History of auction buyer's fee??

majorbigtime

I was thinking about the debate on coin acution fees/commissions and recall the good 'ol days when there was no buyer's fee.

I beleive the buyer's fee came into being around the late '70s, and intiially was 5%, then 10% for about 10 years until bumped to the current 15% (or 20% to anyone stupid enough to bid via Ebay).

What's your recollection?


PS: I beleive the term "buyer's fee" is a misnomer--it actually comes out of the seller's hide.

roadrunner

Misnomer is dead-on. And you will get a large % of the forum members who will swear it comes out of the buyer's pockets.

____________

They didn't exist in the 1970's when I was bidding in auction.
At least that's my recollection. Don't ever recall 5% either.
I seem to recall them showing up in the later half of the 1980's.
My 1982 Robision catalog doesn't show them yet. My Eliasberg catalog from 1997 only shows 10% still. Once the market started recovering in the late 90's the auction houses probably felt they could go get another 5% and not ruffle the feathers.

A convenient way to pull the wool over the consignor's eyes as to what he was really paying. The first shot was 10%. I believe Heritage or B&M was first. It was fairly easy to do the math in the later 1980's with subtracting 10%. By the end of the 1989 coin cycle I think every auction house had gone to 10%. It was all about making the consignor pay more but not feel like they were. Sheer genius.

The higher fees came about in the 1990's. I did very little bidding then so someone else will have to chime in.

roadrunner

coinguy1

I worked for Steve Ivy, a competitor of Jim Halperin's New England rare Coin Galleries, before and after the two companies merged. I believe that New England first instituted the buyer's premium some time after 1979 but before 1983 - I might be off by a year or two.

Many consignors did not and do not realize/understand that the so-called "buyer's premium" really comes out of the seller's pocket. Because of that, in many cases it was very difficult to compete with New England's lower seller's commission, and other auction firms eventually adopted the buyer's premium concept, as well.

majorbigtime

<< <i>I worked for Steve Ivy, a competitor of Jim Halperin's New England rare Coin Galleries, before and after the two companies merged. I believe that New England first instituted the buyer's premium some time after 1979 but before 1983 - I might be off by a year or two.

Many consignors did not and do not realize/understand that the so-called "buyer's premium" really comes out of the seller's pocket. Because of that, in many cases it was very difficult to compete with New England's lower seller's commission, and other auction firms eventually adopted the buyer's premium concept, as well. >>




Yeah, and it took a 15% selling fee to an effective fee of 25% too!

coinguy1

<< <i>

<< <i>I worked for Steve Ivy, a competitor of Jim Halperin's New England rare Coin Galleries, before and after the two companies merged. I believe that New England first instituted the buyer's premium some time after 1979 but before 1983 - I might be off by a year or two.

Many consignors did not and do not realize/understand that the so-called "buyer's premium" really comes out of the seller's pocket. Because of that, in many cases it was very difficult to compete with New England's lower seller's commission, and other auction firms eventually adopted the buyer's premium concept, as well. >>




Yeah, and it took a 15% selling fee to an effective fee of 25% too! >>

Not really. Once they instituted the buyer's commission (I think it was 10% back then?) they reduced their seller's fees to be able to afford to profitably undercut the competition.

roadrunner

Standard auction rates for typical $20K consignments from B&M and Stacks in the pre-buyer's fee era were 18%. I paid that on a few occasions. It's really not that much different from today. If you gotta sell, you gotta sell. For a decent $50K consignment today you might get a net 13% fee.

Robison was Feb 1982 and Stack's was still doing 0% buyer's fee.

A quick review of old auction cats with PR's would give the answer.
Most of my cats from the 1975-1990 era got water damaged and were tossed out. Hey, but who needs those when you have accurate pop reports (lol)?

roadrunner

majorbigtime

I wonder when Ebay will get on the buyer's fee bandwagon??


(shhhusssh)

MrEureka

I believe Stacks' Roper sale in 83 was the first. I have heard some interesting stories about how that came to be. Maybe someone can give us the hard facts.

roadrunner

The Auction '82 "Apostrophe" sale did not have the fee included.
However Auction '83 did. The big four were getting the taste of it at this point.

roadrunner

jdimmick

I was thinking of selling two 5 figure coins here in the coming months and Heritage has already called about three times wanting me to cosign, but I just cant get around losing the 15% from what the buyer would be willing to pay. The buyer pays the 15% but the seller looses most of that off the bottom net line to him. The way I figure it, is that each of the coins probably will sell for a little stronger in a Heritage sale, but I am not sure it will make up the the 15% that I loose vs selling myself thru the right channels of even a specialized dealer for a percentage. For example, lets say one of the coins I would like to get 19.5k for. IMO in a Heritage sale where they is sufficient bidding intrest at least two buyers are willing to pay 22k for the coin. Now take the 15% buyers premium off the 22k willing to be paid and you have a net of around 19,100. This is figuring 0% buyers, so if you had to cover any additional sellers % would be even less on the bottom line. There are certain coins where national auction exposure will more than make up for this such as a Pop top, or super rarities.
The 1802 Half dime that sold for 300k comes to mind as an example or say the Morse Saints, etc.

bidask

<< <i>Standard auction rates for typical $20K consignments from B&M and Stacks in the pre-buyer's fee era were 18%. I paid that on a few occasions. It's really not that much different from today. If you gotta sell, you gotta sell. For a decent $50K consignment today you might get a net 13% fee.

