First, I find the discussion very informative. I believe this thread is intended to inform the naive and wrestle with reality and practice. I still ant to be sure I understand and then ask several more questions.
Do the "hypothetical" rules you are describing apply generally to mail auctions? If there are exceptions what would the auction conditions section say? Should the practice be explicitly stated in the conditions? If I understand under the scenerio you describe, the auctioneer would/could/should purchase all coins in which the high bid is significantly below wholesale and sell the coin for whatever profit they could get. Would it not be better ( more ethical?) to insist on a reserve or a minimal opening bid? Would the auctioneer who has now nominally purchased the coin consigned to his/her auction contact the consignor and say: " I saved your ass, please take the coin back? If so is this more or less ethical or just stupid? Is the ethical auctioneer issue the price he decides to pay for the coin? Is it less ethical in your mind to pay a little over the high bid but less than wholesale market ? That is the auctioner get the coin for as little as possible? I have a hard time in these discussions to sort out what is "ethical", practice and profitable business tactics although I know what I would do, I am not in your business.
computer programmers can do many things when they write a program
one would be an 'internal' snipe that would be the last bid (by the auction house) for items they are interested in - would only take affect for items that do not have a bid that high
I do not feel it is completely wrong - just an unfair advantage in that they actually see the coin in hand versus all of the internet picture bidders whom only see their picture ( does that explain why some of their pictures are definitely poorer than others? - trying to intentionally make an item look worse trhan it is so maybe they can pick it off cheap? )
Also they have their cost of doing business - but can probably absorb the commission they do not get when they buy the item
Back to mail bid auctions - I often wonder how many items do not actually sell - the person running the bid auction just says it sold at next increment higher than any 'outside' bidder
Trime - You don't want to let me get to sleep, do you? OK, here goes...
Do the "hypothetical" rules you are describing apply generally to mail auctions?
My 6 rules are only meant to be applied to my own hypothetical mail bid auction company.
If there are exceptions what would the auction conditions section say?
No exceptions that I can think of at the moment.
If I understand under the scenerio you describe, the auctioneer would/could/should purchase all coins in which the high bid is significantly below wholesale and sell the coin for whatever profit they could get.
Same as any other bidder.
Would it not be better ( more ethical?) to insist on a reserve or a minimal opening bid?
It's up to the consignor to set a reserve. As for a minimum opening bid, they don't need to be stated or even determined in advance. Auctioneers usually reserve the right to reject unreasonable bids. My $3800 self-imposed cost (when I could have bought the coin for $1600) was meant to clear that ethical hurdle. As the auctioneer, I wouldn't have rejected a $3800 bid as unreasonable. I probably wouldn't have rejected $3000.
Would the auctioneer who has now nominally purchased the coin consigned to his/her auction contact the consignor and say: " I saved your ass, please take the coin back?
I'd never ask the consignor to take the coin back. Depending on the situation, I might give him the option.
I have a hard time in these discussions to sort out what is "ethical", practice and profitable business tactics although I know what I would do
What WOULD you do???
Andy Lustig
Doggedly collecting coins of the Central American Republic.
Visit the Society of US Pattern Collectors at USPatterns.com.
Because it is morally [new word brought into the discussion] unethical. Everybody is supposed to have a fair chance, not just the guy running the auction. But I just don't think you comprehend this. Why should I lose a coin that I bid $1200.00 on if no legitimite bidder bid higher on.
Why are you a legitimite bidder when the auction has already ended????? [your words]. I think you are probably hurting yourself with other board members with your reasoning on this subject.. Look up the word ethic in the dictionary. Mayby, that'll show you the answer. Your not willing to listen to anyone else. JMHO. Steve
I'm going to change up the scenario a bit to try to clarify my viewpoint:
1. $5,000 coin is "won" for $1,500. 2. Auction director, at his/her discretion, rejects the $1,500 bid and all others below it as unreasonable. 3. Auction director tells consignor, "your lot didn't sell, high bid wasn't a legitimate offer at $1,500 so I canceled the bids. If you really want to move the coin I will pay you $3,800 for it."
Is there anything unethical about this practice?
Ethics are very tough sometimes and I agree that in this case all is not well...but things are very close to being well. If the auctioneer (for whatever reason, including efficiency) inspects the other bids before bidding, then at a minimum the consignor should be granted both of the following: A. Knowledge of what the original high bid was pre-auctioneer; and B. The right to refuse to sell any/all items "won" by the auctioneer. If those conditions are met is it not functionally the same as above? I think my altenate scenario is ethical...but is another scenario that is different but with the same outcome also ethical?
I say no. Auctioneer should honor deadline (follow their own rules), and should not examine bids of others BEFORE calculating thier own bids (Are you really trying to make me belive you can GUARANTEE objective behavior on your part Andy...are you claiming to have fully broken the bindings of subconcious reaction to stimuli? Well prove it!). Thoughts, anyone?
Coming soon, if I don't get too tired..."Why the auctioneer SHOULD bid in their own auctions, and why both buyers and sellers SHOULD feel that it is an acceptable practice"...with another hypothetical situation.
