Morphy/Legend Auction 7% of items didn't sell due to high reserves

DaveW · July 21, 2014 6:01PM

I saw that they had quite a few items 14 out of 232 that didn't sell do to not meeting reserve. It seem like a high number compared to the other major auction houses? Does any one know what a common sell through rate is for major auctions?

coinkat · July 21, 2014 8:01PM

I do not see 7% as unreasonable. However, I did not see the 14 coins or their reserves.

Zoins · July 21, 2014 8:06PM

<< I do not see 7% as unreasonable. >>

I also don't see 7% as unreasonable.

Is there a target / sweet spot number?

rkfish · July 21, 2014 10:04PM

I personally think that 7% is a pretty good number given the "boutique" type auction that it is. The real question would be how many lots had reserves? That would be a more telling number.

Boosibri · July 21, 2014 10:09PM

They are nice coins with potentially high reserves. It was a very good sale by all measures.

DaveW · July 21, 2014 10:09PM

<< I personally think that 7% is a pretty good number given the "boutique" type auction that it is. The real question would be how many lots had reserves? That would be a more telling number. >>

I thought when I talked with some one at Goldbergs they said that any thing under 98% sell through wasn't good.

TwoSides2aCoin · July 21, 2014 10:12PM

Sounds like a successful endeavor. Kudos. I cannot imagine numbers for Heritage. Probably much higher since the general public has greater expectations for their "wares". I don't suppose "eye appealing, hand picked" inventory can be beat, as for assembling an auction. I wasn't there . Just imagining if I were …. and dreaming.

BryceM · July 21, 2014 10:35PM

It's always possible that the auction house or original consignor ended up as high bidder on some lots too. You never really know.

gypsylea · July 21, 2014 10:56PM

<< It's always possible that the auction house or original consignor ended up as high bidder on some lots too. You never really know. >>

Absolutely true as far as the house is concerned. Sell through rates can be misleading as reserves are a matter of negotiation between the consignors and the house, as is everything else. All told, this seemed like a decent auction.

PerryHall · July 21, 2014 11:05PM

If a coin doesn't sell because of an unrealistically high reserve, what fee does the auction house typically charge the consignor?

COALPORTER · July 21, 2014 11:05PM

<< 

<< I personally think that 7% is a pretty good number given the "boutique" type auction that it is. The real question would be how many lots had reserves? That would be a more telling number. >>

I thought when I talked with some one at Goldbergs they said that any thing under 98% sell through wasn't good. >>

Then isn't that the answer your looking for ? Why ask people here that have never ran an auction ?

shorecoll · July 21, 2014 11:08PM

For what they were selling, I think 7% is reasonable.

STONE · July 21, 2014 11:13PM

Actually, it's better than 7%.....it's 6%!!!!!!!!!!!!!!!!!!!!!!!!!!!

tradedollarnut · July 21, 2014 11:15PM

This is a stupid thread. Seems obvious to me that they didn't sell due to low bids...

2ndCharter · July 21, 2014 11:25PM

Actually, if you do the math, the sell-through rate was 93.965% which strikes me as closer to 6% that did not sell rather than 7% (unless you went to a school that taught an unusual method of rounding numbers).

Anyway, I tend to agree with Bruce's comment. With a boutique sale of just high-end material, that is a very good sell-through rate. Remember, with the larger auction houses, the sell-through rate is bolstered by a sizable number of group lots that are "no returns for any reason".

crypto79 · July 21, 2014 11:30PM

You guys are over thinking this. The only measure of an auction house to collectors other than customer service is their coins, quality and quantity of them. Sell through rates and prices achieved are more metrics that matter to consigners which lure the good coins to the house. If they have the coins the collectors will show up.

rays · July 21, 2014 11:41PM

<< If a coin doesn't sell because of an unrealistically high reserve, what fee does the auction house typically charge the consignor? >>

Typically, 2%.
If the auction house doesn't charge this fee, then it's not really an auction, but rather an advertisement to sell.

rays · July 21, 2014 11:51PM

Of the three US Large cents in the sale,
Lot 2 1798 S-179 PCGS MS64BN CAC did not sell
Lot 3 1837 Medium letters PCGS 66RB CAC (ex: Joshua and Ally Walsh) sold for $1500 less than its last public sale in 2008 ($8250 vs $9775).
Lot 4 1851 PCGS MS64RD CAC (ex: Naftzger) sold for $655 less than it brought in the Naftzger sale in 2009 ($2900 vs $3555).

