Some semi-weird & questionable situations have come up lately and I'd like to ask the forum about them. The topic is shop handling of consignment guns. Not physical handling but business-related handling. More specifically, how shops should handle offers made on consignment guns when the owner cannot be immediately reached for a decision. And for this discussion, let's take the "good buddies" or "friends of the shop" factor out of the mix.

Question 1: When a reasonable cash offer is made on a consignment gun, should the gun be pulled from display pending a decision from the owner? Or should it be allowed to remain on display for a possible "full asking price" sale or maybe a better offer?

Question 2: In the case of multiple offers on the same consignment gun (obviously this assumes the gun was left on display after the first offer), what should the shop do? Should it simply record the multiple offers without comment and report them to the owner for a decision? Or should the shop interact with the 2nd (or later) offering party(ies) to either:

a) Let the party know that there are other offer(s) on the gun.
b) Let the party know the amount of the preceding offer(s).
c) Let the party know if its offer is lower or higher or the same as the preceding offer(s).

I'm not even sure there is a right or wrong answer on all this, but I'd sure like to know what other forum members think is fair and ethical.

Should your "consignment" gun be in a shop that closes down due to bankruptcy, "your" gun is considered an asset of the former business, and you will not get it back. It will be used to satisfy outstanding debts of the former business.

I would never consign anything to any business.

As to the OP question, the item is for sale at the asking price until it sells, or the price is lowered. Offers mean nothing.

The few I have ever priced in our area LGS, it has been explained to me that the specific gun was "on consignment" and the price was "marked on the gun". Policy was "take it at the marked price or move on". I think that is a great policy for any LGS on a consignment. Had this happen a few times over the years at different LGS.

Which, of course, is why you choose your consignment shop very, very wisely... and why some shops are able to charge a whole lot higher consignment fee than others.

So I assume this means leave the gun on display. But then how should the shop handle multiple offers?

Yes, leave it on display. Unless one of the offers is for the asking price, gun is still for sale. As mentioned, pay the price, or move on.

It starts to get interesting when you have multiple offers above the asking price.

My experience up here has been quite different. Some consignment guns start out at obscenely high asking prices at which no one in their right mind would ever pay. For such obviously over-priced guns, offers are common and readily accepted and relayed to the owner (if the shop is smart). "Take it or leave it" on an overpriced consignment gun is just a waste of the shop's time and display space up this way.

Now that is something I haven't run into yet.

I will try to shed a little light on what is done with the consignment guns at the MA shop I work in. If a reasonable offer is made the gun generally gets pulled of the rack until we can get in contact with the owner. Bear in mind this has to be a reasonable offer. If the owner says no to low the gun is put back in the rack. Consignment guns are a good stream of revenue for my store as the owner is great with the online pictures and posts them on a couple of broker sights. My store is employed by you to sell the gun so it does run out every offer, the decision is finally up to you. These days with mobile phones e-mail the contact is generally completed in 24 hours.

If I may a couple of things to add, the "Buddies" of the store have the same chance as any patron. Sometimes the owner of the gun sets a threshold with the shop for a how low can you go price.

A few more things, when you bring a gun in for consignment try and do a little homework on the piece as I have seen guns come in and the owners think they are worth unbelievable prices and they are not. Please make sure the gun is clean and in safe shootable condition, this takes time and money for us to clean and determine this.

The bottom line is make sure the store sets your expectations when consigning a gun.

Good luck hope this helps.

Pete

1. In my opinion the gun should be pulled if money changed hands. Until then it's not sold, it's not even almost sold. My experience working in the sales field for over a decade. ...I've seen a lot of weird money related things that I go by the rule -its sold when it's sold- The offer might be reasonable to you but may not be to the consignee. He may not want to budge at all on the price and the next guy coming in may thing that asking price is a steal.

2. Shop should let the consignee know that he has X amount of offers at such and such prices. Of course we all know that anyone selling is going to sell to the highest amount. It should be a one time deal. Here are your offers and who would you like to sell to? That's it. Otherwise it turns into, or has potential to turn into an auction and this will be a headache to all involved. The shop trying to get a hold of the consignee while he's at work, then wait for him to call back if he can't pick up right away. Afterwards call all the other interested parties, wait for them to counter offer if they decide then repeat the whole thing over again by calling the consignee. Nah. One time and done, which will most certainly be the highest amount

I'm in agreement with both posts above. Guns on consignment generally start out with a set price and it's a take it or leave it kind of deal - at least in the initial few months.

