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Is it a good thing when the auction house "wins" your consigned coin?
Coinstartled
Posts: 10,135 ✭✭✭✭✭
Hypothetical as I rarely consign. If the auctioneer is the winner, on the one hand you receive a price marginally higher than if they had not stepped in, on the other hand you likely received a wholesale bid and still have to pay the fees.
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Guess my first question is: How would you KNOW the auction house was the winner?? From the "outside", I'm not sure the sale would look any different....
If they win it, you sold at the wrong time!
If it pops up again on the site quickly that is a decent (but not infallible) sign that they were the winner.
My question is why would you track a coin after it sold?
Couple of thoughts:
Assuming the auction house is Heritage they save 20% off what you or I would pay, along with inflated shipping prices. Something you or I would pay $1,200 for plus $25 shipping they pay $1,000 for and have in hand with no shipping.
While house bidders generally save on shipping, they also pay what any other bidder would pay, as whatever portion of the buyer's fee goes to the house has to absorb the expenses of producing the auction.
What is now proved was once only imagined. - William Blake
There could be an expense allocated to that but it wouldn't include the whole BP, that would be saying the auction house runs on break even...
Not true unless the coin wasn’t going to sell without them buying it
Sorry, but I never beached at the final bidder, it was all the other bidders I beached at for not bidding higher.
I'm not sure why people think the auction houses have an advantage, in any real sense, if they bid on a coin. They are GIVING UP THE BUYERS FEE, which was sure $$ in their pocket. So, while you're paying hammer + 20%, they are paying hammer + 20%. (Shipping and taxes, well, that's maybe another story).
An auction house win only works if they KNOW they can sell if for more, either to someone else by private sale, (for the hammer they paid + $$ greater than buyers fee they passed on), or in a later auction, (for more than hammer, resulting in profit + generating a higher buyers fee than they would have).
In short...I don't think it's as common as some believe. Maybe it works in some less traveled corners of the market, but probably not for the common coins that most bidders are interested in, and which sell at some predictable amount (+ or -).
Speaking as someone who has bid as an agent of an auction house, I can tell you that i have always paid the same fees as everyone else.
What is now proved was once only imagined. - William Blake
It would be smart for the auction company rep to have a list of the coins not yet meeting the reserve...there is where the discount lurks.
I assume you are talking about buying a coin for yourself personally.
I think the OP is referring to an auction house buying coins for their own account.
To be re-graded, stickered, resold at a later date or different venue.
@Regulated What 10000lakes said is correct.
It's nice that MorganMan and Regulated are having a "disagree"-able argument, but simply hitting disagree doesn't really resolve what should be an issue of fact.
I am talking about buying for the auction house, not on my personal account. How many major auction houses have you both worked for?
What is now proved was once only imagined. - William Blake
I don't know how much clearer I could have said it, I am referring to the auction house buying while he is referring to buying on behalf of larger clients.
I am referring to buying on behalf of the auction house to resell. The item is costed into inventory at hammer plus the full buyer's fee.
What is now proved was once only imagined. - William Blake
If Heritage is buying lots that co-signers have submitted to them I don't see how one can say they are paying 20% buying from their own auction. Zero, what is your point?
Speaking as a professional who works for a company with an auction house (and buys items for inventory out of those auctions), I am telling you how the businesses in question ACTUALLY account for transactions, not how you imagine those transactions are accounted for.
What is now proved was once only imagined. - William Blake
Shouldn't it be in the terms and conditions of the auction house
I don't care how you account for it, it still works out that the auction firm had an advantage over an completely unrelated person buying the coin to resell it.
Here are two examples, assuming that the original seller is not getting part of the buyer's fee.
Assume a $10,000 hammer price.
1) Auction firm accounts for the %20 buyer's fee upfront at part of the cost of inventory, booking $2,000 as income at the time of the auction. Later the coin is resold for $14,000 and then an additional income entry of $2,000 is recorded for a total of $4,000.
2) Auction firm accounts for the cost of the coin at $10,000 at the time of the auction. No buyer's fee is book as income at that time. Later the coin is sold for $14,000 and $4,000 is booked as income.
They both yield the same overall profit to the auction firm. I'm not an accountant so I make no claims as the proper timing of the recording of income in these two transactions. But at the end of the day they both yielded the same total income to the auction firm, just the timing is different.
Sorry - duplicate post.
There is zero guarantee the coin would sell for more at a future date. After all there was just an auction and no one stepped up to do just that. There is risk on the buy side. If you were the seller would you rather have Joe Public buying your coin at $9,500 or the auction house at $10,000? Buyers fees are the same in either case. They are the same no matter who buys the coin.
m
Fellas, leave the tight pants to the ladies. If I can count the coins in your pockets you better use them to call a tailor. Stay thirsty my friends......
What's bad is when an auction house conducts your listing in a bad light where they can buy it cheap. Please don't ask me how I know but I know.
Some seller's do get a % over hammer, so the advantage for the auction firm would be smaller, but it still exists.
The major auction houses treat their auctions and coin divisions separately. The profit made on a coin at auction is allocated to that auction, and the associated expenses are paid out of the profits of that particular auction sale. If a coin is purchased by an employee of that company for inventory, it is carried on the books as a purchase at the same cost that any bidder in the sale would pay for it.
