Heritage Auction Prices versus "Retail"
Higashiyama
Posts: 2,203 ✭✭✭✭✭
How far below dealer retail are prices realized at Heritage auctions?
The Heritage database is quite a remarkable service -- and can be used to trace coins currently in dealer inventory back to recent sales.
When I do this, I very frequently find that dealer asking prices (for good quality coins in a range of, say $ 1000 - 5000) are 25 - 40 % above the Heritage sale price. When you consider that the Heritage price include the 15 % buyer's fee, this translates into a wopping 50 - 65 % mark-up over the price the Heritage seller received!
This mark-up is quite a bit higher than the 15 20 % margins that some dealers suggest they are working off. Perhaps 15 - 20 % is average, but many sell for a much larger mark-up, while others are traded at zero or a loss?
Any thoughts would be appreciated.
The Heritage database is quite a remarkable service -- and can be used to trace coins currently in dealer inventory back to recent sales.
When I do this, I very frequently find that dealer asking prices (for good quality coins in a range of, say $ 1000 - 5000) are 25 - 40 % above the Heritage sale price. When you consider that the Heritage price include the 15 % buyer's fee, this translates into a wopping 50 - 65 % mark-up over the price the Heritage seller received!
This mark-up is quite a bit higher than the 15 20 % margins that some dealers suggest they are working off. Perhaps 15 - 20 % is average, but many sell for a much larger mark-up, while others are traded at zero or a loss?
Any thoughts would be appreciated.
Higashiyama
0
Comments
I have been saying this for years. Dealers want you to belive all coins other than those you buy from a dealer are junk. Yet auction after auction I see the same dealers and same wholesalers bidding on the same "junk" I am bidding on. One of those dealers post here about their gazillion dollar inventory. Which they claim is marked up 10-15%.
I can't count the number of times I saw coins at auction and bid too low and lost. Then a few days later a dealer calls trying to sell me the same coin!!! Usually at 30-50% more than what he/she paid. There was a MS65 DMPL I lost on early last year, went for a bit more than $3.5k. I see the buyer now seller has it for sale at more than $5k. Let's see how long it sits. He asked me if I would buy at $5k then I told him I bid on it [probably caused him to pay more] and know my DMPLs. You can count on one hand the number of 65 DMPLs worth $5k, ok maybe 2 hands and a foot! This ain't one of them and won't be for a long long time.
Know your series and pricing. As with any auction there will be crap and you have to know/see what you are buying.
Dealers do render a service if they know what they are doing [most don't] and the buyer doesn't have the time or expertise to buy right.
But I am tracing the same coin from a Heritage auction to a dealer's inventory, and finding markups of 25 - 40 %!
Excellent advice! It took me a while to figure this out.
<< <i>Dealers want you to belive all coins other than those you buy from a dealer are junk. Yet auction after auction I see the same dealers and same wholesalers bidding on the same "junk" I am bidding on. One of those dealers post here about their gazillion dollar inventory. Which they claim is marked up 10-15%. >>
Those are my sentiments exactly. The old "If you buy your coins anywhere else but from ME you're getting screwed" mentality.
Just my two-cents (U.S.)
Cheers,
Bob
My ebay auction(s)
To travel on in old accustomed ways
I still remember the talks by the water
The proud sons and daughter
That knew the knowledge of the land
Spoke to me in sweet accustomed ways
Every buyer, whether s/he is a collector or a dealer, needs to be able to identify which coins are worth bidding on. That is where dealer representation can be the most useful. Very few collectors have the market-savvy eyes of a dealer. One possible exception to this is a specialist who has spent years collecting a particular series. Specialsts may have more in-depth knowledge than dealers, especially regarding die varieties. However, the dealer is more likely able to assess the overall market value and salability of the coin.
When a collector buys a coin at auction, if it is a really good one, there is likely to be competitive pressure on it that drives the price up. The consignor who is selling that coin may get the hammer price, but you pay 15% more. So, assuming every coin you buy realizes the price at auction that you paid at auction to buy it, you will automatically lose 15% on every coin you buy. Granted that is still better than most collectibles hobbies (even including art & antiques) where you'd be lucky to get 50% of what you paid, unless you are collecting at the most expensive high-end levels.
