It is a huge hassle trying to figure out what my real price will be when trying to bid on the other auction sites.
maybe I'm missing something, but what's to calculate?? before I finalize a bid there always seems to be a line which says the amount of the bid with the "premium" factored in, how hard is that to work with??
following this thread it seems to me that the bidders who are most affected by a premium and most against its use are dealers or bidders who are looking to re-sell what they bid on. they are at a distinct disadvantage when bidding against someone like me who is a collector.
I get the same impression as Aotearoa above, members are just debating in circles about nothing.
Removing BP probably would not greatly impact the market.
It seems more that auctions have been cheapened by the fact that there are so many of them. You have online auctions every few days with some really average quality material. Does anyone get excited by that?
Even with BP as it is, most lots sell.
So how would lowering BP rejuvenate coins? Have even more auctions with even weaker material? Don’t see how that helps the market.
@keets said: It is a huge hassle trying to figure out what my real price will be when trying to bid on the other auction sites.
maybe I'm missing something, but what's to calculate?? before I finalize a bid there always seems to be a line which says the amount of the bid with the "premium" factored in, how hard is that to work with??
following this thread it seems to me that the bidders who are most affected by a premium and most against its use are dealers or bidders who are looking to re-sell what they bid on. they are at a distinct disadvantage when bidding against someone like me who is a collector.
_ I get the same impression as Aotearoa above, members are just debating in circles about nothing._
Again? Huge hassle? And some collectors wonder why some dealers assume they can eat a collector's lunch
Here's the rundown.
I can count to 9 without taking my shoes off.
You can't, but don't get that it's essential.
You go broke because you're not only innumerate, but fatally narcissistic (that "stable genius" you see in the mirror has expensive blind spots).
Who ever told you that (essentially) day-trading coins (except on the bourse floor) was a money-making proposition?
They LIED
"People sleep peaceably in their beds at night only because rough men stand ready to do violence on their behalf." - Geo. Orwell
Huge hassle? And some collectors wonder why some dealers assume they can eat a collector's lunch
we're on the same page as long as you understand the "huge hassle" was jwitten's post on page three and not mine. as for lunch, if we ever meet at a show I'll gladly treat you to a meal as long as we both get to eat.
@keets said: Huge hassle? And some collectors wonder why some dealers assume they can eat a collector's lunch
we're on the same page as long as you understand the "huge hassle" was jwitten's post on page three and not mine. as for lunch, if we ever meet at a show I'll gladly treat you to a meal as long as we both get to eat.
You will get to eat, because the colonel will likely be talking (a lot!).
Mark Feld* of Heritage Auctions*Unless otherwise noted, my posts here represent my personal opinions.
@topstuf said:
All I have to say is that eBay is way way way too smart to ever even consider a ...BUYER.... fee.
There is a buyer fee. It's just not advertised.
As mentioned above, I think an important reason auction houses have the BP is so they can tell sellers they are getting 100% of hammer, even though that 100% gets smaller as the BP increases.
The reason they have BP is so they can give you 110% or 115% of hammer. But not for widgets.
If the real question is: would cost-free transactions change the hobby, then the answer is yes. Would it invigorate the hobby? The answer is not so obvious.
Auction houses do not exist as charities. They are not cost-free and need to cover costs somehow. If you think it is so easy and cheap to run a major auction, ask yourself why there aren't more auction houses undercutting the existing ones.
You want major placement, you want advertising, you want services. Those things cost money.
It's not an accident that ALL the houses have essentially 10-12% fees on major coins and 20% on widgets. And I mean ALL. In fact, eBay is cheaper for widgets and really expensive coins. But total fees at Heritage and Stack's are 30%, but when you get 110% of hammer, your total fees are only 10%. eBay is 6.15% + PayPal for a total of 9.15% (with store). GC is 10%. Gee, surprise, they are all the same.
For inexpensive widgets, Heritage and Stack's are going to be 25% but so is GC, only eBay is in the 13% range (10% no store + 3% PayPal).
Now, for the more obtuse collectors out there who can't do the math, they may THINK that GC is cheaper when it generally is not (some things yes, some no). They may think that no BP would make coins cheaper but that is generally a fallacy as MOST people know how to account for the other fees. But if you really look past the headlines: EVERY MAJOR AUCTION HOUSE has total fees that are PAID BY THE SELLER ONLY that amount to the same value.