RELLA
Oh by the way my scenario with the two listed conditions met is still not exactly the same...what is different? Hmmm....there should be a prize involved for the first correct answer to that one but I can't think of a good prize right now.
Do not fall into the error of the artisan who boasts of twenty years experience in his craft while in fact he has had only one year of experience... twenty times.
Rella, You are changing the rules again. Which is fine, I suppose. But this case is about a real live dealer thinking he has the right to buy a coin cheap after the auction ends, and thereby screwing the winning bidder out of his rightful coin. There may be different answers for different scenerios, but that is not what this discussion is about. I think this particular case is important because a well known board member thinks this is all right. Well, I don't. I think it is unethical, and puts him in a very bad light. I also think it probably is illegal. [I'm not a lawyer.] But nobody would go to that trouble for that amount of money. They would just be pi@@ed. Mr. Eureka, rethilnk your position on this. You're wrong. If it happened to me and I found out about it, I would make sure I could tell every body about it. It's just not right. JMHO. Steve
Auctioneer should honor deadline (follow their own rules), and should not examine bids of others BEFORE calculating thier own bids (Are you really trying to make me belive you can GUARANTEE objective behavior on your part Andy...are you claiming to have fully broken the bindings of subconcious reaction to stimuli?
Rella - Thanks for keeping an open mind. Now, to answer your question...
As far as honoring the deadline is concerned, I've already said that I WOULD honor the deadline. In practice, I don't see it as a significant issue because an auctioneer can simply enter his bids a minute before the sale closes, get the same results, and avoid accusations of late bidding. But if you insist, I'll concede that auctioneers shouldn't bid after the deadline, if for no other reason than that some of their customers will find it offensive.
Also, YES, I can guaranty that I will be objective if I don't look at the identities of the bidders. (Computers make it very easy to hide bidder identities from a system user, including oneself.) Like I said before:
I think it would be unethical for an auctioneer to "go to school" on a mail bidder's bid. However, that will only happen if the auctioneer knows the identity of the mail bidder and he respects the mail bidder. NOBODY with half a brain is going to pay more for a coin just because some UNKNOWN bidder placed a high bid.
As many of my friends on these boards will readily (and wittily) attest, I do have half a brain, so my objectivity is assured.
Andy Lustig
Doggedly collecting coins of the Central American Republic.
Visit the Society of US Pattern Collectors at USPatterns.com.
Andy, I really do wonder if this is legal? I don't know much about law but I can ask the lawyer in the family Sunday at breakfast. What state are we talking about? mike
Andy, I really do wonder if this is legal? I don't know much about law but I can ask the lawyer in the family Sunday at breakfast. What state are we talking about?
Mike - That would be great, but let's make sure we get some details staight:
1. The consignor contract and terms of sale state that the auctioneer may bid on the coins. (No details are provided as to how and when those bids are to be placed.) The terms also allow the auctioneer to refuse bids that he believes to be unreasonable.
2. After reviewing customer bids, the auctioneer places his own bids one minute before the auction closes.
3. Customer bids are reduced to one increment above the underbidder.
4. (Although it's probably irrelevant from a legal perspective) The auctioneer does not know the identities of the bidders when he enters his own bids.
My prediction is that the attorney will tell us that there's nothing illegal about this UNLESS the auctioneer is knowingly placing his own bids one or two increments BELOW the high bidder. In that case, one could argue that the auctioneer is systematically defrauding his bidders by inflating the purchase price. But that's not the scenario we're dealing with........yet.
Andy Lustig
Doggedly collecting coins of the Central American Republic.
Visit the Society of US Pattern Collectors at USPatterns.com.
Regardless of whether forum members agree with Andy's thinking on this subject, I think he deserves a lot of credit for this thread.
It is informative, interesting and thought provoking. And, I think it took a lot of guts to speak up as he did, no doubt, knowing in advance, that he would be subject to some of the criticisms he has received.
I don't thilnk Eureka deserves any credfit for this. It is unethical. It was dumb of him to bring it up in the way he did. [bidding after auction ended] That's the whole difference. No one has defended Eureka on this, and more importantly, no one has flamed me for bringing the heat on him. Considering he's your friend and I'm an unknown, that tells me a lot. Lots of flaming goes on. I think any dealer that bids after the auction ends is dishonest; no ifs ands or buts. If I'm wrong, tell me. Most of you answer on a lot of stuff that matters little. Nows a time to stand up and be counted on a subject with a vast difference of opinion. After the 2nd page most of you dropped off. Probably because it was getting uncomfortable. This message board is really slow so I'll check back later. JMHO Steve
Dog 97, Is that really how some contractors work??
