How does one figure their max bid.
Coinstartled
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In the Paradisefound thread regarding bidding on a coin at Heritage, a few noted that the OP should calculate a max bid and enter it sometime before the auction. I get the whole part about figuring in shipping and buyers fees and taxes and all that....the question is...how do you figure your max bid.
Assume that the coin is of a quality that you are pleased with and does not show up on the market very often. Price guides are of course a guide, but that is about it.
What percentage value do you add for the "I really want the coin" aspect? How far will you divert from a likely current resale value on a given, more difficult to acquire coin?
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It really can be a lot of factors such as are my bills paid up, can I pay for it now, can I sell other coins or liquidate items to feel comfortable with the purchase, would I have to hide the purchase from my spouse because s/he would be pissed, does it fit into my collecting goals....
All coins worth owning have to be hidden from the spouse.
I look at "Coin Facts," recent auction results and the Gray Sheet and work from there. Usually I come to a number and divide it buy by 1.2 because of the buyers’ fee. If sales taxes are involved, I multiply the 1.2 by 1 + the tax rate (e.g. 1 + .06 if the rate is 6%) to get the total break back number. The “break back” calculation if there is a 6% sales tax is 1.2 X 1.06 = 1.272. Sorry, but when I see that number it feels like a lot of the “air” is being let out of my bid and my money. That’s why even increasing buyers’ fees make me angry.
I bid a little more if the coin is really nice for the grade or if I’ve been looking for a long time, and I know I probably won’t see another one for a while.
I treat the shipping as a “throw away.” I know that sounds odd, but the way I look at it, if I travel to show to buy a coin, it’s going to cost me more than the shipping. So in a way the shipping is “a bargain” even if the amount the shipper charges is a “rip-off.” I were bidding as a dealer, my approach might be more conservative, but it really is the concept of alternative and marginal costs. Shipping is usually cheaper and traveling.
My wife tells me what my maximum bid will be.
I look at all the avail historical prices to help me decide what others may be willing to pay and if I’m comfortable with that playing field I’ll consider jumping in. Then I have to decide what I’m gonna go above that to actually get the piece and finally I imagine the razor thin line of “gosh, I wouldn’t have felt another few bucks really and that’s just crazy!”
Add em up and that’s my max bid!
Max is Max and it depends on how deep my pocket is @Coinstartled ..... I would shell up to 50 % over melt on that particular one Plus Plus by the time it arrives at my door
The Max for me is what I am willing to live with it in my conscience paying such mark up
I asked a famous dealer that question decades ago. His answer: "If you need to ask, you are not ready to bid on coins in an auction."
This did not come from him: Research, experience, and how much money you have. Fortunately, these days you have the internet but you never can factor in the "Black Swan" event on a lot.
So my final answer is: "If you need to ask, you are not ready to bid on coins in an auction." That's why I still don't bid on coins in an auction.
The coin itself may not have traded in a long time but other dates in the series (or other comparable rarities) probably have and one can utilize the historical relative values to get an idea of where it SHOULD trade
Each coin is different. If it’s a coin that I haven’t seen an equal of in a generation or two then I am very aggressive and the fees, etc. don’t matter to me as I plan to keep it for quite a while. Now if it’s something I like but won’t lose sleep over if I don’t get it then I will pay closer attention to the added costs.
All that said, I prefer buying privately! This is the coin, this is the price. Easy peasy!
Figuring out where it should trade is a good starting point. Calculating what premium or discount for a given coin is a bit trickier. Most of my buying is for resale so the leash is tight. Just wanted to see what premium (or maybe discounts) collectors are willing to pony up for a coin that does not come along very often.
Listen, the coins are an end in themselves - with the extra bonus of obtaining personal pleasure from owning a desirable historical object. The coins are not a means to an end - obtaining much more cash money with brief ownership of the coins as an intermediate step.
If you gotta do much more calculating besides checking your bank balance before bidding, you are probably trying to do the latter and not the former, and I have little sympathy.
