Why do people consign coins to auction houses?

BryceM

I put in a bid and amazingly enough actually won a coin in the recent Heritage Long Beach auction. Two or three years ago I used to do this with some regularity. Lately, I've been working on other projects and actively buying coins has taken a bit of a back seat. Not that many years ago I'd pick up 3-5 pieces in a single auction, usually spending in the low 4 figures but sometimes much more.

I just got my invoice. I was aware of the increase to a 20% buyer's premium but the staggering transaction costs really got me to thinking. The single coin I won had a hammer price of $851. The total price to me was $1051.30. This was in-line with other recent auction results for what, in reality, is a reasonably common, slightly widgety coin.

The difference here is $200.30. $170.20 of that is the buyer's premium (20%). $30.10 is "Service and Handling", whatever that is. Pick it up, plop it in a $0.50 box, slap on a computer generated label, and mail it to me for $7. $30.10 minus $0.50, minus $7 leaves $22.60 to pay for one or two minutes of an employee's time....... a separate issue.

If the seller paid a 10% seller's premium he would only have netted $765.90 which is about 73% of what I was willing to pay to acquire the coin. The real transaction cost to the previous owner is therefore actually around 27%. I wouldn't think it would be difficult for anyone to sell this particular coin (and its little green sticker) for $850 with VERY LITTLE EFFORT. I imagine almost any dealer would be happy to buy it outright or consign it for FAR more favorable terms. Consigning it with a dealer may have easily netted the seller $900.

Why would anyone consign material like this to an auction house? I can only see a few possibilities:

• The consignor negotiated a much better deal.
• The coin was part of a forced liquidation (estate, divorce, bankruptcy, etc.)
• The consignor was desperate for cash.

Don't get me wrong. I don't begrudge the auction houses. They're in business to make money and they're doing a great job at it. They provide a useful service, especially to buyers. I just don't understand where they find material to sell. I contacted one of the two or three largest auction houses about selling a small group of coins (less than two dozen, all PCGS, 2/3 CAC'd). The total value was in the low six figures. I was told that I'd probably not be able to negotiate better than 90% of the hammer price. That conversation tuned me up real quick and I consigned the coins with a dealer. When all was said and done I netted almost 90% of the final sale price. Everyone was happy. Who can afford to consign coins?????

Cameonut

@BryceM said:

Who can afford to consign coins?????

I agree with most of what you posted. But as I get older and desire to spend my time on endeavors that I enjoy, I let others do some of the things I used to do. My time now has a higher value to me.

So I can imagine that many people are more than happy to send coins off to an auction house and get a check in the mail (I am going to be one of those someday). They simply have made an economic decision on what their time is worth. Not to mention not having to deal with all the deadbeats and scammers out there.

Zoins

I have my fair share of widgets but I mostly get them on eBay, reserving auction houses for rare items.

I have picked up widgets from auction houses but agree the fees make them less cost effective.

Shamika

Bottom line, 20% just seems greedy to me.

Numiven

I have the same thoughts.

I feel greatcollections gives a better deal for sellers and buyers too. I have done more than 25k of business with them in the last several months. Their shipping charges are very fair, unlike ha.com's outrageous gouge.

Now, when I start selling my collection, my mindset might change. My entire collection is in the low 6 figures, so I am small fish, to ha.com or other large auction houses.

Coinstartled

20 years plus of internet technology and the transaction costs on coins have skyrocketed. From Ebay to Heritage and even a bump from economical Great Collections.

I don't have a good explanation.

1630Boston

It seems expensive...but it must be beneficial to some other than the auction houses....otherwise they would be out of business.
JMO

dpoole

Auctions and Ebay are the market now because of the Internet. The advantage, obviously, is that the exposure by such means is vastly greater for your coin. But the Internet phenomenon has also generate quasi-monopolies (Google, Apple, Amazon, etc.) that diminish competition, and allow the established big guys to raise their prices with relative impunity.