It was dumb of him to bring it up in the way he did. [bidding after auction ended] That's the whole difference. No one has defended Eureka on this
66 - I agree that it was dumb of me to paint the scenario with the auctioneer bidding after the auction ended. It was an unnecessary complication of my core issue. I've tried to explain that but you're not buying the explanation. No matter, we don't need to debate that. What I'd really like to know is if you think it's ethical for an auctioneer to bid in his own sale in the way I described to darktone (a few messages up). If you don't think it's ethical, I'd like to hear your explanation. I know you feel these are important questions and you've given it a lot of thought. It would be a pleasure and honor to learn from your insights. Thank you.
Andy Lustig
Doggedly collecting coins of the Central American Republic.
Visit the Society of US Pattern Collectors at USPatterns.com.
I don't thilnk Eureka deserves any credfit for this. It is unethical. It was dumb of him to bring it up in the way he did. [bidding after auction ended] That's the whole difference. No one has defended Eureka on this, and more importantly, no one has flamed me for bringing the heat on him. Considering he's your friend and I'm an unknown, that tells me a lot. Lots of flaming goes on.
That's a little out of line. You guys should be able to have a discussion without getting all worked up and posting derisive comment such as the above.
I read through the thread twice and I still can't articulate why the auctioneer bidding doesn't sound right under those conditions. But there's just something about it that bothers me.
I also wanted to say it's a conflict of interest, but that doesn't hold up under close examination. The auctioneer wants to get the most money for his customer, the consignor. The consignor also wants to get the most money. The high bidder won, after all, and the only person who isn't happy is the mail bidder who would have won but for the auctioneer.
I'm sympathetic to the fact that it would be a waste of the auctioneer's time to enter bids on every lot. For me, though, that's the only way to keep things all above-board. There something inherently unfair about getting guaranteed last shot at every lot.
It comes down to the fact that these rules would be all right IF you knew the auctioneer was above reproach. Less-principled auctioneers could easily take advantage of the consignor and screw potential winning mail bidders at the last minute, all under the same rules. To me that's why it doesn't work - the rules could be followed, yet still abused. Taking MrEureka's $5000 coin example, an honest auctioneer bids $3800, beating out the $1500 underbidder. The other kind of auctioneer takes it home for $1600. No rules violation.
Or, let's say the high mail bidder is $4100 instead of $1500. Now the coin is no longer pitifully underpriced. An unethical auctioneer could still grab it for $4200, if there was little risk. Too many loopholes.
The only way to keep everything right is for the auctioneer to either enter ALL his/her bids first, or to not bid at all.
New collectors, please educate yourself before spending money on coins; there are people who believe that using numismatic knowledge to rip the naïve is what this hobby is all about.
The only way to keep everything right is for the auctioneer to either enter ALL his/her bids first, or to not bid at all.
Kranky -
That would certainly be best if time allowed for it, for the reasons you stated and for one more very important reason: The auctioneer's bid could become a legitimate underbidder and increase the price realized for the consignor.
For example, if the auctioneer bids 3K, and then two other bidders bid $1000 and $4000, the lot will realize $3100, $2000 more than it would have brought without the auctioneer's bid.
On the other hand, if the auctioneer bid 3K AFTER seeing the other two bids, I'd have a serious problem with that...
Andy Lustig
Doggedly collecting coins of the Central American Republic.
Visit the Society of US Pattern Collectors at USPatterns.com.
Mr. Eureka. I'm not complaining about you bidding before the auction ends. I still don't think that is right. But that is open to honest discussion. But the way the thread started, it was stated the auctioneer bidded after the auction ended. That's what I'm hot about. That's dishonest. Before the auction ends, maybe is different, but I disagree with that too. [MAIL BID SALES ONLY] But that's not too important to me. Maybe some of the members conduct auctions like that and that's why they don't chime in. I don't know. I'm not trying to pick on you personally, but it is your thread. I would pick on any huge auction house if I thought that they did the same thing Answer this, please. Don't you think the $1200.00 bidder got screwed in this scenerio. By the way, I have seen a whole lot of threads a whole lot more hostile than this one. they draw the most attention. Steve
Don't you think the $1200.00 bidder got screwed in this scenerio.
No. I think it's a "Sorry you missed this bargain" deal.
One more thing: Even if the auctioneer's rules are that other bidders have a bid deadline, that doesn't necessarily mean that he is subject to the same deadline. It's his auction and he makes the rules. But like I said, the deadline is immaterial because the auctioneer could have simply bid before the deadline if necessary.
Andy Lustig
Doggedly collecting coins of the Central American Republic.
Visit the Society of US Pattern Collectors at USPatterns.com.
Quite a last statement Eureka. Bottom line; dealers like you are what is wrong with the hobby. Get what you can from whom you can when you can and go on to the next pigeon. You must be proud. JMHO. Steve
<< <i> 1. The consignor contract and terms of sale state that the auctioneer may bid on the coins. (No details are provided as to how and when those bids are to be placed.) The terms also allow the auctioneer to refuse bids that he believes to be unreasonable.