Seller and shop expectations also need to be considered. There should be a general understanding of what the seller expects. If the seller wants a high asking price near the full market value of the firearm, the expectation needs to be that it is going to take awhile to get that price - something that has to be acceptable to both the seller and the shop where it's taking up space. And then the reality is that with a realistic asking price, the seller is only going to get about 80% of full market value after the commission.

In contrast, if the seller wants to turn the firearm into money quickly, then the expectation needs to be that the seller has to set a fairly low asking price, or at least give the shop a reasonable "lowest offer" the seller will accept.

In practical terms, this second approach is a lot less common as a highly motivated or desperate seller is far more likely to take the 50% to 60% of market value that the shop would probably offer for the firearm outright. If it's a firearm the shop knows it can move quickly the shop may offer a little more, but it won't be more than about 80% of what the shop can get for it in the short term.

Consequently that usually leaves consignment guns in the "not motivated seller, priced at market value" category - often niche market pieces where the shop is unwilling to pay a high percentage of the market price and keep that money tied up for the length of time it takes to sell it.

The reality is however that if the gun has sat there several months or even a couple years, and obviously isn't selling at the asking price, passing along a reasonable offer made on the gun to the seller for possible acceptance isn't out of line.

That's generally been my approach when I see an overpriced consignment gun. I'll check back in every few months, see if it's still there and after it's been taking up shelf space long enough that I detect a willingness to entertain offers from the shop, I'll float an offer. Sometimes it's accepted, sometimes it's not. But generally at that point the buyer will have the shop owner in his corner as he's beginning to view the firearm as a waste of sales staff time and shelf space and will generally encourage a seller with unreasonable expectations to either take the offer or take the gun back home.

I think you have more chance of getting hit by lighting on the day you find the pot of gold at the end of the rainbow before your gun is taken by bankruptcy filing. Not saying it can't happen, never did and never will but the chances are so so so slim. You have to know your gunstore. The stores I deal with are family businesses, not corporate, but the only way they'll close is if there is a new law prohibiting gun sales, manufacturing and possession. Two of these store are the top 25 sellers on gunbroker with an avg of 50 sales in store a day. A 3rd is just as busy. I don't see them going bankrupt overnight

None of my bidness..but my 2 cents.
In todays modern age, namely the net and
auction sights or the many classified
sections why take your gun to a shop ?

In short, why give someone else 15-20% of your
dough to sell your gun ?
On-line selling and buying is a simple process.

It may not happen to you, but it is part of bankruptcy law. And I have personally seen businesses be operating wide open one day and closed up tight and in bankruptcy the next day. Employees congregating around a locked door in the morning with no clue as to what is happening. FAR more likely the smaller the business is.

Why in the world anyone would chose a consignment sale over just using gunbroker is a mystery to me.

Hit by lightening? I always love that one. I have been hit 3 times!

Not enough room here (even for a court reporter who gets paid by the word) to describe my few experiences putting up a gun on consignment.

Enough to say I will not ever do it again.

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and what his trumpet saith

Since I was old enough to know what bankruptcy is I have seen your scenario twice. Once with an electronics store which was all over the east coast and once with a window store which closed because the place they were buying their product from turned out to be a mob front.

Like I said worrying about that store closing is like worrying that I may be hit my lighting if I step outside

I've asked that question myself, and at least in my state, that is not the case. The firearm is property of the owner until a transfer is done. The risk is that the firearm is sold, and the business has not yet paid you, or a check is declined if the business were to close.

My LGS has a lengthy agreement regarding the consignment.

Yes, a risk exists, but not in such a large window of time.

As to offers, they do not negotiate against my price. They do review my asking price against the new price, condition, and market. They will tell me if they think it would ever sell at the price I set. They let me know in general what reaction they get, but no, they don't call me with lower offers on the spot. If I wanted less, I would ask less. I would not want to be bothered in business meetings for someone lowballing my price.

The way I know I priced it too low is if it sells too fast.

You sound like an old buddy of mine.

He was always happy when his gun didn't sell because he knew then that he hadn't under-priced it.

But then when a gun of his did sell, he was unhappy because it raised the possibility that he did under-price it and maybe could have gotten more. In a couple such cases, he actually squashed the sale fearing he had made a big mistake.

Once you consign an item to a store, you have already received compensation in the form of advertising, display space in the store, and sales assistance from the staff. This is the "investment" the store has made, it is not without cost.

This is the basis for it being treated as a store asset, the store has already invested in that item once it is on display. As a creditor, I have a right to make a claim against that asset if the store owes me money.

Good feedback... thank you! So given your shop's procedure you are highly unlikely to have two (or more) competing offers at the same time. That does solve the ethics question.

