Selling $3m violins for a friend...questions on the topic..
August 22, 2011 3:55 PM   Subscribe

A friend of mine is looking to sell two extraordinarily valuable violins (in the 3+ million dollar range). I think he's hoping to sell it privately to avoid the huge cut the auction houses take, and he's suggested that if I can find him a buyer, he'd be happy to pay a finder's fee of some sort. So two questions...

Any ideas on how to go about this?

What would a reasonable finder's fee be? Friends + money is always ugly, and I'd like to tread carefully there. Any suggestions?
posted by sdis to Work & Money (21 answers total) 2 users marked this as a favorite
Find out what the auction fee is, and take a quarter of that. Even 1% is $30k, so you'll be making out well, and the auction house's cut is likely on the order of 25-50%. As long as you're under half what the auction house would take, your friend is making out well too, so there shouldn't be any hard feelings.

However, agree upon the finder's fee amount before introducing him to a buyer. Get it in writing (by email is sufficient).
posted by fatbird at 4:03 PM on August 22, 2011

Less than half an auction house fee.

I'd be concerned about doing this. An auction house or violin specialist (someone like Heinl's in Toronto) might have a book of tens of people willing to buy the instruments. Do you? If you undervalue these things, what recourse would your friend want?
posted by scruss at 4:06 PM on August 22, 2011

Clarify your business relationship on paper, and use an escrow service for any transaction. There will be fees for this, too.
posted by Blazecock Pileon at 4:15 PM on August 22, 2011

Get it authenticated & appraised first.

Before you do anything, get it all in writing.
posted by darkgroove at 4:17 PM on August 22, 2011

I deal on other matters with a few people who are deeply into collecting and playing very expensive vintage guitars. They buy through, nearly exclusively, a very small network of highly trusted dealers and agents, who guarantee provenance and condition of the instruments they trade. If you are not in a reputation network of top violin dealers, or otherwise known to be validly representing a Strad or a Guarneri, you'll not likely get entree to those circles easily, except on the strength of the very goods you are trying to sell. And even if you do, on the strength of the goods you represent, you'll pay commissions to such dealers/agents for their involvement, equal to what the market generally bears.

However, if you have something that is really rare, but well known, and that has been away from the market awhile, some high end dealers will cut back their fees somewhat, just for the cachet of handling the deal, and steering the instrument to one of their preferred clients. If that strategic description fits your goods, you might quietly contact one or two of the top violin dealers in New York and London with a query for an appraisal/authentication, for insurance and estate purposes. If you can, travel with the instruments, and let them talk you through their initial appraisal, and be prepared to pay for appraisal. If they ask about your willingness to sell, smile, say very little, and leave your number. It may take a few days for them to call, but if your goods are genuinely of the class you represent here, you will be called.

Negotiate tough with the dealers then, but only with the dealer; don't try to cut them out, as the only ones that will lose is you/your friend. Be prepared for negotiations to go on for a while. Be reasonable, but firm. And when your terms are met, sell.

Nobody likes a tease.
posted by paulsc at 4:24 PM on August 22, 2011 [4 favorites]

General remark: be careful. Be aware, that sometimes there may be other reasons for such requests than what people give. When selling to a private buyer, outside of any auction house, odds are higher that what is being sold is not authenticated properly. Authentication, sadly, can even be a problem with auctioned items, let alone those outside of it. I am certainly not casting any aspersions on your friend, but be aware, that if something goes wrong - like the item is not what it is purported to be - you are now a party to this transaction. You don't want to be in a position to be accused of facilitating fraud, should such a thing happen. Now, I'm assuming your friend is looking for a private buyer exactly for the reasons he's indicating, rather than hoping to lessen scrutiny, but I think it's very important that the authentication and all the paperwork is on the up and up - this will also make it easier to actually get a buyer to bite.
posted by VikingSword at 4:26 PM on August 22, 2011 [1 favorite]

Uhh, even if the seller loses 30% to an auction house they still 2.1 million bucks per violin. Really, what is the difference between 4.2 and 6 million? Really?

I think something is really odd here.
posted by roboton666 at 5:30 PM on August 22, 2011

Really, what is the difference between 4.2 and 6 million? Really?

About 30%. If I knew a sucker friend who would be willing to do the leg work for half or a quarter of that, I'd do it in a heartbeat.
posted by toomuchpete at 6:27 PM on August 22, 2011

You're thinking about getting in the middle of a 6 million dollar transaction in an industry you know nothing about? At the very least you need a lawyer to protect your own interests. And consider that there is a reason auction houses charge so much - they aren't just taking a totally unearned cut; they have the expertise to facilitate the sale.
posted by yarly at 7:27 PM on August 22, 2011 [5 favorites]

I'm pretty sure your friend is full of it. Unless he has two strads, which I'm pretty sure he doesn't, he does not have any violins worth $3 million. Or $1 million. I'm guessing he's got violins that are not worth anything.

There are some strads worth more than $3 million, but most are worth significantly less. there are not a lot of strads in the world. The people who deal in them are in an insanely specialized market that probably involves no more than 200 people worldwide.