2. After reviewing customer bids, the auctioneer places his own bids one minute before the auction closes.
3. Customer bids are reduced to one increment above the underbidder.
4. (Although it's probably irrelevant from a legal perspective) The auctioneer does not know the identities of the bidders when he enters his own bids. >>
My thoughts and opinions are based on the conditions/specifics noted by Andy above. *Edited to add: as well as much of the discussion contained within this thread:
If an auction house has interest in and/or bids on consigned items, no matter how pure the intentions, there is an inherent conflict of interest.
For example, images and/or catalog descriptions of items desired by the auctioneer might receive sub-par/inferior attention/treatment (if the auctioneer lets his bias win out). If a prospective bidder calls or writes the auctioneer for information/opinions about the lots in question, the auctioneer's bias can come into play, that way, too. Ditto, if the consignor should ask the auctioneer for suggestions about reserve levels.
On the other hand, the auctioneer could (either knowingly or subconsciously) over-compensate for the potential conflict of interest, by giving favorable/preferential (rather than inferior) treatment to items he has interest in. But, that could work against other consignors who have consigned items that the auctioneer does not care about.
However, even considering the above potential conflicts/bias, IF it's disclosed in the terms of sale, IF the auctioneer doesn't go to school on others' bids and IF he is completely honest, fair, etc., the potential conflicts can at least conceivably be overcome. That is admittedly a lot of big "IF's" to hurdle and it's hard to imagine most human beings being able to balance all of that just right, no matter how wonderful their intentions or how hard they might try. That is part of why I feel DISCLOSURE is so important.
One other consideration - it certainly can help the sellers/consignors to have another bidder participate.
In this scenario, I would much prefer that when bidding, the auctioneer NOT be able to use updated bid/price information that others would not have access to (whether it be 1 minute or much longer) before the end of the sale.
I wouldn't bid after the auction I wouldn't bid during the auction unless I specifically had it in the rules. [I wouldn't put it in the rules] I've never seen it in the rules, but I don't see that many mail bid sales. Sorry, the owner of the coin got a bad deal, but it should be from the high bidder, not the dealer trying to make an extra buck. The owner should have had a reserve. JMHO Steve
I would much prefer that when bidding, the auctioneer NOT be able to use updated bid/price information that others would not have access to (whether it be 1 minute or much longer) before the end of the sale.
Mark - There's nothing stopping a mail bidder from calling the auctioneer and finding out if he is the current high bidder. There's nothing stopping the mail bidder from raising his bid to meet the competition. Therefore, the auctioneer does not have superior information when bidding for his own account. Unless, like I've said over and over again, he knows who the bidders are.
Andy Lustig
Doggedly collecting coins of the Central American Republic.
Visit the Society of US Pattern Collectors at USPatterns.com.
"My thoughts and opinions are based on the conditions/specifics noted by Andy above:
If an auction house has interest in and/or bids on consigned items, no matter how pure the intentions, there is an inherent conflict of interest.
For example, images and/or catalog descriptions of items desired by the auctioneer might receive sub-par/inferior attention/treatment (if the auctioneer lets his bias win out). If a prospective bidder calls or writes the auctioneer for information/opinions about the lots in question, the auctioneer's bias can come into play, that way, too. Ditto, if the consignor should ask the auctioneer for suggestions about reserve levels.
On the other hand, the auctioneer could (either knowingly or subconsciously) over-compensate for the potential conflict of interest, by giving favorable/preferential (rather than inferior) treatment to items he has interest in. But, that could work against other consignors who have consigned items that the auctioneer does not care about.
However, even considering the above potential conflicts/bias, IF it's disclosed in the terms of sale, IF the auctioneer doesn't go to school on others' bids and IF he is completely honest, fair, etc., the potential conflicts can at least conceivably be overcome. That is admittedly a lot of big "IF's" to hurdle and it's hard to imagine most human beings being able to balance all of that just right, no matter how wonderful their intentions or how hard they might try. That is part of why I feel DISCLOSURE is so important.
One other consideration - it certainly can help the sellers/consignors to have another bidder participate.
In this scenario, I would much prefer that when bidding, the auctioneer NOT be able to use updated bid/price information that others would not have access to (whether it be 1 minute or much longer) before the end of the sale.
Thanks for the pm Eureka. I had to look that word up. You were right on the 2nd part. But overall, it's still bad ethics. I'm sure that you have gotten a lot of pm's. I have. It'd be interesting to compare them. [but we won't]. Gotta go to work. Hopefully, sombody will agree with somebody. Usually, everybody's got an opinion on everything on this forum. What does that tell you. I think I know. Steve
<< <i>Mark - There's nothing stopping a mail bidder from calling the auctioneer and finding out if he is the current high bidder. There's nothing stopping the mail bidder from raising his bid to meet the competition. Therefore, the auctioneer does not have superior information when bidding for his own account. Unless, like I've said over and over again, he knows who the bidders are >>
Andy, my strong preference is that, where possible, everyone have equal footing for bidding purposes - that is just about impossible when the "house" can bid against others. Perhaps the mail bidder can't get through on the phone and/or doesn't have current bid/price information at his fingertips like the auctioneer does.