I am willing to pony up if you have what I am looking for
I agree, but you can't buy everything privately. Some coins are rarely sold privately, and some of those that are, have big problems. This is especially true since the offerings at the major shows have lost a lot of their pizazz.
I hate to provide a crappy answer, but...it depends...on the coin.
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Yes, you are right. Coin shows are down and there are tons of problematic early coins out there. I don’t even bother with paying for the early bird badge anymore. That said, I keep my want list close to me and it is easier to buy special coins through the mail now since the dealers that I buy from will send me images and I pretty much will be able to decide at that moment whether or not the coin will hit the spot. Seldom will I pass on on a coin that they mail out to me. They know what I like and don’t like about coins. It’s a tough chase yet very enjoyable!
Price guides are of course a guide, but that is about it
the typical answer for this oft-asked question is usually the same: calculate off the price guides and then deduct all the buyer fees, etc. to come up with a number. if that is followed, one of two things will happen --- you will either not win very many really nice coins or the price guides will remain stagnant. since we all tend to end up buying nice coins from auction and prices tend to rise over time I am left to conclude that the "oft-repeated" answer isn't really followed by many who give it.
we used to have a Coin Club member that we messed with. when he wanted to buy a coin and we knew it we'd sit in the back and raise him up, mostly just for fun and not for much money. it was funny to see him get incensed over the idea that some other club member would beat him at auction. what we called it was "The Clayton Roiter Theory of Bidding" which equated to if I bid the highest I win. it is 100% infallible, guaranteed.
when I see something I really like and want to own, usually Esoteric items that have no established pricing, I figure out what I think is both reasonable and affordable. that is my high water mark which has proven easily crossable, I just try not to get stupid. also, though my friend Clayton has been gone for a few years now I still think of him smile.
My max bid is on the top left it say $50k if need more call.
Hoard the keys.
If the coin is readily available, I’m usually about 10% below Coinfacts on my bid assuming it’s not truly exceptional. For coins that are difficult to find, my desperation index increases that amount by about 5% per month.
LIBERTY SEATED DIMES WITH MAJOR VARIETIES CIRCULATION STRIKES (1837-1891) digital album
I figure my top bid to be the maximum I would want to spend. In other words, the number that -- if someone bought it for less at the auction or on eBay -- I would be annoyed at myself for not bidding more.
If that makes any sense.
Agreed. I figure the number at which I am ambivalent about whether I win or not.
For items which have a reasonably established price, I try to be the first to hit that number or go a little above. For toned items or others with large price spreads (like DMPL Morgans where awesome depth of mirrors can double the value) it is based on experience and how much I think the market values the coin (and how much it is worth to me).
You hit the nail on the head with that one
Lafayette Grading Set
For max bids:
(1) I take 67 pct of what plan sell it for x .89 (factoring in 12.5 pct juice).
(2). Or simply .90 x cdn bid x .89 same auc House. If win get it no more than 10 pct backo bid.
Others bids less.
Won many items during summer slow season. Many 20 pct behind bid will take it. Guy in cc offers them 75 pct bid at shows.
Ten percent back of bid on most coins. Sometimes I determine I want a certain coin and then I'll go as high as necessary.
Back when I was actively buying on ebay, I would look at prices (including shipping) of completed/sold items
at the same grade, and my max bid would be the 20th percentile.
That way, I would lose 4 of 5 auctions, but I would eventually get the coin at a good price.
Of course, this only works if several of the coins at about the same grade have sold in the recent past.
The Edgeworth box approach.
How bad do you want the coin and how much can you spend?? That is the collector formula... if in business, then a more judicious method should apply.
Cheers, RickO
Consult an expert.
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Succinct and the perfect answer. Nothing to add.
@Insider2 I like your answer. I Googled "black swan theory" as I have never heard the term before. The three points that describe the theory in Wikipedia are concepts that definitely apply to coin evaluation /max bid determination, and I think my whole life in general. The term is now going to be added my vocabulary!