I don't know if it is just this small sample of coins or what, but typically examples from the Naftzger, Holmes and Husak sales have been recently bringing higher prices than they originally sold for circa 2008-9.

tradedollarnut · July 21, 2014 11:57PM

<< Of the three US Large cents in the sale,
Lot 2 1798 S-179 PCGS MS64BN CAC did not sell
Lot 3 1837 Medium letters PCGS 66RB CAC (ex: Joshua and Ally Walsh) sold for $1500 less than its last public sale in 2008 ($8250 vs $9775).
Lot 4 1851 PCGS MS64RD CAC (ex: Naftzger) sold for $655 less than it brought in the Naftzger sale in 2009 ($2900 vs $3555).

I don't know if it is just this small sample of coins or what, but typically examples from the Naftzger, Holmes and Husak sales have been recently bringing higher prices than they originally sold for circa 2008-9. >>

I don't think you realize that the prices posted don't include the buyer's fee

rays · July 22, 2014 12:03AM

<< 

<< Of the three US Large cents in the sale,
Lot 2 1798 S-179 PCGS MS64BN CAC did not sell
Lot 3 1837 Medium letters PCGS 66RB CAC (ex: Joshua and Ally Walsh) sold for $1500 less than its last public sale in 2008 ($8250 vs $9775).
Lot 4 1851 PCGS MS64RD CAC (ex: Naftzger) sold for $655 less than it brought in the Naftzger sale in 2009 ($2900 vs $3555).

I don't know if it is just this small sample of coins or what, but typically examples from the Naftzger, Holmes and Husak sales have been recently bringing higher prices than they originally sold for circa 2008-9. >>

I don't think you realize that the prices posted don't include the buyer's fee >>

Oh dayum my whole post is incorrect.
Nevermind.

DavidLawrence · July 22, 2014 12:07AM

93-94% is actually a really good sell-through rate. When taking consignments, auctions houses would love to have 100% sell-through but that requires consignors to sell lots without reserves which is scary, and very risky. A reasonable percentage of coins failing to meet reserves indicates that the auction company is working with the consignors to find the right balance of fair reserve / sell-through on the consignments. This is a very difficult balance.

sparky64 · July 22, 2014 12:14AM

I agree with DL with regards to looking out for the consignors.

roadrunner · July 22, 2014 12:32AM

<< 

<< I personally think that 7% is a pretty good number given the "boutique" type auction that it is. The real question would be how many lots had reserves? That would be a more telling number. >>

I thought when I talked with some one at Goldbergs they said that any thing under 98% sell through wasn't good. >>

Goldbergs must be a fantastic auction house to target 98% and higher. I recall some of the major auctions in 2009 where 30-50% of the better choice/gem PF/MS 19th century didn't sell.
I think anything above 90% is a pretty darn good sell through rate. Even on a lot that doesn't sell the house might still make money on the buy back fee. What really matters is how well the auction
house did on the entire auction (net profit vs. total costs). Sell through rate is one part of that. On really cool lots the auction house will often bend a bit to offer the consignor a better rate and a better
minimum reserve (usually with no buy back fee as well). They want these coins in the sale to generate some buzz. Even if they don't sell, they did their job in generating more interest in the sale. Now when
every 2nd or 3rd lot fails to sell that's a problem. When dealers consign stale or slow moving inventory to auctions I'd bet they'd be ecstatic to see 75% of those coins sell.

I recall watching one particular dealer consignment from 2003-2005 where it took up to 5 auctions to sell all of those coins. And no doubt those guys had a 0% buy back. Dealer coins that don't sell probably
out-number collector coins. I might be wrong but I see Goldbergs as more of collector-oriented firm vs. the big boyz that take in a large % of dealer consignments. Maybe 98% to Goldbergs is low if they are
very strict in setting tight reserves (or no reserves). One doesn't necessarily have to have no reserves to get a 100% sell through rate. If the consignors were to agree to reserves set right around the wholesale
bid levels a sell through rate of >99% might be achievable. Goldbergs doesn't have the retail boutique presence in the market that Legend does. So I suspect that purchases from Legend that are consigned back to
them have to factor in the price the consignor paid. This probably makes the reserve setting more sensitive so feelings don't get hurt or customers aren't lost. Still, factoring that in, a 93-94% sell through rate seems
quite strong.

DaveWcoins · July 22, 2014 1:59AM

I agree.