I agreed to let you conduct your sale, as long as it met certain conditions. This last point was my strong preference, not a mandate, so quit while you're (almost) ahead with me, already.
Andy, my strong preference is that, where possible, everyone have equal footing for bidding purposes - that is just about impossible when the "house" can bid against others. Perhaps the mail bidder can't get through on the phone and/or doesn't have current bid/price information at his fingertips like the auctioneer does.
Ah, so you don't want the auctioneer to be able to snipe you! OK, no problem.
Andy Lustig
Doggedly collecting coins of the Central American Republic.
Visit the Society of US Pattern Collectors at USPatterns.com.
Andy, You have now seemed to add a new aspect to the discussion suggesting that an auctioneer could legitimally bid beween the high bidder and the underbidder this increasing the price to the consigner and profit for the auction company. You are not supportive of this but suggest that it may represent practice. Perhaps I haver misrepresented your position. Possibly some of the forum members are happy knowing how a hypothetical auction compnay runs their hypothetical auctions, others may want to believe in a different world. I for won have driven to the local liquor store and bought four lottery tickets. I know the odds are near zero but want to believe that the numbered balls falls by chance. Shows how little I know about balls.
Unfortunately there are auction houses that play ALL these games.
Personally, I think it's a bigger crime to pay $1200 for the $5000 coin. Ethically, it's a crime to bid $1200 for a $5000 coin and live happily with yourself once you do own it. I'll bid $4200 for coins like that all day (and usually not get them).
If the auction house gets me more for my coin than all you $1200 bidders looking to score on me, then hats off to the auction house and screw the $1200 sharks....collectors or dealers...it doesn't matter. I have a much bigger problem with all the $1200 do-gooders. The only morality I live buy is to pay fair. And $1200 for $5000 is not fair, ethical, reasonable or whatever. The rest of this bs is just that.....bs.
Well at least we got one person [roadrunner] who thinks it's all right for the auctioneer to buy after the auction ended. About time somebody spoke up. Steve
Comments
First, I find the discussion very informative. I believe this thread is intended to inform the naive and wrestle with reality and practice. I still ant to be sure I understand and then ask several more questions.
Do the "hypothetical" rules you are describing apply generally to mail auctions?
If there are exceptions what would the auction conditions section say? Should the practice be explicitly stated in the conditions?
If I understand under the scenerio you describe, the auctioneer would/could/should purchase all coins in which the high bid is significantly below wholesale and sell the coin for whatever profit they could get. Would it not be better ( more ethical?) to insist on a reserve or a minimal opening bid? Would the auctioneer who has now nominally purchased the coin consigned to his/her auction contact the consignor and say: " I saved your ass, please take the coin back? If so is this more or less ethical or just stupid? Is the ethical auctioneer issue the price he decides to pay for the coin? Is it less ethical in your mind to pay a little over the high bid but less than wholesale market ? That is the auctioner get the coin for as little as possible? I have a hard time in these discussions to sort out what is "ethical", practice and profitable business tactics although I know what I would do, I am not in your business.
Ah, but what if he hasn't really won the lot yet?
Doggedly collecting coins of the Central American Republic.
Visit the Society of US Pattern Collectors at USPatterns.com.
one would be an 'internal' snipe that would be the last bid (by the auction house) for items they are interested in - would only take affect for items that do not have a bid that high
I do not feel it is completely wrong - just an unfair advantage in that they actually see the coin in hand versus all of the internet picture bidders whom only see their picture ( does that explain why some of their pictures are definitely poorer than others? - trying to intentionally make an item look worse trhan it is so maybe they can pick it off cheap? )
Also they have their cost of doing business - but can probably absorb the commission they do not get when they buy the item
Back to mail bid auctions - I often wonder how many items do not actually sell - the person running the bid auction just says it sold at next increment higher than any 'outside' bidder
Do the "hypothetical" rules you are describing apply generally to mail auctions?
My 6 rules are only meant to be applied to my own hypothetical mail bid auction company.
If there are exceptions what would the auction conditions section say?
No exceptions that I can think of at the moment.
If I understand under the scenerio you describe, the auctioneer would/could/should purchase all coins in which the high bid is significantly below wholesale and sell the coin for whatever profit they could get.
Same as any other bidder.
Would it not be better ( more ethical?) to insist on a reserve or a minimal opening bid?
It's up to the consignor to set a reserve. As for a minimum opening bid, they don't need to be stated or even determined in advance. Auctioneers usually reserve the right to reject unreasonable bids. My $3800 self-imposed cost (when I could have bought the coin for $1600) was meant to clear that ethical hurdle. As the auctioneer, I wouldn't have rejected a $3800 bid as unreasonable. I probably wouldn't have rejected $3000.
Would the auctioneer who has now nominally purchased the coin consigned to his/her auction contact the consignor and say: " I saved your ass, please take the coin back?
I'd never ask the consignor to take the coin back. Depending on the situation, I might give him the option.
I have a hard time in these discussions to sort out what is "ethical", practice and profitable business tactics although I know what I would do
What WOULD you do???
