Why do auction houses keep putting estimates on items?

Tomi

This Gretzky jersey was estimated at $500,000 as you can see at the bottom of the auction. The final bid was nowhere close. Not even half. I wonder if they are telling their consignors that these estimates are close to accurate. Do you think that auction houses should do this or just not put an estimate at all? I know a lot of people don't care, but I remember a few cards that I consigned with an auction house and the estimate they gave me was absurd. My cards sold for less than half but I knew pretty much what they were worth so I wasn't disappointed. I remember the Antiques Roadshow not long ago where some cards were appraised at a million dollars, but everyone who knows the cards say that they are worth a little north of $100,000. What are your thoughts.

Gretzky jersey

Griffins

On the flip side there are auction houses that put ridiculously low estimates just so they can tout how much higher than that they sold for. It's all a way of trying to manipulate and influence the sale, and I just ignore them.

Stone193

<< <i>On the flip side there are auction houses that put ridiculously low estimates just so they can tout how much higher than that they sold for. It's all a way of trying to manipulate and influence the sale, and I just ignore them. >>

+1

MooseDog

In his great book "Thinking Fast and Slow" Daniel Kahneman touches on the concept of "anchoring", in brief, that people rely on the first piece of information they get. So by giving a high estimate in this case they auction house is establishing the "anchor" price at $500,000. There is a lot more too it of course, I really recommend that book and the parts about pricing, those concept will help you in your selling activities.

IndianaJones

Hey MooseDog,

Thank you for the comment on "anchoring". I had never heard of that before and from the description you give is quite fascinating. Bringing it to bear on this whole business of auction marketing was spot on. It has been my experience when I consigned quality items to auction houses that they flat out set the minimum bid too low, and they did not set any estimate at all. To be sure, the auction house can make you, or break you. The general mentality of sports card collectors has been "the rookie cards are most important, all important, and therefore most valuable". The same thing has happened with selling a sports item---i.e. auctioning is the most important, viable way of getting rid of it. Which is, in reality, a bunch a hog manure. The auctioning of fine sports cars and sports racing cars, I believe, is done properly, attracts the right kind of buyers, and the prices are enormous for the top echelon of its particular kind. The sports card market is a different story, but I guess they're "just" sports cards. Then again, the sports collectibles market has many niches, in contrast to the vintage sports car market. Niches get hot and cold.

seebelow

I think "anchoring" has it merits..with the uninformed. The vast majority of visitors, contributors here on this board are very informed.
I think it's a dangerous game that they are playing. We quickly realize if their estimates are legitimate or not. One AH tried to convince everyone a particle item had a value of a million dollars and "who knows, the skies the limit" . He was on cnbc, espn, CNN hyping his product. All well and good, maybe. It ended up at somewhere in the 100-150,000$ area. Which was the true market value.

Point being, I give them all a chance or two to test my intelligence with their pipe dream estimates. If it's near market value, ill bid and in fact probably overbid. But the other ones I will read the description but don't even look at the estimate. Some , I dont even open the catalogue or give it a quick scan. Losing me as a customer. If they "lie" with their estimates, what else are they doing?

lmf

Auction houses are in most cases over their heads on the estimates, in most part for lack of knowledge in any one particular area some are great in one but fail in others. I buy the best from the best in any one area, my newest addition is bgs beckett auctions for modern graded cards their auctions start at a fair price and it's very easy getting your cards , they go through beckett mailing services the same mail room they send back graded card submission so no eBay seller problems or other auction houses bs in getting your item,plus since becketts a secure building your items are insured in and out through the mail basically they have your items or they have your money if there's any mailing issues ,and they can figure out what a modern bgs graded card is worth fairly easy, so it's fast to.

mtcards

It also happens on ebay as well. One of the more notorious is "BigboydInvestments" or something like that. They put a dollar value on the card they are selling and its usually 3 times book value and usually more than that on actual value. In the listing they put a disclaimer as saying its their "target value" and not a estimate of value. Even though its pretty shady IMO, it gets them a few more dollars per item than they should get. Money over integrity

LarkinCollector

<< <i>It also happens on ebay as well. One of the more notorious is "BigboydInvestments" or something like that. They put a dollar value on the card they are selling and its usually 3 times book value and usually more than that on actual value. In the listing they put a disclaimer as saying its their "target value" and not a estimate of value. Even though its pretty shady IMO, it gets them a few more dollars per item than they should get. Money over integrity >>


+1, ' bigboydsportscards3' is one of their eBay usernames, but I think they have multiple. They use Beckett MINT or GEM MINT values on cards that are clearly not in that condition. They usually have some nice and/or hard to find stuff for modern player collectors, but it definitely goes for higher than it should based on the values they put in their titles. I bought a couple 100 card Larkin lots from them in the past that were supposedly $300-$350 worth of cards that I actually totaled up Beckett High at less than $50.

ETA: Looks like their latest is keyword spamming "GEM" in many of their raw listings.

dfanredsfan

I write auction catalogues in a completely different field and we always give estimates. But our offerings are books, for which there isn't anything like a price guide. For cards, I wouldn't think there'd be any real reason to give an estimate, especially if they're graded. But for memorabilia...? That's a lot harder to price. As a potential bidder, I'd like to know quickly if something is probably out of my price range or may be something I can go for. Just my two cents.

df