From what I know about coin auctions, a 93% sell through rate is outstanding. If that is the case, Legend Auctions is to be commended.

By the way, there is someone who posts on these boards as "DaveW" .

That is fine and dandy, but that is not me.

I am DaveWcoins on the PCGS (and NGC, for that matter) boards.

DaveW · July 22, 2014 2:52AM

I was just thinking if these are "hand picked" lots why doesn't Legend place bids on each coin at there buy prices so every coin sells. It might be a unique marketing approach to tell a consigner that we don't allow reserves but we place a wholesale bid on every lot as a back stop. Just an idea. I thought David Lawrence did that on there auctions.

Ed62 · July 22, 2014 2:54AM

A 6.1% no sale rate sounds very good to me. I have seen much higher no sale rates in several sales by the bigger auction houses.

LegendRareCoinAuctions · July 22, 2014 2:55AM

<< 

<< 

<< Of the three US Large cents in the sale,
Lot 2 1798 S-179 PCGS MS64BN CAC did not sell
Lot 3 1837 Medium letters PCGS 66RB CAC (ex: Joshua and Ally Walsh) sold for $1500 less than its last public sale in 2008 ($8250 vs $9775).
Lot 4 1851 PCGS MS64RD CAC (ex: Naftzger) sold for $655 less than it brought in the Naftzger sale in 2009 ($2900 vs $3555).

I don't know if it is just this small sample of coins or what, but typically examples from the Naftzger, Holmes and Husak sales have been recently bringing higher prices than they originally sold for circa 2008-9. >>

I don't think you realize that the prices posted don't include the buyer's fee >>

Oh dayum my whole post is incorrect.
Nevermind. >>

Yes it is important to note that the Prices Realized on our website represents the hammer prices and does not include the 17.5% Buyer's Premium.

LegendRareCoinAuctions · July 22, 2014 2:56AM

<< 93-94% is actually a really good sell-through rate. When taking consignments, auctions houses would love to have 100% sell-through but that requires consignors to sell lots without reserves which is scary, and very risky. A reasonable percentage of coins failing to meet reserves indicates that the auction company is working with the consignors to find the right balance of fair reserve / sell-through on the consignments. This is a very difficult balance. >>

A very important note from Mr. Feigenbaum!

telephoto1 · July 22, 2014 3:44AM

If I am a potential consignor then I don't care about the total with the buyer's juice added. I want to know what the piece actually hammers for, as that is what my seller fees would be based upon.

GoBust · July 22, 2014 4:01AM

My impression was that those were very good results. You also need to remember that some auction houses are buying coins from their own auctions if they are selling low. Some coins are cycled and appear to sell, but then reappear at another auction at the same firm six months to a year later. These are actually kept back in the Auction house because they did not meet some target. I think its tough to tell exactly what the sell though rate is sometimes. Reserves of course are to protect consignors' interest.

The 6% not meeting reserve is very reasonable for almost exclusively high grade material. I think the large cents did cell for higher prices (you need to include the 17.5% buyers fee). Sometimes the buyers fee is shared with the consignor on higher value, high quality material, or when a large amount of material is consigned together.

Its remarkable to me to see Legend get a foothold in such a competitive landscape with Heritage, Goldberg and Stacks Bowers. The trends have been consolidation and fewer auctions companies over the past 10 to 15 years.

LegendRareCoinAuctions · July 22, 2014 4:53AM

Prices Realized have now been adjusted to include Buyer's Premium. Sorry for any confusion.

roadrunner · July 22, 2014 5:22AM

<< If I am a potential consignor then I don't care about the total with the buyer's juice added. I want to know what the piece actually hammers for, as that is what my seller fees would be based upon. >>

With most consignments of $10-$20K or more there are no "seller's" fees unless you don't try to negotiate them to 0%. What you get for your coins STARTS from the hammer price and goes up. You should care
very much about the buyer's fee juice added as some of that should go back into your pocket. What a coin truly sells for (FMV or hammer+juice) is the only thing that matters. Could you imagine price guides being based
on hammer price? As a consignor, both fees come out of your pocket. It's your job to know about both of them and to make them as small as possible. When I look at how I did on a consignment, I take the final price
realized and divide it by what I was paid. That's my net commission....and it's the only thing that matters. Ideally that comes out to be around 87-92%. That's the same basic range I've been paid in over the past 25 years.
They can maneuver the fees any which way they like. But as long as I end up in that net 87-92% range it's probably fair. If your name is Pogue, Newman, or Gardner, I suspect you can do a lot better than that.

rays · July 22, 2014 5:54AM

<< Prices Realized have now been adjusted to include Buyer's Premium. Sorry for any confusion. >>

I just checked their site, this is correct. I find it amazing that one or two comments regarding this issue, and within a few hours, their website is corrected (!).