Doggedly collecting coins of the Central American Republic.
Visit the Society of US Pattern Collectors at USPatterns.com.
That's because everybody DOES have a fair chance to buy the coin.
Why should I lose a coin that I bid $1200.00 on if no legitimite bidder bid higher on.
To me, the auctioneer IS a legitimate bidder. (After all, if he wasn't a legitimate bidder you wouldn't have lost the coin.
Doggedly collecting coins of the Central American Republic.
Visit the Society of US Pattern Collectors at USPatterns.com.
1. $5,000 coin is "won" for $1,500.
2. Auction director, at his/her discretion, rejects the $1,500 bid and all others below it as unreasonable.
3. Auction director tells consignor, "your lot didn't sell, high bid wasn't a legitimate offer at $1,500 so I canceled the bids. If you really want to move the coin I will pay you $3,800 for it."
Is there anything unethical about this practice?
Ethics are very tough sometimes and I agree that in this case all is not well...but things are very close to being well. If the auctioneer (for whatever reason, including efficiency) inspects the other bids before bidding, then at a minimum the consignor should be granted both of the following: A. Knowledge of what the original high bid was pre-auctioneer; and B. The right to refuse to sell any/all items "won" by the auctioneer. If those conditions are met is it not functionally the same as above? I think my altenate scenario is ethical...but is another scenario that is different but with the same outcome also ethical?
I say no. Auctioneer should honor deadline (follow their own rules), and should not examine bids of others BEFORE calculating thier own bids (Are you really trying to make me belive you can GUARANTEE objective behavior on your part Andy...are you claiming to have fully broken the bindings of subconcious reaction to stimuli? Well prove it!). Thoughts, anyone?
Coming soon, if I don't get too tired..."Why the auctioneer SHOULD bid in their own auctions, and why both buyers and sellers SHOULD feel that it is an acceptable practice"...with another hypothetical situation.
RELLA
Oh by the way my scenario with the two listed conditions met is still not exactly the same...what is different? Hmmm....there should be a prize involved for the first correct answer to that one but I can't think of a good prize right now.
who boasts of twenty years experience in his craft
while in fact he has had only one year of experience...
twenty times.
Rella - Thanks for keeping an open mind. Now, to answer your question...
As far as honoring the deadline is concerned, I've already said that I WOULD honor the deadline. In practice, I don't see it as a significant issue because an auctioneer can simply enter his bids a minute before the sale closes, get the same results, and avoid accusations of late bidding. But if you insist, I'll concede that auctioneers shouldn't bid after the deadline, if for no other reason than that some of their customers will find it offensive.
Also, YES, I can guaranty that I will be objective if I don't look at the identities of the bidders. (Computers make it very easy to hide bidder identities from a system user, including oneself.) Like I said before:
I think it would be unethical for an auctioneer to "go to school" on a mail bidder's bid. However, that will only happen if the auctioneer knows the identity of the mail bidder and he respects the mail bidder. NOBODY with half a brain is going to pay more for a coin just because some UNKNOWN bidder placed a high bid.
As many of my friends on these boards will readily (and wittily) attest, I do have half a brain, so my objectivity is assured.
Doggedly collecting coins of the Central American Republic.
Visit the Society of US Pattern Collectors at USPatterns.com.
Mike - That would be great, but let's make sure we get some details staight:
1. The consignor contract and terms of sale state that the auctioneer may bid on the coins. (No details are provided as to how and when those bids are to be placed.) The terms also allow the auctioneer to refuse bids that he believes to be unreasonable.
2. After reviewing customer bids, the auctioneer places his own bids one minute before the auction closes.
3. Customer bids are reduced to one increment above the underbidder.
4. (Although it's probably irrelevant from a legal perspective) The auctioneer does not know the identities of the bidders when he enters his own bids.
My prediction is that the attorney will tell us that there's nothing illegal about this UNLESS the auctioneer is knowingly placing his own bids one or two increments BELOW the high bidder. In that case, one could argue that the auctioneer is systematically defrauding his bidders by inflating the purchase price. But that's not the scenario we're dealing with........yet.
Doggedly collecting coins of the Central American Republic.
Visit the Society of US Pattern Collectors at USPatterns.com.
It is informative, interesting and thought provoking. And, I think it took a lot of guts to speak up as he did, no doubt, knowing in advance, that he would be subject to some of the criticisms he has received.
Dog 97, Is that really how some contractors work??
66 - I agree that it was dumb of me to paint the scenario with the auctioneer bidding after the auction ended. It was an unnecessary complication of my core issue. I've tried to explain that but you're not buying the explanation. No matter, we don't need to debate that. What I'd really like to know is if you think it's ethical for an auctioneer to bid in his own sale in the way I described to darktone (a few messages up). If you don't think it's ethical, I'd like to hear your explanation. I know you feel these are important questions and you've given it a lot of thought. It would be a pleasure and honor to learn from your insights. Thank you.
Doggedly collecting coins of the Central American Republic.