On the other hand, when a collector has assembled a large collection within a series, and then consigns them all at once to auction, the market may be saturated, and the prices realized may be LESS than the collector paid. Then his loss will be more than 15%. Conversely, if his collection is truly of the highest quality, and is sold in a hot market, maybe it will realize MORE than he paid ... if s/he is lucky, it will realize at least 15% more, and then the collector will break even. Some might even MAKE money!! This has been happening with certain PCGS Registry series.
Another thing to realize is that TIMING IS EVERYTHING. And, it is impossible to time the coin market unless you are a major promoter who influences market timing. For example, if you bought a coin at a time when no-one else was looking at it, you might actually make money !! I assembled the #1 set of PCGS Indian $2.50 (now #2) on the Registry, and nobody else was even LOOKING at those coins then. Now they are hot as anything, and I sold my set quite comfortably. I bought pop-top MS Lib & shield nickels when nobody cared about them, and sold them at anywhere from 20% to 200% gain. Ditto for patterns. Of course, there were also many I lost money on .. especially the generic coins. The truly fabulous and valuable rarities that I acquired were relatively easy to sell for what I paid, and did not need to be consigned to auction (yes, that means if you wanted to buy them, you would have had to go through the dealers that I consigned them to or sold them to).
What I made money on: coins that were out of favor that came into favor (patterns, Indian $2.50); and pop-top PCGS Registry coins. For example, nickels that I made by taking NGC coins that I bought when Lib & shield nickels were out of favor, conserved them at NCS, and then got them crossed into PCGS holders. Part of my profit was from market stupidity that derives from the Registry program: people suddenly were willing to pay $6000 for better date PCGS MS66 Lib nickels, when I bought the same coins for $900 in NGC MS66 holders. (Why did I submit these coins for conservation? Because PCGS would generally only put white nickels into MS66+ holders ... I gave up on trying with any originally toned coins.)
What I lost money on: generic product, such as NGC coins that would not cross, and were not super rare, and did not have fabulous toning. Example, NGC MS66 Lib nickel, better date, that I paid $1500 for from a dealer, and then realized only $650 at auction (hammer price). Lost money on ordinary coins, with ordinary appearances. (Remember: QUALITY PAYS.) Also some fabulous coins that I bought at auction under very competitive circumstances, where because of timing, I could re-create those exact competitive circumstances when selling the coin. Also lost money on some Pop 1/0 coins that had become pop 5/0 by the time I sold them, because those series were getting hot, and everyone was trying hard to make new coins. (Hint: that can't happen when you have true absolute rarity.) Some beautiful coins that I bought from high-end retail dealers didn't perform as well at auction because of timing (for example, you sometimes can't know when you consign a coin that there will end up being five others of that date in the same auction !!!)
What I broke even on: all the fabulous rarities, proof gold, early proof type, early MS type, early coppers. The more expensive coins were more likely to be break-even propositions.
How I did overall: it's not over yet, but I will end up about 7% ahead of where I started on the group that I have sold ... and I consider myself incredibly fortunate to have achieved that result. But if I look ONLY at the coins I sold by auction, I end up down about 15% on those ... gee, no surprise, that's the amount of the buyer's fee !!! My worst losses were on some coins that I truly overpaid for - but these were equally divided between coins that I bought retail & coins that I bought at auction, and they were equally divided betwee generic junk that I shouldn't have bought (or certainly not at that price), and superb beautiful coins that had intrinsic value, but I still paid too much.
How I sold: the best stuff went through top dealers. If you wanted to buy it, you had to know them. Dealers bought outright what they really wanted, and the rest went on consignment. Other pop-top Registry stuff went directly to Registry collectors who were accessible by e-mail from the PCGS Registry site. Additional pop-top Registry-type material went through specialty dealers to private collectors who do NOT put their sets on the Registry, but who have super sets that could easily beat anything on the PCGS Registry. The rest went by auction. This included many fabulous coins, and pop-top coins, that I didn't find buyers for the other ways. Not everything that went by auction was "junk" & "leftovers." (For example, most of the high-end proof seated dollars in the last few Bowers auctions came from here ...)