In the past, I sold a few guns on consignment.
Why? Because I didn't want to mess with it and it was worth 15% of the sale price (the consignment fee at the LGS) to have them sell it...
...which I partially made up WHEN I applied the proceeds to some other gun I wanted to buy...
...because then I didn't have to pay sales tax on that amount of $ on the NEW gun being purchased.

You start with a price above what you would 'take' for it. Then if it doesn't sell within, say, 60 days, you lower it.

Offers below asking price mean nothing.

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But then, what do I know?

Okay, that's a good point... i.e., whether or not a deposit has been placed with the offer to buy. That would factor in to how the shop should treat the gun.

Correct. You can see how the situation can get out of hand depending on the pricing and popularity of the consignment gun in question. I wouldn't want to be bothered a whole lot. On the other hand, a decent offer after a long period of time is something I'd want to be informed about in a timely enough manner so that the potential sale is not lost.

The dealer should know what the lowest price is that the seller should set. Pretty simple. I tried to buy a consignment one time. I made what I thought was a fair offer and was turned down. The dealer told me the gun never sold and he had it twice.

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That's just somebody talkin.

A deposit with an offer has no meaning until it is accepted. Full payment that is below asking price also has no meaning till accepted. It may make the person making the offer feel better, but it is meaningless.

Clearly, opinions are going to vary on the appropriateness (or appropriate timing) of offers made on consignment guns. I don't see a big problem with the idea of making an offer on a consignment gun at any time, but I'll admit that I've been mostly on the buying side (sometimes successfully, sometimes not) and not on the selling side.

But I'd still like to know more opinions on the way a shop should handle multiple offers. That's where things seem to vary shop-to-shop and can get a little squirrelly.

Oh, I know about plenty of such guns. I am sometimes amazed by the patience exhibited by some of my local shops. Some have guns on consignment that have been there for years... vastly over-priced and not all that interesting. They must have been placed there by really good customers for the shops to put up with such silly nonsense that long.

In my (limited) experience, the farther you are from home, the more that a cash deposit (or offer of same) can mean. May not mean a hoot to your local neighborhood dealer who has known you for the last 10 years as a solid, trusted customer. Could mean a lot to a shop owner on the other end of the state who doesn't know you from Adam.

I am aware of several shops in the area that will not accept transfers from a non FFL. If your buyer has that problem, you'll be paying the auction site fees as well as a transfer fee.

Guns America has a $20 minimum, and Gunbroker charges 5% on the first $25 and 2.5% on the the rest of the price up to $1000. For a firearm that sells for $600, that's $20 in fees on GA and $15.88 with a thumbnail image on GB. A transfer fee will cost between $35 and $50 in this area.

That represents between $51-$70 in fees on a $600 gun - between 8.5% and 11.6% of the selling price. I then have to cover the shop's costs to ship it - no slower than second day air for a handgun. That's not all bad as I can at least leverage the lower rates on their commercial account. If I don't have to ship it from an FFL, I still have to ship it no slower than second day air if it's a handgun, and that will cost you between $70 and $75 if you're shipping it any distance at all.

Either way, fees and shipping will set me back around $100 on a $600 firearm - just under 17% of the selling price.

Now...I can set a high enough reserve to try to get my costs back, or state in the listing the buyer's obligation to cover transfer fees and shipping, but that works like a buyer's premium and they'll reduce their maximum bid accordingly to account for those closing costs.

Consequently, unless I've got a very desirable gun that will attract a great deal of collector interest, find the "right" buyer who really wants it for a high reserve price, or I get lucky and have a couple bidders get in a bidding war, a 15% or 20% commission to a local shop doesn't look too bad in comparison. It's certainly a lot easier on my end than listing it with an on-line auction.

And if I'm selling it on consignment for a shop that will also list it on GB or GA (in each case no fees unless it sells), it's a win all the way around for me as I'm exposing it to both local and on-line markets, the FFL won't charge a transfer fee, and the buyer is on the hook for the shipping.

Assuming the seller has fixed an initial price, by the time a shop owner has reached the point where he or she is forwarding offers that are under the asking price on a slow moving firearm, multiple offers are not going to be a problem.

Those usually belong to the shop. It is a ruse to try to get above market for the piece. They don't want or need to sell it unless paid their exorbitant price.

Have seen it several times by local shops.

There's a lot of reasons. You have people that ....
-don't trust buying online
-won't buy something they cannot inspect
-won't buy if they can't haggle
-prices are cheaper locally

I'm not saying I agree with any and reasons but it is what it is. I know that in my case I can 9 time out of 10 buy cheaper locally. And I know that 9 times out of 10 that if I put up a gun on consignment at my LGS it will sell faster than online auction

I personally have never put a gun on,consignment but I see plenty at my lgs. Usually they only sit a few weeks if that. The LGS asks you the price you want and the lowest you'd take. They'll call only if someone makes an offer close to the lowest price.