Visit the Society of US Pattern Collectors at USPatterns.com.
That's a little out of line. You guys should be able to have a discussion without getting all worked up and posting derisive comment such as the above.
I read through the thread twice and I still can't articulate why the auctioneer bidding doesn't sound right under those conditions. But there's just something about it that bothers me.
I also wanted to say it's a conflict of interest, but that doesn't hold up under close examination. The auctioneer wants to get the most money for his customer, the consignor. The consignor also wants to get the most money. The high bidder won, after all, and the only person who isn't happy is the mail bidder who would have won but for the auctioneer.
I'm sympathetic to the fact that it would be a waste of the auctioneer's time to enter bids on every lot. For me, though, that's the only way to keep things all above-board. There something inherently unfair about getting guaranteed last shot at every lot.
It comes down to the fact that these rules would be all right IF you knew the auctioneer was above reproach. Less-principled auctioneers could easily take advantage of the consignor and screw potential winning mail bidders at the last minute, all under the same rules. To me that's why it doesn't work - the rules could be followed, yet still abused. Taking MrEureka's $5000 coin example, an honest auctioneer bids $3800, beating out the $1500 underbidder. The other kind of auctioneer takes it home for $1600. No rules violation.
Or, let's say the high mail bidder is $4100 instead of $1500. Now the coin is no longer pitifully underpriced. An unethical auctioneer could still grab it for $4200, if there was little risk. Too many loopholes.
The only way to keep everything right is for the auctioneer to either enter ALL his/her bids first, or to not bid at all.
New collectors, please educate yourself before spending money on coins; there are people who believe that using numismatic knowledge to rip the naïve is what this hobby is all about.
Kranky -
That would certainly be best if time allowed for it, for the reasons you stated and for one more very important reason: The auctioneer's bid could become a legitimate underbidder and increase the price realized for the consignor.
For example, if the auctioneer bids 3K, and then two other bidders bid $1000 and $4000, the lot will realize $3100, $2000 more than it would have brought without the auctioneer's bid.
On the other hand, if the auctioneer bid 3K AFTER seeing the other two bids, I'd have a serious problem with that...
Doggedly collecting coins of the Central American Republic.
Visit the Society of US Pattern Collectors at USPatterns.com.
Answer this, please. Don't you think the $1200.00 bidder got screwed in this scenerio.
By the way, I have seen a whole lot of threads a whole lot more hostile than this one. they draw the most attention. Steve
No. I think it's a "Sorry you missed this bargain" deal.
One more thing: Even if the auctioneer's rules are that other bidders have a bid deadline, that doesn't necessarily mean that he is subject to the same deadline. It's his auction and he makes the rules. But like I said, the deadline is immaterial because the auctioneer could have simply bid before the deadline if necessary.
Doggedly collecting coins of the Central American Republic.
Visit the Society of US Pattern Collectors at USPatterns.com.
66 - I wouldn't pay $3800 for the coin if that was my attitude. I'd pay $1600.
BTW, I'm still waiting for you tell us what YOU would do in the same situation.
Doggedly collecting coins of the Central American Republic.
Visit the Society of US Pattern Collectors at USPatterns.com.
<< <i> 1. The consignor contract and terms of sale state that the auctioneer may bid on the coins. (No details are provided as to how and when those bids are to be placed.) The terms also allow the auctioneer to refuse bids that he believes to be unreasonable.
2. After reviewing customer bids, the auctioneer places his own bids one minute before the auction closes.
3. Customer bids are reduced to one increment above the underbidder.
4. (Although it's probably irrelevant from a legal perspective) The auctioneer does not know the identities of the bidders when he enters his own bids. >>
My thoughts and opinions are based on the conditions/specifics noted by Andy above. *Edited to add: as well as much of the discussion contained within this thread:
If an auction house has interest in and/or bids on consigned items, no matter how pure the intentions, there is an inherent conflict of interest.
For example, images and/or catalog descriptions of items desired by the auctioneer might receive sub-par/inferior attention/treatment (if the auctioneer lets his bias win out). If a prospective bidder calls or writes the auctioneer for information/opinions about the lots in question, the auctioneer's bias can come into play, that way, too. Ditto, if the consignor should ask the auctioneer for suggestions about reserve levels.
On the other hand, the auctioneer could (either knowingly or subconsciously) over-compensate for the potential conflict of interest, by giving favorable/preferential (rather than inferior) treatment to items he has interest in. But, that could work against other consignors who have consigned items that the auctioneer does not care about.
However, even considering the above potential conflicts/bias, IF it's disclosed in the terms of sale, IF the auctioneer doesn't go to school on others' bids and IF he is completely honest, fair, etc., the potential conflicts can at least conceivably be overcome. That is admittedly a lot of big "IF's" to hurdle and it's hard to imagine most human beings being able to balance all of that just right, no matter how wonderful their intentions or how hard they might try. That is part of why I feel DISCLOSURE is so important.
One other consideration - it certainly can help the sellers/consignors to have another bidder participate.