Who's going to make major inroads on Ebay, just with lower fees? Possible, but intimidatingly tough....

savitale

Probably because it is relatively quick and easy. EBay or any direct-to-collector sale takes a lot more effort. Selling directly to a dealer would likely incur the same 27% discount (or more). Consigning requires finding the right dealer and often waiting a long time for your coins to sell. Any of these can be the right solution depending on what is important to you.

jkrk

Why consign?

I always believed that most of Heritage business came from consignments from estates? Can any executor handing over coins to be liquidated to a large auction house face a lawsuit?

An executor is considered a fiduciary, meaning he has an obligation to act in the best interest of the estate and exercise all due care in carrying out his responsibilities. ... Among other things, beneficiaries of the decedent may sue an executor for breach of fiduciary duty or negligence.

BAJJERFAN

@Shamika said:
Bottom line, 20% just seems greedy to me.

The $50 bid increment at the $600 level burns my ass. Had one that I was going to bid on yesterday, but then I thought pith on it.

Zoins

@dpoole said:
Auctions and Ebay are the market now because of the Internet. The advantage, obviously, is that the exposure by such means is vastly greater for your coin. But the Internet phenomenon has also generate quasi-monopolies (Google, Apple, Amazon, etc.) that diminish competition, and allow the established big guys to raise their prices with relative impunity.

Who's going to make major inroads on Ebay, just with lower fees? Possible, but intimidatingly tough....

Great Collections?

Cougar1978

Doing shows and having online store have no use for auction houses in terms of selling. My online buying eBay and GC.

I believe people consign to auction houses bc they don't want spend the time selling it like above or its some expensive big ticket item they can't move on their own.

Others have no concept on how sell coins.

oih82w8

Those fees are what keep me out of the running on a lot of coins that I would like to have. Although I do succumb ever once in a while.

(scene from Finding Nemo)
The "light" is the coin
Dory and Marlin are the potential coin bidders
The Angler fish is the auction house after the bidding has ended, that holds the invoice including the numerous fees.

https://www.youtube.com/watch?v=JT1fXGQGvhc

ricko

Wow.... fees just continue to climb...... I know that those who provide services need to be paid.... just how long those services will be valued is a question that may soon arise. Or perhaps it has.... Cheers, RickO

messydesk

@BryceM said:
Why would anyone consign material like this to an auction house? I can only see a few possibilities:

• The consignor negotiated a much better deal.
• The coin was part of a forced liquidation (estate, divorce, bankruptcy, etc.)
• The consignor was desperate for cash.

... Who can afford to consign coins?????

Perhaps "retail" consignors are like the people who pay MSRP for cars. With a little work, it's possible to get a much better deal, but these consignors don't have the time, motivation, or knowledge to do that work.

TwoSides2aCoin

I don't. Not as of yet, anyway.

shorecoll

I have sold through auctions in the past, my reason was added exposure. As GC continues to grow, they become more of an option for esoteric stuff. I never thought of consigning through a dealer to an auction, but that's something I would consider. I've never sold a thing on eBay, not sure if I ever will.

amwldcoin

The only time I have seen it as a better option is when an area or series is booming like the Russian and Chineese markets did awhile back. I consigned my Russian collection just past the peak and saw many record prices on my better stuff!

ms70

20% is disgusting and the Heritage crew should be ashamed.

Coinstartled

@ms70 said:
20% is disgusting and the Heritage crew should be ashamed.

As long as no collusion is involved among the auctioneers (ie Christies/Sotheby) the sellers are free to name their terms.

On another forum a veteran coin guy noted that he is stepping away from coins and returning to tropical fish. I like that idea.

1630Boston

I wouldn't want tropical fish in my SD box

BAJJERFAN

@Coinstartled said:

@ms70 said:
20% is disgusting and the Heritage crew should be ashamed.

As long as no collusion is involved among the auctioneers (ie Christies/Sotheby) the sellers are free to name their terms.