Compare to the months of grumbling about the (dyfunctional) Stack's-Bowers site. I don't even go there anymore, it's just too frustrating.

LegendRareCoinAuctions · July 22, 2014 5:58AM

<< 

<< Prices Realized have now been adjusted to include Buyer's Premium. Sorry for any confusion. >>

I just checked their site, this is correct. I find it amazing that one or two comments regarding this issue, and within a few hours, their website is corrected (!).

Compare to the months of grumbling about the (dyfunctional) Stack's-Bowers site. I don't even go there anymore, it's just too frustrating. >>

We aim to please!

LindeDad · July 22, 2014 6:06AM

Summer doldrums maybe.

telephoto1 · July 22, 2014 6:14AM

You should care very much about the buyer's fee juice added as some of that should go back into your pocket.

Interesting. We have of course bought tons from various venues over the years but have not consigned anything to a major house in a very long time (frankly we can usually either sell nicer stuff in house or flip to someone who needs it). Is it common for bigger houses to kick back some of the buyer's fee to the consignor? I know smaller guys that won't.

roadrunner · July 22, 2014 6:43AM

<< You should care very much about the buyer's fee juice added as some of that should go back into your pocket.

Interesting. We have of course bought tons from various venues over the years but have not consigned anything to a major house in a very long time (frankly we can usually either sell nicer stuff in house or flip to someone who needs it). Is it common for bigger houses to kick back some of the buyer's fee to the consignor? I know smaller guys that won't. >>

Yes, it is the norm to kick back some of the buyer's fee to most consignments of $10K-$20K for most auction venues (though for summer ANA standards are much tighter). I haven't consigned anything since 2011 but at that
time you could get 0% sellers premium and 2-3 % of the buyer's fee back on most any decent consignment. On my last two consignments I got 4.5% to 6.5% above hammer (or about 1/3 of the BF refunded +0% sellers). I
also had fairly tight reserves and had zero % buy backs as well. Even if you have a fairly small consignment you might be able to pool with another dealer who routinely brings together smaller consignments and gets better rates
for those people....while earning a couple % for their efforts. If you're paying the entire 17.5% BF today, then you're net commission is 14.9%. If an auction house can always fill up every sale with great stuff there is certainly
no incentive to offer BF kickbacks to common or generic stuff. Heritage seems to get the lion's share of stuff. That made Stacks-Bowers and others very aggressive in their rate offerings. Before they merged, they were
basically cutting each other's throat bidding for the same consignments. So that's one area they've improved in.

DaveW · July 22, 2014 9:39AM

I think the boutique idea is a great place for them to fill in the market basically taking the place that Stacks had before the merged with Bowers. I just look at items that don't sell as a negative reflection on the auction house. They should put up your own money on the line and place a wholesale bid and if the consigner won't let it be listed at that price with the upside of an auction maybe it’s time to pass on the consignment.

rays · July 22, 2014 9:44AM

<< I think the boutique idea is a great place for them to fill in the market basically taking the place that Stacks had before the merged with Bowers. I just look at items that don't sell as a negative reflection on the auction house. They should put up your own money on the line and place a wholesale bid and if the consigner won't let it be listed at that price with the upside of an auction maybe it’s time to pass on the consignment. >>

We don't know the specifics of these lots that did not reach reserve. They could have been owned by the auction house, and the reserve is the minimum they would sell them for.

Justacommeman · July 22, 2014 9:48AM

<< 

<< I think the boutique idea is a great place for them to fill in the market basically taking the place that Stacks had before the merged with Bowers. I just look at items that don't sell as a negative reflection on the auction house. They should put up your own money on the line and place a wholesale bid and if the consigner won't let it be listed at that price with the upside of an auction maybe it’s time to pass on the consignment. >>

We don't know the specifics of these lots that did not reach reserve. They could have been owned by the auction house, and the reserve is the minimum they would sell them for. >>

Legend denotes a "L" in the catalog description on the coins they own.

