So called "Buyer's Premium".....should be called "Buyer's Penalty".......
thebeav
Posts: 3,836 ✭✭✭✭✭
I was just looking at an 1856 Flyer in the current Heritage auction, Lot # 3019. I see the current bid, where the numbers are big and bold, 9,500.00. Then, in much smaller and paler numbers underneath, with buyer's premium
11,400.00.......My gosh, where does it end ?
Unless you're putting up a 30 year old score, the auction company is the only one that makes the money. It would sure be hard to believe that it cost them 2000.00 to promote lot number 3019.......
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Comments
That's a lot of money.
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Plus that does not count what they are charging the seller.
I agree, thats why I like GC.
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GC is just as bad I think they are at 18% or 19% on both ends.
Hoard the keys.
Yet people keep using them. I guess Heritage wants to be the exclusive auction house for whales.
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You'd think they'd cap it at some point. Like 10% up to a max of $200 (for example).
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It's actually a seller's penalty. As a buyer you choose the most you're willing to pay.
Plus that does not count what they are charging the seller.
Unless the seller is a total newbie or an estate situation, I am sure the seller is getting part of the buyer's premium. I know I always do when I consign to Heritage. When S-B jumped the buyer's premium to 20%, Heritage had no choice otherwise S-B would have an advantage when it came to procuring "whale" consignments. Usually the "whales" end up getting 110 - 112.5% of hammer (or more).
Also, if you look around, you'll find some other auction houses that have already raised their buyer's premium to 25%.
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Why do people complain about this? It doesn't affect the buyers at all. It's not like buyers bid without knowing the premium exists. They take the premium into account in their bid. The coins don't sell for any higher just because the buyer's premium is high. If it affects anybody it affects the seller, and the seller often can bargain part of the premium back from the auction house.
Seriously this is the topic that drives me the most nuts on this forum. The buyer factors in the premium into the bid and the seller is the one who pays
Latin American Collection
I disgree with both of the previous posts.
More than a few bidders seem to bid as if the buyers’ premium is not even there. With the political items, Heritage charges a 25% buyers’ premium. People bid the full retail and then pay the 25% on top of it. It’s made the Heritiage political items area quite unattractive to me. They have to come with something that is very special for me to bid in their sales. The competition has a 15% buyers’ premium, and you can get many items for less there.
Keyword: "seem". It's much more likely that things sell for more in Heritage than in other venues because it's Heritage, the most popular auction house in the world. If things are selling for "more than retail," which is kind of an oxymoron anyway and especially for more esoteric items like political collectibles, that just means that people are willing to pay that much for that item. People are not bidding without taking the premium into account.
And there is Bill with the disagrees
Latin American Collection
See, he disagrees with you too Bill
Latin American Collection
Probably not an issue of all the overhead Heritage incurs; just that they may be in a position where they can charge a substantial BP/SP, and either competitors will lower, or, follow suite. These auction houses could mimic gas stations in terms of collusion...that's my nutshell take.
I just bid accordingly with that in mind.
I think one has to evaluate each venue and it’s various costs. Any bidding or buying I do I reduce the bid by the buyers fee say vs say eBay where there is no buyers fee.
The seller gets hit with this and any sellers fees, etc he has to pay.
As a buyer getting material at my price is what I am after. Fees aren’t the only factor if another venue may have shills or sellers allowed to bid.
'It's actually a seller's penalty. As a buyer you choose the most you're willing to pay.'
100% correct.
Dave
Fine, line up and disagree with me, but the high buyers fees have taken the fun out of auctions for me.
Since I started getting involved with major auctions, the rate has increased from 15 to 17.5 to 20 percent, and there are people here who want it to go higher because all you have to do is "to use some 5th grade math." Yet, all I see is higher prices to me for the coins I would like to buy.
And...most importantly: If you don't like the cost of the coin, don't place a bid. If you don't like the take of the house, don't consign the coin.
You do get to choose. It's only a "penalty" if it is imposed on you against your wishes. Both the consignor and the bidder of agreed to the terms of the sale. There is no "penalty" on anyone.
You can always just list your 1856 FE Cent on Craig's List and only take cash and there will be "no penalty". You can probably also find an 1856 FE cent on Craig's List to buy. When you meet the guy to purchase it in the dark alley, make sure you bring the correct amount of cash because he probably won't be able to make change.
On cheaper coins they are at a total of somewhere around 20%, maybe up to 25% on really inexpensive material due to the one time set up charges.
A $10,000 coin at GC would only have the 10% buyer's premium (13% if paying by PayPal or Credit Card) and essentially 0% seller's premium (I got their flyer today).
I would like to stay out of the Bill Jones Disagree War. However, I think both absolute positions are less than 100% correct.
There do appear to be some buyers (NOT all) who totally ignore the BP in their bidding. I think it is most obvious on widgets who seem to get bid up to $50 when they sheet at $50 and people don't seem to have considered the $30 BP and shipping charges.
On the other hand, I have never bid on a coin without backing out both the BP and even the shipping charges on cheaper material. [$9.65 shipping is irrelevant on a $1000 coin, but it stings about on a $50 coin.] And I'm sure all of us experienced auction buyers do the same.
I have given this more thought than warranted over the years. At first glance, this is correct. Amazing that as internet commerce matures, the transaction costs (Ebay, Heritage, GC) continue to increase. In the aggregate this reduces liquidity and is a negative to most collectors...at least those with shorter or moderate hold periods.