In this scenario, I would much prefer that when bidding, the auctioneer NOT be able to use updated bid/price information that others would not have access to (whether it be 1 minute or much longer) before the end of the sale.
OK, I'm done now!
I wouldn't bid during the auction unless I specifically had it in the rules. [I wouldn't put it in the rules] I've never seen it in the rules, but I don't see that many mail bid sales.
Sorry, the owner of the coin got a bad deal, but it should be from the high bidder, not the dealer trying to make an extra buck. The owner should have had a reserve. JMHO Steve
Mark - There's nothing stopping a mail bidder from calling the auctioneer and finding out if he is the current high bidder. There's nothing stopping the mail bidder from raising his bid to meet the competition. Therefore, the auctioneer does not have superior information when bidding for his own account. Unless, like I've said over and over again, he knows who the bidders are.
Doggedly collecting coins of the Central American Republic.
Visit the Society of US Pattern Collectors at USPatterns.com.
If an auction house has interest in and/or bids on consigned items, no matter how pure the intentions, there is an inherent conflict of interest.
For example, images and/or catalog descriptions of items desired by the auctioneer might receive sub-par/inferior attention/treatment (if the auctioneer lets his bias win out). If a prospective bidder calls or writes the auctioneer for information/opinions about the lots in question, the auctioneer's bias can come into play, that way, too. Ditto, if the consignor should ask the auctioneer for suggestions about reserve levels.
On the other hand, the auctioneer could (either knowingly or subconsciously) over-compensate for the potential conflict of interest, by giving favorable/preferential (rather than inferior) treatment to items he has interest in. But, that could work against other consignors who have consigned items that the auctioneer does not care about.
However, even considering the above potential conflicts/bias, IF it's disclosed in the terms of sale, IF the auctioneer doesn't go to school on others' bids and IF he is completely honest, fair, etc., the potential conflicts can at least conceivably be overcome. That is admittedly a lot of big "IF's" to hurdle and it's hard to imagine most human beings being able to balance all of that just right, no matter how wonderful their intentions or how hard they might try. That is part of why I feel DISCLOSURE is so important.
One other consideration - it certainly can help the sellers/consignors to have another bidder participate.
In this scenario, I would much prefer that when bidding, the auctioneer NOT be able to use updated bid/price information that others would not have access to (whether it be 1 minute or much longer) before the end of the sale.
OK, I'm done now!"
Mark, very well said!
But overall, it's still bad ethics. I'm sure that you have gotten a lot of pm's. I have. It'd be interesting to compare them. [but we won't]. Gotta go to work. Hopefully, sombody will agree with somebody. Usually, everybody's got an opinion on everything on this forum. What does that tell you. I think I know. Steve
Sometimes, there is no one right answer.
Doggedly collecting coins of the Central American Republic.
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<< <i>Mark - There's nothing stopping a mail bidder from calling the auctioneer and finding out if he is the current high bidder. There's nothing stopping the mail bidder from raising his bid to meet the competition. Therefore, the auctioneer does not have superior information when bidding for his own account. Unless, like I've said over and over again, he knows who the bidders are >>
Andy, my strong preference is that, where possible, everyone have equal footing for bidding purposes - that is just about impossible when the "house" can bid against others. Perhaps the mail bidder can't get through on the phone and/or doesn't have current bid/price information at his fingertips like the auctioneer does.
I agreed to let you conduct your sale, as long as it met certain conditions. This last point was my strong preference, not a mandate, so quit while you're (almost) ahead with me, already.
Ah, so you don't want the auctioneer to be able to snipe you! OK, no problem.
Doggedly collecting coins of the Central American Republic.
Visit the Society of US Pattern Collectors at USPatterns.com.
You have now seemed to add a new aspect to the discussion suggesting that an auctioneer could legitimally bid beween the high bidder and the underbidder this increasing the price to the consigner and profit for the auction company. You are not supportive of this but suggest that it may represent practice. Perhaps I haver misrepresented your position. Possibly some of the forum members are happy knowing how a hypothetical auction compnay runs their hypothetical auctions, others may want to believe in a different world.
I for won have driven to the local liquor store and bought four lottery tickets. I know the odds are near zero but want to believe that the numbered balls falls by chance. Shows how little I know about balls.
Personally, I think it's a bigger crime to pay $1200 for the $5000 coin. Ethically, it's a crime to bid $1200 for a $5000 coin and live happily with yourself once you do own it. I'll bid $4200 for coins like that all day (and usually not get them).
If the auction house gets me more for my coin than all you $1200 bidders looking to score on me, then hats off to the auction house and screw the $1200 sharks....collectors or dealers...it doesn't matter. I have a much bigger problem with all the $1200 do-gooders. The only morality I live buy is to pay fair. And $1200 for $5000 is not fair, ethical, reasonable or whatever. The rest of this bs is just that.....bs.
roadrunner
Come on, Brian, tell us how you REALLY feel.
Doggedly collecting coins of the Central American Republic.
Visit the Society of US Pattern Collectors at USPatterns.com.