On another forum a veteran coin guy noted that he is stepping away from coins and returning to tropical fish. I like that idea.

The toning on tropical fish is oftimes awesome and many people can have the same toners without paying an arm and a leg.

Treashunt

@1630Boston said:
I wouldn't want tropical fish in my SD box

Not unless you put a room deodorizer in there also

MrEureka

@BryceM said:
I contacted one of the two or three largest auction houses about selling a small group of coins (less than two dozen, all PCGS, 2/3 CAC'd). The total value was in the low six figures. I was told that I'd probably not be able to negotiate better than 90% of the hammer price.

Maybe you should have contacted one of the other firms?

Elcontador

If you're buying in California and the total invoice amount is under $1,500, don't forget the sales tax, which is added to everything else.
When I've sold coins, I usually get in the lower range of the spread in auction prices, which includes the auction premium. But these are nice coins. I haven't consigned anything.

BruceS

@1630Boston said:
I wouldn't want tropical fish in my SD box

The sticker would fall off too.

crazyhounddog

I refuse to be clipped by these auction houses. The fees are outta this world both buying and selling. They are making money hand over fist and for what? Then if they sell YOUR coin and it doesn't do well on the hammer price you REALLY get screwed over in a BIG way. Seriously I just can not bring myself to take the shower offered by these auction houses with my eyes wide open.

Coinstartled

@1630Boston said:
I wouldn't want tropical fish in my SD box

They do eat the verdigris though!

ms70

It would be fabulous if the ANA was in the position to start a low fee auction house. Never gonna happen.

TwoSides2aCoin

Well, I bet Smitty's new discovery of a war nickel on a copper/nickel planchet would do well at the big house.

BryceM

Tropical fish...... well, since you mentioned it...... this is another of my excessively numerous hobbies. Planted freshwater tanks are a real challenge but stunning when they look nice. The photos are from a few years ago:

Dave99B

If you're a big-shot seller, I know for a fact Heritage will negotiate way, way down on their sellers fee side of things. I'm a minnow, but I know a semi-large whale who pays a very small fee. Can't speak to the other auction houses. I know, I know...the rich get richer.

Dave

Coinstartled

Bryce...you have gotten me hooked again. That aquarium is spectacular.

BryceM

Well, it's a lot of work.

jonruns

@Elcontador said:
If you're buying in California and the total invoice amount is under $1,500, don't forget the sales tax, which is added to everything else.

NY and TX get sales tax too....adds another 5%...

jmlanzaf

@BryceM said:
I put in a bid and amazingly enough actually won a coin in the recent Heritage Long Beach auction. Two or three years ago I used to do this with some regularity. Lately, I've been working on other projects and actively buying coins has taken a bit of a back seat. Not that many years ago I'd pick up 3-5 pieces in a single auction, usually spending in the low 4 figures but sometimes much more.

I just got my invoice. I was aware of the increase to a 20% buyer's premium but the staggering transaction costs really got me to thinking. The single coin I won had a hammer price of $851. The total price to me was $1051.30. This was in-line with other recent auction results for what, in reality, is a reasonably common, slightly widgety coin.

The difference here is $200.30. $170.20 of that is the buyer's premium (20%). $30.10 is "Service and Handling", whatever that is. Pick it up, plop it in a $0.50 box, slap on a computer generated label, and mail it to me for $7. $30.10 minus $0.50, minus $7 leaves $22.60 to pay for one or two minutes of an employee's time....... a separate issue.

If the seller paid a 10% seller's premium he would only have netted $765.90 which is about 73% of what I was willing to pay to acquire the coin. The real transaction cost to the previous owner is therefore actually around 27%. I wouldn't think it would be difficult for anyone to sell this particular coin (and its little green sticker) for $850 with VERY LITTLE EFFORT. I imagine almost any dealer would be happy to buy it outright or consign it for FAR more favorable terms. Consigning it with a dealer may have easily netted the seller $900.

