collection can also take weeks or months. As one guy said, "Selling over the internet is a pain in the neck. Frankly it is too much work, and the various costs eat into profits. It could easily turn into a full time job. It's not just the selling part but the follow-through, packing and shipping that is also a major headache."

The seller must pay to list, and if there is a problem, trying to contact an actual person to resolve an issue can be extremely difficult. Then there is the prep work -- typing out an accurate description of each piece, taking pictures, modifying them to an appropriate size for the web (to minimize download time for viewers), and uploading all that information to the internet site. After the sale, the seller has to worry about billing, payment (including checks clearing the bank), boxing, and shipping. With a number of auctions going on at any one time, keeping everything organized is a chore. Hiring someone to do it for you only lowers the numbers on the bottom line. Another annoyance is the fact that not every buyer is on the up and up, and some people can be very slow payers.

Notes: There are professionals who will take care of all the internet selling details for a commission. Most of them don't know beans about railroadiana, but, they do know how to post an item and then handle all of the after-sale rigmarole. The basic theory is that if they post a good picture and give an adequate description, collectors will have something to go on, and the stuff will sell itself. That's the theory anyway. This website has a page with some additional advice for selling on the internet.

Donations to a Museum or Organization. You can donate your collection to a railroad-oriented museum or organization, and many of them have the necessary legal status to accept donations as tax write offs.

Positives: Some museums handle donated items better than others. A donation of a piece or two in memory of a loved one to an established museum may give peace-of-mind to the giver. The donation may become part of the permanent collection and possibly go on exhibit. It can also have a positive tax consequence over outright selling. If the numbers are big enough, you may want to look before you leap and contact a professional tax consultant, CPA, or attorney.

In the case of a donation to a railfan club or historical society, if you really like these people and want to leave them something, then do it. More than likely you've been involved with the group and have some personal connection.

Negatives: Making a donation sounds like a noble thing to do. But, most people need cold hard cash more than they need a tax deduction. It's nice to think that you will be remembered forever over an act of generosity. But, once an item is given away and signed over, anything can happen to it. Museums can close, and staffs can change. Displays can come in and out of style, and some things may end up just sitting in storage rooms. The museum or organization can even sell your stuff to raise funds. Making a donation of your collection to a reputable institution sounds like the decent thing to do, but you should know that you lose control of your donation. The key here is to do your homework and make informed decisions. Part of this might include asking the museum coordinator up front: "What would you do with this item or collection if I donate it?".

As far as donations to railfan clubs or historical societies, unless you are doing this on a personal basis, my opinion is that most times these donations simply get lost. Or, they end up in somebody's personal collection. Or the club sells the stuff to some vulture for beer money. I've seen this happen.

Bottom Line: If it's your collection....

Keep good records on the stuff in your collection, and let your potential heirs know what you would like to have done with it. Do this legally with a will and/or a letter of intent. It's a tough task, not only because we don't like to think about the inevitable, but also because we may still be looking for new stuff. But nobody will know your opinions and wishes unless you tell them.

Bottom Line: If you're helping someone else break up a collection....

Maybe it's because I live right outside of Washington D.C., but I am fully aware of the fact that any action, backed by the very best of intentions, can come back to bite you in the behind sometime down the road. For example, all it takes is for one person to accuse you of being a "vulture", and your reputation in the collecting community will be in question.

If you are asked to help out with the breakup of a large collection, keep in mind that ethical and above-board behavior must be your guide. Full disclosure to the person you are serving is essential. When in doubt, the survivor should be encouraged to get a second or third opinion as well as your own. Disclose in writing, and demonstrate on paper that you did what you did without selectivity or prejudice. In the event of a "family squabble", you can go from "the trusted friend of the deceased" to "the goat" in no time. So be sure to protect yourself (C.Y.A.) with a paper trail as things progress. Keep copies of the papers or documents pertaining to your role, especially for large, valuable collections. Should the seller get Alzheimer's or the family question your motives or some lawyer comes to you 10 years down the road alleging that you behaved unethically, the burden of proof is on you! Be sure to keep those records!

Final Note: Many of the ideas in this article came from a number of experienced, trusted collectors who were generous with their opinions. While no one is credited with any particular point, I want to thank everyone who contributed. This is a work in progress, and comments are welcomed. Email me.