Assuming the seller has fixed an initial price, by the time a shop owner has reached the point where he or she is forwarding offers that are under the asking price on a slow moving firearm, multiple offers are not going to be a problem.

+1 on "...won't buy something they can't inspect...". We're talking about 20-50+ year old mechanical devices. I have exactly 1 feedback on GB - and I met the guy to do the inspection/transfer. Probably would not have done it otherwise. (Bud's and other major internet retailers being the exception - because they have return policies).

The consignment 'game' is just one more tool to get you there. To the OP's point, I do not think the LGS makes enough margin on consignment sales to warrant the expenditure of additional manpower and recordkeeping to juggle multiple offers/counteroffers on a large number of consigned inventory items. I think the 'negotiation' is up to the owner and that it is best managed by starting high and walking the price down over time.

You are searching for the 'market clearing price' for that item in that market at that point in time. The LGS's market is limited vs. GB, so that's probably going to affect the market price.

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But then, what do I know?

Then why am I running into it so much lately? Admittedly, I spend far too much time in gun shops and more often than not I don't have a clue how long a particular gun has been there. Often time I don't even know if it is consignment vs. shop-owned before I start talking price.

++++++++

To close out this thread... I feel like I've unintentionally started a debate on the wisdom/risk of consignment sales and the appropriateness or inappropriateness of making offers on a consignment gun. That was not my intent. The fact is that offers on consignment guns *do* happen. At least they do where I live. All I really want to know is what forum members feel about how shops should handle multiple offers if/when they occur.

That's the question lately that seems to have no clear answer.

Ethics? Really?

Before getting worked up over a piece of merchandise, ask the seller if he owns it or it is on consignment, problem solved.

Every shop OWNER is free to run his business any way he wants, and change his own rules daily, if he wants. Customer's expectations do not equal business rules.

The only reason the gun is on consignment is because the gun owner wants more than it is worth to the shop owner.

That has been the case in all of my sales. The offer as a trade-in or sale to the LGS is always pretty pathetic. If I'm not desperate, I won't generally take a low offer.

I am betting that the LGS does not have the same thing in stock, and that the buyer wants to walk away with his new toy, rather than wait days or weeks for the distributor to find one.

I don't understand. How/why do some people think firearms are somehow different than other products? For example, consignment vehicles aren't pulled when an offer is made - why should firearms be any different?

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Thread Killer.

I know my lgs always write " -consignment-" on the tag so you know it's not one of theirs. And they also have a date of when it was put out on all guns. The one thing they don't do is haggle. The price is what it is. To be fair though their prices aren't high. The owner doesn't care if it sits for a year, which almost never happens. They have enough sales that there is no such thing as not enough room and if that's the case it will get pulled for a few weeks.

I think this gets to the heart of the issue.

I've made offers on consignment guns and the offer will either be accepted or rejected - and I have no expectation that they are going to hold the gun for me until the owner decides whether or not to accept my offer. The same thing happens at a car dealership while you're haggling over price on the new car of your dreams, someone else may be buying that same car off the lot from another salesman. Maybe they can get you another just like it, or maybe not. But that's the risk you take in haggling over the deal.

If someone is so emotionally invested in a firearm that he'd be upset if someone walked in while his offer was pending and bought it out from under him at full price or a better price, then he should have just paid full price and taken it home in the first place.

You see something similar happen at gun shows all the time. A gun will be on a table and a prospective buyer will offer less than the marked priced, the seller will counter offer with something in the middle, and the prospective buyer will walk away and think it over/see what else is at the show. Sometimes the firearm will still be on the table when he comes back and sometimes it will get sold to someone else first.

Gun show, or gun shop, there's no reason for hurt feelings or accusations of improper ethics as the prospective buyer always exercises a choice when he walks away after offering less than the asking price.

At a lot, they won't sell a car out from under when someone is trying to work deal right then and there aka in person, but they won't pull the car off the lot without written commitment, either - at least that's the lots where I've worked.

An offer to buy, is just that, an offer, not a commitment on either part.

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Thread Killer.

More potential down-side than up-side for a store to take consignments.

Up-side .... you will likely make a few bucks.

Down-side ..... many. Sellers claim you aren't "pushing" their item in preference to store-owned stock ..... buyers many times want something-for-nothing prices on consignment items ..... if the gun fails, the buyer thinks the shop should warranty it or provide the original owners name ..... same potential legal liabilities apply if a buyer does something stupid and lawyers get involved ...... etc., etc., etc.