Why would anyone consign material like this to an auction house? I can only see a few possibilities:

• The consignor negotiated a much better deal.
• The coin was part of a forced liquidation (estate, divorce, bankruptcy, etc.)
• The consignor was desperate for cash.

Don't get me wrong. I don't begrudge the auction houses. They're in business to make money and they're doing a great job at it. They provide a useful service, especially to buyers. I just don't understand where they find material to sell. I contacted one of the two or three largest auction houses about selling a small group of coins (less than two dozen, all PCGS, 2/3 CAC'd). The total value was in the low six figures. I was told that I'd probably not be able to negotiate better than 90% of the hammer price. That conversation tuned me up real quick and I consigned the coins with a dealer. When all was said and done I netted almost 90% of the final sale price. Everyone was happy. Who can afford to consign coins?????

Heritage will give most people 0% seller's premium. Some heavy hitters get negative 3 to 5%. If you had a silver center cent, you'd probably get negative 10%

But, before you go any farther wondering about Heritage or Stack's...would you have bid as high on eBay? And selling on eBay still comes with a 10% seller's premium.

Would you sell a $1,000 coin on eBay? There is risk of loss or theft.

Every placement of a coin for sale is a balancing act between costs and potential benefits. There are some coins for which Heritage will simply get FAR more money.

[Note: I sell 4000+ coins and stamps on eBay every year. I'm not trashing eBay.]

jmlanzaf

@ms70 said:
It would be fabulous if the ANA was in the position to start a low fee auction house. Never gonna happen.

They would charge 20% also. It is not free to run an auction house.

Zoins

@BryceM said:
I contacted one of the two or three largest auction houses about selling a small group of coins (less than two dozen, all PCGS, 2/3 CAC'd). The total value was in the low six figures. I was told that I'd probably not be able to negotiate better than 90% of the hammer price.

What was the Buyer's Premium with that 90% of hammer? It would be interesting to know what the seller would net from the buyer's price.

The buying example had a 20% BP. Combined with a 10% SP, the seller will net 75% before other costs, similar to the 73% in the example.

bronco2078

@BAJJERFAN said:

@Coinstartled said:

@ms70 said:
20% is disgusting and the Heritage crew should be ashamed.

As long as no collusion is involved among the auctioneers (ie Christies/Sotheby) the sellers are free to name their terms.

On another forum a veteran coin guy noted that he is stepping away from coins and returning to tropical fish. I like that idea.

The toning on tropical fish is oftimes awesome and many people can have the same toners without paying a fin and a tail .

FTFY

BAJJERFAN

@Zoins said:

@BryceM said:
I contacted one of the two or three largest auction houses about selling a small group of coins (less than two dozen, all PCGS, 2/3 CAC'd). The total value was in the low six figures. I was told that I'd probably not be able to negotiate better than 90% of the hammer price.

What was the Buyer's Premium with that 90% of hammer? It would be interesting to know what the seller would net from the buyer's price.

The buying example had a 20% BP. Combined with a 10% SP, the seller will net 75% before other costs, similar to the 73% in the example.

Regular big consignors get around 105% of hammer from what I understand. Plus there is also the matter of commission which is 10% or more IIRC.

jmlanzaf

@Zoins said:

@BryceM said:
I contacted one of the two or three largest auction houses about selling a small group of coins (less than two dozen, all PCGS, 2/3 CAC'd). The total value was in the low six figures. I was told that I'd probably not be able to negotiate better than 90% of the hammer price.

What was the Buyer's Premium with that 90% of hammer? It would be interesting to know what the seller would net from the buyer's price.

The buying example had a 20% BP. Combined with a 10% SP, the seller will net 75% before other costs, similar to the 73% in the example.

I had one $6k coin. Contacted Heritage. Asked for 0% and got it. Only 2nd time in 3 years I consigned anything to them. Got 0% both times.

Local dealer sends them things all the time, he gets negative 5%