Robison was Feb 1982 and Stack's was still doing 0% buyer's fee.

A quick review of old auction cats with PR's would give the answer.
Most of my cats from the 1975-1990 era got water damaged and were tossed out. Hey, but who needs those when you have accurate pop reports (lol)?

roadrunner >>

What happens if a coin you submit in auction does not meet a reserve? Lets say a 20k coin.

roadrunner

If your $20K coin doesn't meet reserve the outcome is determined by your contract with the house. They could re-auction the coin or return it to you with a fee attached. Or maybe they'd buy it outright at a price discussed earlier. There's no limit to what you could agree on. The last deal I did with an auction house on a coin over $20K, I had a $35K reserve on it which was pretty low in retrospect. It ended up selling for $74K with the 15% buyer's fee. That was a case of not really knowing what it was worth until it went to auction. Anyone interested in the coin was not going to give me a fair idea of what it could bring.

Had the coin failed to meet reserve, I had a 0% buy back at that min reserve. It was one reason we picked that number. It was going to sell and it was the least I would take. As I recall the auction house did have the right to sell it once again if it didn't meet reserve. I had also stipulated at what venues the coin could be sold at (ie Long Beach, ANA or FUN). This was interesting because the auction house actually orig put the coin up in a lesser sale w/o me knowing about it. A mistake I was told. Fortunately we were able to pull it before it got into the final catalog. All worked out in the end as the coin brought much more than I thought it could or that I would have asked for in a private sale. It was not a simple process as I had to have the photos redone (they were poor the first time out) and I basically "wrote" the auction description. I felt if anyone could maximize the value of the coin by it's history/rarity/provenance/etc. why not me? Why not put out all the best info you have rather than leave it to chance?

roadrunner

roadrunner

Jim, your point is very valid. Unless you can swing that extra 20% or more the auction venue may not be the way. But from my view, it seems on average, the auction buyer pays at least an extra 10-15% just for being there and gets caught up in the competition. As long as your coins are nice for the grade, and desireable, they will bring that extra 10%. In the case of my coin above it brought about
50% more than I think it could have by private or dealer sale......
and at least 30% more to me in the end.

roadrunner

bidask

<< <i>If your $20K coin doesn't meet reserve the outcome is determined by your contract with the house. They could re-auction the coin or return it to you with a fee attached. Or maybe they'd buy it outright at a price discussed earlier. There's no limit to what you could agree on. The last deal I did with an auction house on a coin over $20K, I had a $35K reserve on it which was pretty low in retrospect. It ended up selling for $74K with the 15% buyer's fee. That was a case of not really knowing what it was worth until it went to auction. Anyone interested in the coin was not going to give me a fair idea of what it could bring.

Had the coin failed to meet reserve, I had a 0% buy back at that min reserve. It was one reason we picked that number. It was going to sell and it was the least I would take. As I recall the auction house did have the right to sell it once again if it didn't meet reserve. I had also stipulated at what venues the coin could be sold at (ie Long Beach, ANA or FUN). This was interesting because the auction house actually orig put the coin up in a lesser sale w/o me knowing about it. A mistake I was told. Fortunately we were able to pull it before it got into the final catalog. All worked out in the end as the coin brought much more than I thought it could or that I would have asked for in a private sale. It was not a simple process as I had to have the photos redone (they were poor the first time out) and I basically "wrote" the auction description. I felt if anyone could maximize the value of the coin by it's history/rarity/provenance/etc. why not me? Why not put out all the best info you have rather than leave it to chance?

roadrunner >>

That is interesting, so the auction house will allow an owner ( in your case a knowledgeable one) to write their own coin description for the catalog!I suppose you could confer with them too to get a description.

roadrunner

Bidask,

I looked at it as self-preservation plus maximizing the return to me as well as the auction house. I also did some of the work and most of the research for them. That saves them time. Also forgot to mention that I stipulated a half page minimum layout on the coin. I think they gave it a full page in the end. I did not want the coin buried somewhere. While they aren't going to do this for less expensive coins all you can do is ask and evaluate what it is worth to you. Since this was a trophy coin of mine for many years, I wanted it done up right sort of as a testimonial or legacy. I also think they were trying to ensure I stayed in their "fold" as there were more coins to auction down the road someday.

roadrunner