MJ

coin4sale · July 22, 2014 9:59AM

using an ( obtuse) analogy from Real Estate

If occupancy rate = Sell thru rate, some may argue 100% is better than 94%.

however those in the real estate industry may tell you that if you have 100% occupancy - chances are your rents are
too low.

so, what does a 100% sell thru rate mean?

7Jaguars · July 22, 2014 3:09PM

I really do not understand how the "rates" can mean anything, when they can be so easily manipulated with a so-called sale. I won't mention names, but have noted fair numbers of coins that have continued to turn over at other venues & apparently counted as sales - NOT Legend by the way & have no idea of their practices, nor is it my business.

Bochiman · July 22, 2014 3:14PM

<< using an ( obtuse) analogy from Real Estate

If occupancy rate = Sell thru rate, some may argue 100% is better than 94%.

however those in the real estate industry may tell you that if you have 100% occupancy - chances are your rents are
too low.

so, what does a 100% sell thru rate mean? >>

Not the same as, at an auction, it really would only mean that the consignors/auction house(s) set reasonable minimums and that the market decided the coins were worth that price, or more, as people don't pay more for rent than the ask, but in an auction, people do pay more than the minimum - quite often.

oreville · July 22, 2014 4:55PM

Actually i think it is more honest for an auction house NOT to bid on a lot in lieu of a disclosed reserve.

Such bidding by an auctioneer would mean that the auctioneer is then competing with their own auction bidders?
Not a recipe for long term success.

I am glad that Legend has refrained from such bidding. I am sure there might be exceptions such as bidding on behalf of a client?
Other accepted exceptions?

By the way, I have always thought that a sell through rate of 90% or more was one of the signs of a successful auction?

DaveW · July 22, 2014 6:24PM

<< Actually i think it is more honest for an auction house NOT to bid on a lot in lieu of a disclosed reserve.

Such bidding by an auctioneer would mean that the auctioneer is then competing with their own auction bidders?
Not a recipe for long term success.

I am glad that Legend has refrained from such bidding. I am sure there might be exceptions such as bidding on behalf of a client?
Other accepted exceptions?

By the way, I have always thought that a sell through rate of 90% or more was one of the signs of a successful auction? >>

I'm pretty sure Legend is competing with you on the lots in their sale. I think they mentioned that they would be bidding on coins in the sale as well. I think this was part of their business model for the auction.

CoinZip · July 23, 2014 4:51AM

I bet Morphy's sell through % is way better than ebay's..............

gypsylea · July 23, 2014 7:16AM

<< 

<< Actually i think it is more honest for an auction house NOT to bid on a lot in lieu of a disclosed reserve.

Such bidding by an auctioneer would mean that the auctioneer is then competing with their own auction bidders?
Not a recipe for long term success.

I am glad that Legend has refrained from such bidding. I am sure there might be exceptions such as bidding on behalf of a client?
Other accepted exceptions?

By the way, I have always thought that a sell through rate of 90% or more was one of the signs of a successful auction? >>

I'm pretty sure Legend is competing with you on the lots in their sale. I think they mentioned that they would be bidding on coins in the sale as well. I think this was part of their business model for the auction. >>

Not sure what your issues are, but every auction house in any collectible field that I know of reserves the right to bid in their own auctions. Hardly any business plan that is unique to Legend. The idea that lots did not sell because reserves were too high is not necessarily true either. Back in the 90's, I consigned a couple of dozen slabbed coins to B & M and set reserves at 20-25% below sheet. Two did not sell. They offered to roll them over to the next auction, I agreed and both lots brought a fair amount over my reserve. The market had not visibly changed in the meantime. Who knows why?

roadrunner · July 23, 2014 7:51AM

Some or most auction houses certainly use their auctions as a source to buy coins. It's probably one of the juiciest areas for them to find upgrades/crosses. I consistently see coins pop up 3-6 months later in a follow on
auction that you just know the house purchased and upgraded. It's all part of a logical business plan.

DaveWcoins · July 23, 2014 9:01AM

<< Some or most auction houses certainly use their auctions as a source to buy coins. It's probably one of the juiciest areas for them to find upgrades/crosses. I consistently see coins pop up 3-6 months later in a follow on
auction that you just know the house purchased and upgraded. It's all part of a logical business plan. >>

As a consignor to many coin auctions each year, I think this is a terrific practice. I would encourage all auction houses to bid on coins in their own auctions. More bids means more competition for my coins and higher overall prices realized for me and the other consignors to that sale.

Morphy/Legend Auction 7% of items didn't sell due to high reserves

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