Q for dealers (real and wannabe) regarding auction representation

ER

Have you ever had two clients asked you to represent them for the same coin? And if so, how did you handled the situation?

Pistareen

PM sent.

This does happen, but honesty, flexibility, and preparation can usually solve anything.

For the record, I find that representing serious collectors at major auctions is one of the most fun things a professional numismatist can do.

John K.

ER

Thanks John. ANR folks are first-class.

coinguy1

Yes, that has happened on a number of occasions. When it did, I made sure to describe the coin the same way to each client, I told each of them that another client had interest and I didn't disclose to either, what the other's bid was.

One client has told me that in the future, I need not even bother to tell him if another client of mine has interest in the same coin.

So, how does one handle the bidding in such a case?

There are at least two factors to consider:

1) Avoid collusion - it's not fair to the auction house or its consignor to get one of the clients not to bid against the other.

2) Avoid a situation where the coin sells for a price at which each client believes he has won the lot.

The following is how I avoid each of the above situations:

Let's say that client A gives me a maximum bid of $1500 and client B gives me a maximum bid of $1100. I need to make sure that the coin sells for a minimum of $1101. So, no matter how low the bidding has started, I would jump the bid to (edited to add: approximately) $1125 in this scenario.

By the way, all of the above applies to a situation where a client has asked me to represent him on a coin that I have interest of my own in.

Edited to add: I also like Julian's method (which he mentioned in his post below) of jumping the bid to the appropriate level, after the lot has been hammered.

Julian

I had this situation, for the first time in 1977 at the River Oaks Sale by Bowers and Ruddy.

Harry Bass and Rudy Sieck both contacted me about purchasing the Amazonian quarter in silver. They both told me to purchase the coin.

I then told them both that I had two interested people and that they must give me an absolute top price to pay. As I remember it, Rudy gave me 12000 and Harry gave me 13000.

I purchased the coin, competitively, at the auction, for 7500 and after I was awarded the coin, in public, told the auctioneer to raise the winning bid to 12500.

I received many inquisitive looks and questions after the sale. After I explained the situation, they understood.

A critical part of this is that the consignor of the coin is entitled to the full participation of all the bidders. Of course, the auction house also benefits.

Longacre

Julian:

I don't understand (maybe I'm not reading it correctly). In your situation of jumping the bid after hammer, which one of your clients ended up getting the coin? The one that could have bought the coin at $7500, but which was ultimately "outbid" with the final upped bid at $12,500, or the client who was willing to pay $13,000, but could have bought the coin at $7500, but now it cost him $12,500? If you could clarify, that would be great. Thanks.

Julian

Harry Bass gave me the higher of the two bids and he was awarded the coin for 12500.

The point that I was trying to make is that the consignor of the coin, and the auction house for that matter, are entitled to both bids.

I represent everyone, just as they are there themselves.

Longacre

Julian:

Hi. I sort of understand your point, and it assumes that if both Rudy and Harry were in the room, the coin would have been bid up to the ultimate selling price of $12,500, at which point Rudy would have dropped out.

slabfab

Hmmm. Then why not just start the bid at 12500 and be done with it? Same difference, no?

coinguy1

<< <i>Hmmm. Then why not just start the bid at 12500 and be done with it? Same difference, no? >>

Frank, the auctioneer starts the bidding, but one option would be to immediately jump the bid to $12,500 under Julian's scenario. And, while I mentioned in my previous post that bidding in that way was an option, the downside is that (in rare instances) if you were to jump the bid dramatically, it could give other bidders the false impression that you were dying to win the lot, that you might have a good reason for such, and it might encourage others to bid against you.

On the other hand, if you don't jump the bid, it might cause/allow other bidders to remain in the bidding. It comes down to style and strategy.

Longacre

Good points, Mark

kranky

When I read the OP I immediately thought of Julian's story which he's shared before on the boards. Mark's is similar.

That's the right way to handle it. The result should not be any different regardless of whether the two highest bidders were represented by the same person.

slabfab

Ah, you sensed the question behind my question. I knew I must be missing something. Thanks.
In the lower end waters where I swim this usually isn't such a concern

Julian

The reason that I choose to do it this way is that it shows the underlying value, or third highest, outside of the mega-bidders, which is valuable information to some, as it was to me, at the time.