If you friend is serious about letting you have a crack at selling them, it means he doesn't actually own them.
posted by sully75 at 7:48 PM on August 22, 2011 [4 favorites]

you can see that a very, very small percentage of violins sell for over $1 million. Very few sell for over $100,000.

Seriously, just walk away and forget about it.
posted by sully75 at 7:52 PM on August 22, 2011 [3 favorites]

ps you should know that 95% of all violins in the world have fake Strad labels in them.
posted by sully75 at 7:52 PM on August 22, 2011

nthing the votes to walk away. Friends don't get involved in big money deals with friends. Recipe for disaster. Let a pro handle it.
posted by colin_l at 7:54 PM on August 22, 2011

I would also ask yourself, the following: "ok, let's say I find a willing buyer. How do I execute a $3 million transaction?"

It probably isn't that easy to just write or deposit a $3 million check. Do you take cash in a briefcase? Can that much fit in a briefcase? Should you bring a sack with a $ sign on it? In other words, there are a lot of logistical issues beyond just locating a buyer. Probably the types of things an auction house is very good at. So, a discussion with a lawyer would probably be a very good idea very early on.
posted by This_Will_Be_Good at 8:16 PM on August 22, 2011 [2 favorites]

• Get violins authenticated by a violin expert (your friend pays for this). Find the best in the business. Do not go second rate with your appraisal.

• If they're real, strip down to your underpants and dance around the living room.

• You'll need provenance. Where did the violins come from. How did your friend come across them. Any paperwork?

• Get a contract signed with your friend. Have this drawn up by a lawyer.

• So now you have a wonderful appraisal from one of the top violin experts in the world, letters of provenance from your friend and a signed agreement to act as the sole agent on the sale of your million dollar violins.

• Set up a website. Call it Million Dollar Violins R Us (or something more tasteful). Show images of what you have for sale (with watermarks on your photos), details - and your contact information.

• Research - and contact all of the serious musical instrument collectors. JFGI

• After doing all of this you'll just realize that 99 percent of all serious musical instrument buyers (I'm talking million dollar bidders) - do their buying at a major auction house. Pound your head on the desk a few times and then call Christie's. Work out a deal on the consignment fee - make that your commission - and let them make you some real money. You're dealing with something that's way over your head. An auction house offers protections from things you haven't even imagined.
posted by Bighappyfunhouse at 10:16 PM on August 22, 2011 [3 favorites]

Nthing those saying that violins of this quality, if that's what you have, get sold at auction houses. And with rock-solid appraisals and water-tight provenance. A 3-million dollar violin is a very rare beast indeed and those who are in the market for such things will not buy them from an unknown party.
posted by ob at 5:26 AM on August 23, 2011

"It probably isn't that easy to just write or deposit a $3 million check. Do you take cash in a briefcase? Can that much fit in a briefcase? Should you bring a sack with a $ sign on it?"

That kind of money often gets wired electronically.
posted by mikeand1 at 9:18 AM on August 23, 2011

As a former auction house employee, I'm going to have to agree with many of the above answers - auction houses provide an important service: representing an item accurately; safe storage, insurance and handling of an item in the interim; offering it for sale in a protected manner; reaching the top of the market; handling the transaction and providing the paperwork trail needed for provenance and, blech, sales or whatever taxes. It's not a huge cut - the buyer's premium is usually 10-15%, the commission about the same, but it can be negotiated. Just think - that money pays for about ten people to work to sell the item for the maximum amount: the department head, the preview staff, security, the photographer, the printers, the advertising department, the auctioneer, the people handling the phone bids, the floor person, the receptionist, the accountant, the general manager...

That said, certain auction houses offer a referral fee, sometimes around 4% of the hammer price. You could offer to find the most appropriate auction house for the sale, and collect that fee from the auction house, not your friend.

Further, where I worked, the buyer's premium was untouchable - but we would sometimes waive the seller's commission in order to procure high-end items. If you friend doesn't want to pay an auction house's fees, he can negotiate to minimize them. For example, auction houses will often charge for pictures in the catalog, but since items don't sell as well without images, and they have to take them for the website and screen during the sale anyway, it's easy to ask them to waive such fees.

Let's put it this way - it's fraught enough to stop for a sandwich with a Strad - do you want to meet someone in a hotel room to make the deal, then walk away with the money? How much are you going to pay your bodyguard? And what if all goes well, but the buyer finds the item has been misrepresented (or, claims it is, whether or not...)? How are you going to handle any potential legal case they may want to bring afterward? I haven't worked for an auction house in years - but it's a relief not to have my butt on the line. I say, why invite trouble?
posted by peagood at 10:38 AM on August 23, 2011 [1 favorite]

This sounds like the start of a con, to be quite honest.
posted by i_am_joe's_spleen at 12:38 PM on August 23, 2011

I thought of this question when I caught this episode of Buried Treasure on tv the other night, and would love to know how this ended up - but, alas, I may never.
posted by peagood at 7:22 PM on September 1, 2011

Looks like there might be a sudden glut of valuable violins on the market. What a strange coincidence, I too would love to know how this ended up.
posted by punilux at 1:35 AM on September 4, 2011

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