For a $9500 coin like the OP used as an example, we charge only a single $10 listing fee to the consignor. And we charge the buyer a discounted 10% fee.
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Hell, some buyers are stuck with buyer's premium AND having to pay tax on the item won.
Look before you leap.
On political items, the total is close to 34% because of the sales tax. For punches of foreign coins under $500, it is 28.4% in Florida.
Why would you say that ? It's a 'premium' for the auction house, a 'penalty' for the buyer. Knowing that it exists doesn't make it any less of a penalty. The fact remains, if you choose to bid on an item, you are going to be 'penalized' with this fee.
If I get a speeding ticket, I will be penalized with a 200 fee. Even though I know it's coming, it remains a penalty.
I believe there should be a scaled percentage based on the value of the coin, much as the way GC handles it. I assume that there are negotiated fee schedules that are undisclosed to the buyer in cases of very valuable consignment, so sellers in these cases probably have much lower transaction costs percentage-wise - so I'm referring to the "other guys".
Ebay muddies the water further with the selective Ebay Bucks promos. Bid aggressively on a coin that you want and your opponent has a 9% advantage if he has the right promotion.
Seems like both buyer and seller are penalized with large auction houses.... it is getting ridiculous, especially after I have to pay PCGS to grade and CAC to sticker it..
Thank you Ian for setting it straight on bigger ticket items there is not a crazy fee.
Hoard the keys.
You forgot the $30 shipping fee on a $1000 item!
I would much rather buy my coins from bourse deals than major auctions, but the supply of coins on the retail level has really dried up in recent years.
/yawn
Where I live, auction premiums are usually about 15%, but we have an HST tax of 13% on top of that.
That's why in the last twenty years, I've only purchased about 5 items from auctions and 99.9% of my purchases are at coin shows, coin stores and the internet (mainly Ebay).
"“Those who sacrifice liberty for security/safety deserve neither.“(Benjamin Franklin)
"I only golf on days that end in 'Y'" (DE59)
And the thread will hit 137 posts. Way easier to adopt the DLRC model (assuming they still do so) and charge a single price. Let the auctioneer and consignor work back from there.
I have seen a few instances where I was outbid and suspected that the high bidder didn't do his/her math, but this isn't new. Heritage shows the bid with the fee in real time, so screwing up with HA bids would be pretty careless.
Dealers and collectors approach auctions differently. For a dealer, no emotion is involved. If total price is too high, they pass. For a collector, if you have been looking for something for a long time, you might keep bidding, even you are up against a "win at any price" bidder.
If everyone exercises restraint and does not buy, the auctions will soon smarten up.
However, as long as buyers are willing to pay up to 30% (Europe) juice, plus tax and shipping (in some countries you pay tax on the Juice and the shipping) I can not see an end to that sad practice!
Here is an idea: Perhaps some of you with really deep pockets should get together and have a semi annual Mega Bourse somewhere in the middle of the country. Have it for at least 3 days and have a minimum of 100 dealers there.
just thinking aloud...
"If everyone exercises restraint and does not buy, the auctions will soon smarten up." Ain't gonna happen. Frankly, grade inflation/manipulation costs collectors more than auction fees.
RMR: 'Wer, wenn ich schriee, hörte mich denn aus der Engel Ordnungen?'
CJ: 'No one!' [Ain't no angels in the coin biz]
That is not a "penalty", it is a condition of sale that YOU accepted. A penalty is something imposed on you, not something you agreed to. It's like saying that a mortgage is a penalty for living in a house.
You don't choose to pay $200 to speed. You get hit with a $200 fee, imposed against your will, if caught. It's a punishment.
I assume, in your view, postage is a penalty for sending a letter. A customer check is a penalty for eating dinner at a restaurant.
When you register to bid in an auction, you explicitly check the box accepting the terms and conditions which includes the premium, any sales tax, and shipping. It is a choice, not a penalty.
Actually, you only need CAC because you don't trust PCGS. We should just ask JA to slap the sticker right on the raw coin - it would save you $35.
This is an astute observation and I completely agree that the frictional costs of the ownership lifecycle and the increasingly parasitic behavior of the major market makers can have a detrimental effect on the hobby. Regardless Mr Jones continued disenfranchisement with the modern hobby seems to continue unabated.
Latin American Collection
Which is how much?
Probably 0% to negative 3% on that coin.
Maybe it's time for a poll: Would you rather buy a coin at auction where you know the auction house is making 20-30% on premiums or buy a coin from a dealer who could be making 0 to 90%? In the end, the only thing I care about is my cost, not the profit or loss of the person from whom I obtained the coin.
In the end, this bellyaching only exists because of the actual transparency of the costs. If a dealer buys a VAM for $30, gets a favorable slab and a CAC and sells it to you for $300 with free shipping, you love him, even though he made $200 on you. If you buy the same coin from Heritage for $300 (total of all fees), you're mad because you got charged $50 in BP and $10 shipping.
Don’t forget a lot of dealers inventory comes from auctions. So if you by from a dealer that got a coin from auction you paid all associated auction costs and more
m
Fellas, leave the tight pants to the ladies. If I can count the coins in your pockets you better use them to call a tailor. Stay thirsty my friends......