Consignment for net?

[Ernee]

Question for those selling through a dealer. One I've talked to said it is sometimes simpler and faster to agree on a "net to seller" arrangement, given that buyers will sometimes trade in their own equipment to make a deal possible.

Of course, the potential for the gross amount to be 2x or 3x the net is also quite real.

How common is this arrangement? Is there a way of reducing the potential for deviously concealed profit?  (Assuming you don't know and implicitly trust the dealer.)

[jacobsaunders]

Are you scared that the dealer might make a profit?

[Ernee]

There is the question of getting a fair deal.  The violin trade has its share of opacity, which usually doesn’t benefit clients.

[Michael Darnton]

Getting the price you ask for is not a fair deal? Explain.

[Ernee]

It depends on the seller having knowledge of what the item is worth.  I remember in high school, an orchestra coach who did a bit of collecting, tell a bunch of us with some glee about his getting a Guadagnini for $5,000 out of a classified ad in the local paper.  This was a time when the market prices were north of $40,000.  The owner knew what she had, and asked what she thought was a good premium over what Sam Ash was charging for their factory instruments.   That made me a little ill.  I don't know how you would feel about it.

 

[Michael Darnton]

Knowing what you do, do you think you will make the same mistake? I think if you do, you should prepare yourself better. Someone I used to work for expressed it well; "It's not fair to expect me to play both conflicting roles of buyer and seller."

If you have doubts you can get an appraisal. From a third source, obviously. In view of your concerns I think that is a good idea.

[deans]

I think what Michael is saying is that a consignment agreement should have a amount of money you need to get when the instrument leaves the shop. Not just a percentage, which could get entagled in a three way deal. 

[The Violin Beautiful]

There are a number of options for making a consignment agreement, and which one is used comes down usually to the one that the shop selling is most comfortable with, as the shop must put in the work of showing the instrument, adjusting it, maintaining it after it sells, and possibly taking it back in trade later on.

Setting a percentage of the retail price is fairly standard, but some shops will instead set a net price. In some agreements, a net price is established, and then anything over a certain number  for the retail price will be split between the shop and you. It can be simpler for a shop sometimes to use the net pricing and then adjust the retail price without needing to notify you each time. Read the terms of the agreement and ask any clarifying questions before you sign.

If you agree on a net price and you’re paid that sum after the sale, the retail price for the sale isn’t really important. It may seem a bit disappointing to lose the money you have forego in commission, but when you make the agreement, the shop agrees to pay you a certain amount regardless of the sale price, and you agree to give the shop the rest of the proceeds in exchange for doing all the legwork. It’s when the agreement is a percentage that the retail price matters. When you’re paid, it should reflect the proper amount. Yes, there’s a chance that you might not be told the truth, but musicians like to talk about the prices they’ve paid for their instruments, so dishonesty can really come back to bite a shop.

As is the case in most of the violin business, it comes down in the end to your ability to trust the people who deal with your instruments. If you have reservations about their honesty, you’re much better off either choosing a different shop you trust or just trying to sell your instruments on your own. 

[Altgeiger]

I did almost exactly this with a good student instrument once. I knew about what it was worth, and the dealer and I made an agreement we thought was mutually fair. The instrument sat with him for several years and did not sell; he gave it a new (poor) setup, and did not seem to see it as a priority item, probably because his margin on it was smaller than a new instrument. At that point I considered reclaiming it from him, but his idea of appropriate recompense for his time and effort in setting it up and offering it for sale did not agree with mine; he offered to purchase it outright for less than I was hoping to get if he had sold it. I accepted because I needed the money and doubted my ability to sell it privately for a better price in a reasonable time. 

I don't think I was treated unfairly. My only real complaint was the poor setup. As a private person, you need to either have a long time and a lot of energy to sell the instrument for what you think it's worth, or you work with a dealer and accept less.  You have to give the dealer a chance to make enough money that he won't prioritize everything else in his shop first.

[Ernee]

There is the question of who bears what risk.  But for many sellers, the real problem is finding someone to work in their interest.  Lowering the net price will make payoffs faster, but could also provide incentives for dealers to understate value.

As Michael says, the issue comes down to who is working for whom.  A lot of sellers probably think the dealer is working for them.

[David Burgess]

7 hours ago, Michael Darnton said:

Someone I used to work for expressed it well; "It's not fair to expect me to play both conflicting roles of buyer and seller."

Why not? Haven't most dealers bought most of the instruments they are trying to sell, so playing both roles is what they are already doing anyway?
Sounds to me like a lame excuse for the employer not being smart enough to figure out how to play "win-win".

[GoPractice]

Any seller should study up a bit. Before the internet, even common knowledge at the player level was difficult to obtain. Even now, at some shops, information might be limited. I still spend time at University libraries but am fortunate to access many bits of info in print.

The amounts do matter. The amounts in 3- 4- 5- digits figures rarely bump up to the next, but much can fall a digit or two. Stamped bows and mislabeled instruments are significant.

Better Papers are expensive. Take that as you will.

Not getting into the weeds for this, but better workmanship and condition, from credible sources of has some value.

[Michael Darnton]

40 minutes ago, David Burgess said:

Why not? Haven't most dealers bought most of the instruments they are trying to sell, so playing both roles is what they are already doing anyway?

Not as buyer and seller at the same moment on the same instrument, being the buyer while supposedly advising the seller how to deal with the dealer.