Do you really win or lose at auction?

parkave

I tried to buy a deal at about 8% behind bid from a customer. He declined and went the auction route. Then he called me to tell me about his nightmare consignment. Went something like this..

After I decided to auction my coins I called to consign my coins and wanted to place reserves on my coins. They flew out from (guess the state) and talked me into a no reserve consignment.

My $100,000 dollars in coins brought about $80,000 in bids...and I had to pay a commission on top of that....next time I'll take your offer....

So it seems that bidders want to buy coins at market value so they bid 15% behind that (factoring in the commission), then after the hammer goes down the seller pays 5% to the auction house and low and behold you end up losing 20% of the actual value.

Anyone else ever find themselves in this position? Makes you think twice about selling direct to your dealer or consigning to auction.

Lakesammman

What was your offer?? Need to know that to know if it was a good deal or not.

dragon

I'll guess the state was Texas. And he was paying a sellers commission on a 100K consignment???

dragon

That seller should seriously reconsider ever doing business with that auction firm again. I've consigned as little as 7000.00 in material to Bowers & Merena auctions in the past, and was given 0% cash advances, and 0% commission.

Russ

Dragon,

That was the first thought that popped in to my head. That kind of value should have given him all kinds of negotiating leverage.

Russ, NCNE

Lakesammman

Was that the new or the old Bowers??

Gerry

Perhaps your customer should have taken your offer - but it very much depends on what he was selling. Some things do better on the auction route, some do not. It's a judgment call. But, in any case, he was pretty naive and a poor negotiator. I am always surprised about how much room the auction houses have in any deal that they are trying to make.

BillJones

To me auctions are overrated both for buyers and sellers.

When I was a collector I was looking for very specific items. That meant that only small portion of an auction was of interest to me. If that part of the auction went for high prices, I had wasted my time.

I learned that hard way that one could not accept the grades that the major auction houses put on coins. You had to see the coins first to be able to formuate reasonable bids. If the coins were really nice, you did not bid enough and lost if the item. If they stunk, you usually ended up with an overpriced item. I also came to the conclusion that bids were often not reduced properly if you were not there to bid yourself.

As a dealer auctions can be a bit more useful because a dealer is open to buying a much wider range of items. If some coins sell for too much, you can buy the pieces that sell for less. Still with the protective bids, the shilling and the buyers' fees, acutions are still boring tedious and at times unproductive.

From the consigners point of view, you lose a lot of control when you put your coins up for auction. You can't control where your coins get placed the catalog. You can't control the fact that your coins could be auctioned at 9 AM or 3 AM when no one is there. People always talk about the record prices, but they don't advertise when coins get sold for song.

Do I consign coins to auction? Yes I do, but I'm very selective about who gets my stuff, and no, I don't use any of the big names. Most of time I think that a collector is better off selling or consigning his material to a trusted dealer. That way you have some control over the selling prices and how much will be netted back to you.

jd4science

Ack, that's a shame. And for the record, i've got to guess Florida.

presleyh

Selling anything is a gamble. Why do so many people use real estate brokers to sell their houses? My experience has been that every transaction I have made has been far better for me to not use a real estate broker. They want 6 to 8 percent of their wild a## guess what a house is worth, whether they get that price or something less. Auctions are a gamble almost everytime. I have sold many items on ebay, and the only items I list are those that I have almost zero cost in. It's hard to lose that way.
In your mentioned case why would anyone who thought an item was worth 100,000 put it up for absolute auction without a reserve? Wishful thinking or a drastic need for cash comes to mind.

dorkkarl

i couldn't judge such a situation based on the info given - everything you've spelled out is in terms of money. that's fine, but then what did the guy pay for these coins? if he paid $2000 in 1977, then i think he did great! the scenario as you explained it sounds slanted somewhat, i'd want a few more facts

K S

agentjim007

presleyh & dorkkarl. You guys happen to be adopted. I'm thinking seperated at birth. Anyone else notice a slight resemblance?

dorkkarl

heck agentjim, you should see our sister!

K S

Max

What an unusual thread!

In the past I kept reading about record auction prices and now I find out things are selling for a "song"? Someone please tell me what!!

After seeing some common date type silver and gold going for ask + 10-20% I don't believe ther e are bargains to be had unless we are talking butt ugly or impaired coins.

Auctions are THE way to go when dealers toss out insulting 30% in back of bid offers. I have experienced and seen that too many times. Look at some dealers inventory over the next few weeks and you'll see alot of it comes from the recent auctions with a 30-40% markup.

BillJones

This is the whole point. People make a big deal of record auction prices. They never talk about the auctions that went wrong for the consigner.

As for dealers charging way over the auction price, well that's what markets are all about. Just because they ask high prices does not mean that they are getting them. A few dealers in Baltimore were overstocked, and they were ready to deal if you will willing to really work the bourse. The same goes for selling coins to dealers. Don't expect the first to whom you show the coins to pay your price. Selling is just as work as buying.

dorkkarl

<< <i>Auctions are THE way to go when dealers toss out insulting 30% in back of bid offers. >>

30% back of bid doesn't sound all that insulting to me, unless your talking 6 digit coins. example: 30% below silver spot on a roll of '64 quarters does not seem like an inappropriate offer to me. of course it's always up to you to hold out for a better offer, but i'm not insulted at all when a dealer offers well behind bid.

ie. how much markup do you think there is on everything else you buy? i know that some of the products my company sells are marked up 85% from cost!

K S

BillJones

Most of the coins that people have are worth less than "bid." The reason for this is that many collectors run around with the Gray Sheet (or worse yet, the Blue Sheet) and think that's what they should be paying for coins.

What's a dealer to do? If the buyers won't pay any more than "bid" then how can your pay "bid?"

Then again there are "real coins" that trade between dealers for "bid" or more. These are the coins that have a "real" future IMO. I'll pay "bid" or darn close to it all day long for "real coins," especially when I have real collectors who know what "real" coins are worth.

coinkat

Good question...it really depends on the coins you have and how generic they are. If you have rare coins that seldom enter the market, then its auction time.