Why I sold: some things scared me. I saw pops going up as new coins were being made. I saw some coins made by insiders that should NEVER have been able to get into those holders. It made me feel the whole thing was rigged. I saw more AT coins showing up, and lasered proof gold. I got a sense that the whole thing is such an incredible racket. But mainly I sold for the usual reason: I had been so obsessed, and had put so much money into it, that I couldn't justify it any more !!
Bottom line: you should know & deal with the top dealers if you want to assemble a top collection, or sell one. But you should also pay attention to all the major auctions, and be well-versed in the auction venue as a means of buying and selling. You should spend several years or more looking at the series that you collect before you presume to think that you know what you are looking at !! You should talk to other collectors who share your interest in whatever specialties you collect - sometimes great coins pass from collector to collector if they know each other. You should remember that at every auction there are people with far more experience than you. Some of these people are truly mind-boggling in their talent and experience, either as numismatists, as dealers, or as insider-professionals who buy coins & work them into the right holders.
My advice: don't buy coins to make money. You can't, unless you get lucky, or you work with a truly top seasoned professional. Buy coins to enjoy them, and try to be smart enough not to LOSE too much money. You can't outsmart the coin market any more than the stock market. But you can educate yourself to the point where you don't do stupid things.
Hope this advice is useful to everyone !!
Sunnywood
Sunnywood's Rainbow-Toned Morgans (Retired)
Sunnywood's Barber Quarters (Retired)
To distill one point from my excessively lengthy post above: the coins I overpaid for were equally divided between coins bought at auction & coins bought from dealers ... in the end, no matter how you buy, only you can control that "buy or pass" decision, and decide at what $$ to draw the line.
Sunnywood
Sunnywood's Rainbow-Toned Morgans (Retired)
Sunnywood's Barber Quarters (Retired)
Your post was a lesson that I greatly appreciate and can relate to. I guess anyone new or "unseasoned" in the hobby can benefit from what you wrote. I too have become obsessed on occaision and bid on coins I had to have...only to pay way too much.
I believe you hit the nail on the head with coins reaching holders because of who was submitting them rather than on the merits of the coin itself. I own one of those and am thankful I only paid minimum for the grade.
Auctions, and buying coins sight unseen, are a risky business.
Dan
Particular thanks for the comments of Sunnywood and Laura.
He has also eloquently stated that in reality the SELLER pays the 15% buyers fee. The coin sells for what it's worth at auction or at least at what 2 people think it's worth. The fees get taken off that price and the SELLER ends up paying all fees and commissions.
roadrunner
Thanks for an excellent post. It wasn't too long......every paragraph was very helpful.
Thanks again!
If you have NOT SEEN THE COINS, what's on a a prices realized list is not worth squat when it comes time to determine what are good and fair prices. The material that appears in auctions is no better that than that which appears in dealers inventories (perhaps not as good), and if you don't look at the lots IN PERSON, you are going to get hosed.
When you firgure in all those cheap prices you see in auctions, you need to add the cost of going to the sales, lost time at work or lost vacation time, and all the other expenses associated with attending sales in person. Otherwise it is not a fair comparison You have got to buy a lot of coins at auction at fair to cheap prices to come out ahead.
Bottom line: you need to be a dealer or buy a lot coins to make auctions come out as cheap as some of you might think they are.
One caveat - if you are picky like me, get to the auction and see the coins. It's very hard to have a dealer commit for you (especially if an expensive coin) unless they have worked very closely with you and want to keep you as a customer. On the flip side, you will have to buy their mistakes if you want to keep them on your side.
I have won several auctions for sight-unseen, certified gold coins in the $500 to $1600 range over the last year. Most of the coins were average for the grade, some were below average, and none were outstanding. As far as the pricing, about 10% were a good deal, 70% were reasonable/okay, and 20% I overbid/overpaid for. Some of these were internet only auctions and some were Signature auctions, the latter seem to generally be higher quality (though the Ashland City collection at FUN was somewhat of a bust--no pun).
My conclusion is that I am better off using a dealer to buy coins. It saves time and often money, and I do not get stuck with low-end-for-grade examples.
Paying a dealer to buy for you is great when you're going after spendy stuff. The couple of hundred it's going to cost you pales in comparison to the thousands you're spending. But for the poor old working stiff in the trenches, this arrangement is not an option.
Cheers,
Bob
Ken