This is how these transactions actually work and are accounted for.
You're welcome to imagine a world in which auction houses only pay 100% of hammer to all of their consignors, and where these companies do not incur expenses when they sell a coin in an auction sale; however, that is not how the coin business operates. I'm not trying to be snarky here, I'm sharing 20 years of direct, professional experience.
What is now proved was once only imagined. - William Blake
Dilly Dilly! What Regulated said is 100% true.
With the auction firms providing detailed auction histories, I have seen the same coin listed in multiple auctions in a sequence.
Each time it's listed as sold, but shows up again to be sold again.
1) So either they have generous return policies.
2) They have offered very low buyback fees to the seller.
3) They already own the coin and buy it back to be relisted.
4) They bought the coin and relisted it.
I'm not going to provide examples, because I may not have all of the facts and I'm not going to cast doubt on any of the auction firms. But is does make me wonder sometimes why it occurs.
Of course it is
m
Fellas, leave the tight pants to the ladies. If I can count the coins in your pockets you better use them to call a tailor. Stay thirsty my friends......
I get it, It's just the "Chinese wall" at a brokerage firm between the buy and the sell side.
I believe that story also
No disrespect meant to anyone Chinese
so if Heritage buys a coin in their auction they pay themselves the 20% juice?
MY COINS FOR SALE AT https://www.pcgs.com/setregistry/collectors-showcase/other/bajjerfans-coins-sale/3876
And on an expensive coin, they take themselves out to dinner.
I put a $100 in my left pocket and then payed it to my right pocket. If I repeat the cycle a few times I figure I can make an easy grand in no time.
I suppose they move the funds from one dept account to another, but their actual cost is still hammer - commish.
MY COINS FOR SALE AT https://www.pcgs.com/setregistry/collectors-showcase/other/bajjerfans-coins-sale/3876
Only a stupid businessman would think that he saved $1,000 off the cost of a $10,000 coin consigned to him when another bidder was going to give him practically the same amount if he didn’t buy it
I see I picked up my second disagree on this thread.
Funny thing is my previous disagree was on a thread where I stated that buyers generally take the 20% buyer's fee into account and reduce their bid.
Now I'm saying that auction firms bidding on coins listed in their own auctions don't really pay the 20%. They may account for it and book it as current profit, but they really didn't layout any additional cash and will realize the same overall profit if they sell the coin later on for a higher price.
It's really not that hard to figure out who benefits from the general rise in the buyer's fee.
Hey it's just my opinion, but it really is simple math no matter how you try to spin it.
Their not buying what they believe is a $12,000 coin for $10,000 (20% buyer's fee).
But they might be buying a coin that they think they can upgrade or sell at a higher price at a different time.
Give me a free shot at trying to make upgrades with a 20% buying advantage and even I could turn a better profit than just letting the coin sell for one increment lower and earning the normal fees on the sale.
I suppose that thought has never occurred to anyone?
Sorry. You’re wrong.
The only time it makes a difference is when they bid on a coin that wasn’t going to sell anyway
Plenty of good discussion regarding how the auction house makes out. Let's expand this to any dealer winning a consignor's lot at auction...and how it affects the seller.
Ish Kabibble and sons sells your lot which hammers for $5000 plus a 15% fee so the total is $5750. You get 100% of hammer which of course would be $5000. Kibbitzer and Co. wins the coin and adds it to their inventory at a substantial mark up.
So what did you get for the $750 in fees and 5 month turnaround time if a dealer might have offered you $5750 in the first place?
My logic is that the value of the auction house is to get your coins into the hands of retail collectors and not another middleman.
Your Logic assumes there is a retail collector other than yourself. Or that that person is viewing that particular auction. Or that person is willing to buy from an auction without representation.
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This happens a lot more then many realize. There are various reasons, sometimes its a consigned coin, but more often its a coin the auction house wholesale department purchased outright to be placed in auction and doesn't hit their price point. I have tracked numerous coins, occasionally more then two years between wholesale lists and auctions, back and forth, back and forth. At times re-holdered with a new cert # also, to make it a bit harder to track. Occasionally, an upgrade causing the new cert#. There are numerous examples out there, all you have to do is look and study particular coins, specific grades within one point.
Website-Americana Rare Coin Inc
Any time a coin moves is a good time. Generally speaking, of course. Why consign ? Why reserve ? Keep them
doggies rollin’.
Yes getting $4750 net from a retail collector is so much better then $5000 from an auction house
m
Fellas, leave the tight pants to the ladies. If I can count the coins in your pockets you better use them to call a tailor. Stay thirsty my friends......
Proper promotion by the auction house should reach the collector. $6000 net to the consignor would be much better.
Ask a consignment rep. from one of the major auction houses sometime about why they are so adamant about a consignor not placing reserves.
"Everything is on its way to somewhere. Everything." - George Malley, Phenomenon
http://www.americanlegacycoins.com
Or that the dealer who won his lot would have been willing to give him the $5750.
MY COINS FOR SALE AT https://www.pcgs.com/setregistry/collectors-showcase/other/bajjerfans-coins-sale/3876
Had the dealer offered $5000, the consigner would have still saved 4 or 5 months waiting for the auction cycle to complete.