When an auction company is a salesman for a consigned coin vs an auctioned coin
STEWARTBLAYNUMIS
Posts: 2,697 ✭✭✭✭
As there are sooooo many coin auction companies these days and so many coins there is a special question one needs to ask themselves:
AM i BIDDING ON A RESERVED COIN OR IS THIS A REAL AUCTION ?
IMO there really isn't much difference between between someone placing an ad and selling coins and selling them in an auction with a reserve.IMO it is easier buying direct from a dealer and avoiding a 20% auction fee.Auction fever can be costly.
A real auction is exactlyan AUCTION.NO RESERVE.Let the coins sell for the determined value.
WHAT DO YOU THINK ?
Stewart
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Reserve's really should be set at the absolute minimum the seller will accept but often is set at a price that is just wishful thinking.
The auction houses would probably lose business if no reserves were allowed.
Correct on 20% commission vs. 0, so the dealer is better, right??? Depends on the final price, of course. First off, it's really 15% vs. 0 for the buyer. The auction sights SHOULD charge the consignor if the reserve is not met. Not always the case if you are a big consignor. You may have a better chance selling your coins through auction even with the 20% tagged onto it.... Auction fever. I have bought many coins CHEAPER through an auction when a similar coin dealers wouldnt let me come close to touching. I know the dealers are at the auctions, why not I? But right now, it is a sellers market...when it is a sellers market, sell through auctions. Am having a hard time finding bargains through auctions today.
But if the reserves continue to not be met...then the slowdown comes. Like trying to sell your house: If no one bids (offers), eventually, you have to lower your price if you want it sold. That is not happening yet. The auction houses SHOULD charge you something if you take all their time to catalog your coin, have a high reserve, and no one buys it. I have seen many coins with these crazy reserves, and I am always correct... they don't move.
One the other hand, it is not fair for you to NOT have some protection on your investment. Reserves should be ok to use, but you should have to pay SOMETHING if no sale.
roadrunner
I have made this point many times. People don't realize what is really going on at auctions. Many of the auction houses place their own coins into the auctions. They can then manipulate bidding from the book if they see an eager floor bidder, and they can max out mail and fax bids. And it is perfectly legal. I have known cases where Stack's bought an entire collection outright, then immediately turned around and auctioned it in a major sale ... hardly anyone knew that the auctioneer owned all the coins and was merely holding a retail bourse session.
Spectrum bought Bowers & Merena ... Tangible bought Superior ... PCGS previously tried buying an auction house (failed idea, but they probably thought they could make product in their own slabs and promote the upgraded pieces at auction ... ) Heritage is the largest submitter to both PCGS and NGC, and their influence is extensive ... Heritage, like other auction houses, puts its own coins up for sale in its auctions, alongside third-party consignors.
These are not criticisms or scandalous revelations, merely reporting of the facts ...
Best,
Sunnywood
Sunnywood's Rainbow-Toned Morgans (Retired)
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Another good and MAJOR point...
I do, however, think that free and cheap buyback arrangements are inefficient. For example, let's say a coin is consigned at a 0% sellers fee and (if the coin doesn't reach the reserve) a 0% buyback fee. The buyer has to value the coin at 15% more than the seller - a substantial hurdle - or no sale will take place. On the other hand, if the coin was consigned at 105% to the seller and with a 10% buyback fee, the person that values the coin the highest (consignor or buyer) will end up with the coin. In the perfect world, that's how deals would be structured.
Unfortunately, people are emotional and risk averse by nature. Dollar for dollar, most consignors fear a loss (on a buyback fee) more than they value the potential for higher net proceeds on sales. Therefore, the inefficient deals attract more consignments. In other words, nothing's going to change.
Doggedly collecting coins of the Central American Republic.
Visit the Society of US Pattern Collectors at USPatterns.com.
<< <i>PCGS previously tried buying an auction house... >>
Isn't this a clear conflict of interest?
I hear you man. An auction with a reserve is an oxymoron.
Good question and thread. I would like to see better disclosure from the auction houses about reserves. In the end however, you should only pay what you were originally going to pay and not get "bid up" by the book/reserve.
Yeah, yeah, I know I just paid $18,400 for a 15-D Lincoln in 66RD at auction, but that's different