Now, are some people confused by the fee structure? Yes. Would they be less confused by no fee structure? Probably.
But I'm not sure it is clear whether it is all positive. You would have less advertising, less fancy catalogs, fewer high end coins.
It should have zero effect. As a buyer, you should calculate your net expenses for a purchase. It makes no difference how it's broken down. If I'm willing to pay $1000 for a coin it doesn't matter if it's $1000 straight up or $200 plus $800 in various costs/fees... Either way I'm paying $1000 for the same object.
The only potential consideration would be what your cost would be selling the item. If you had to sell the item on the same venue at the same price what's going to be the haircut you take.
@keets said: Huge hassle? And some collectors wonder why some dealers assume they can eat a collector's lunch
we're on the same page as long as you understand the "huge hassle" was jwitten's post on page three and not mine. as for lunch, if we ever meet at a show I'll gladly treat you to a meal as long as we both get to eat.
You will get to eat, because the colonel will likely be talking (a lot!).
@keets - lost the "quoting >> @jwitten" electrons somewhere along the line. Your tendencies towards rationality have been noted While you and I might value the processes of the hero of Robert Heinlein's "The Smartest Man in the World", the productions of @jwitten's neurons are, based on newly emerged evidence, somewhat suspect, though vitiated by his estimable appetite for crust.
@MFeld - based upon our (up until now generally pleasant) long association, you surely know how gratuitously cruel and painful such utterances can be, especially in such an instance as when they might be true. As was shown in the (sigh) previous paragraph. Well played
"People sleep peaceably in their beds at night only because rough men stand ready to do violence on their behalf." - Geo. Orwell
I must be doing something wrong as buyers fees and auctions don’t bother me. 94% of the time I enter my max bid and then watch Real Housewives with my wife. The auction house either sends me an invoice or they don’t. Either way I know what I was willing to spend all fees included.
m
Walker Proof Digital Album 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......
@keets said: I must be doing something wrong as buyers fees and auctions don’t bother me
has Jessup ever tried to eat YOUR lunch??
No but we went out to dinner once and he ate a French Fry off my plate
m
Walker Proof Digital Album 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......
True recent story. My wife and I drove up to Monecito for our anniversary. We ate at Lucky’s which is the premier steak house there. Sitting across from us was Ivan Reitman (Director of Animal House/ Ghostbusters etc). Next to him was Molly Shannon from SNL who my wife has worked with. So I’m taking to my wife about all that famous people who graced SNL and asked her who she liked better. Steve Martin or Bill Murray. She answers Steve Martin.
Six minutes go by and we look up and Steve Martin is standing in front of us. Without saying a word in one sweeping motion he snatches an onion ring off of my plate and eats it. I inform him it’s gluten free which seemed to delight him as he reached down and ate another. We had an awesome conversation and then he scooted away and left.
m
Walker Proof Digital Album 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......
It could be a short-term stimulus, but I see no reason why removing these fees would help the real factors influencing price declines: aging collector demographics and shrinking collecting base. Younger potential collectors don't necessarily have less of an "appreciation for history", they have reduced buying power, student loan debt, and a desire for financial independence, none of which encourage them to spend whatever discretionary income they might have on coins.
**_The buyer premiums and the shipping nonsense is too high.
Dealers can't move a coin at the prices realized and you're giving 20% plus? No Brainer back to 10% max.
Ever try to sell a coin from an auction and have the dealer research the coin for just an extra minute to find
it came from an auction and then He wants to remove the auction fees and buy for 20% back? No matter how
nice your coin is.
Coins are unsustainable and getting more so
Further look at the up and coming population of potential collectors 20 to 40 years old. They see this as folly._**
I'd rather not throw my money away.
Never used one & doubt I ever will.
Did get a couple of massive rips off Heritage though.
Feel bad for the idiots that listed them.
Doubt I would have had the stomach to do it face-to-face.
Just about pulled the trigger on a $3,300.00 Gold Medal last night. Coin is priced $150 under spot. Then the thought hit me. How will I sell this? This is the same thought I ask myself for every coin I look at over about $500.00 now.
Backed out and went to bed. This is the same action I took with the last 20 coins I liked and would have purchased. I backed out and went to bed.
No - the return of well heeled hot to buy wanna bulk it up investors is needed. Just go to eBay - it has no buyers fees
The market has shifted to buyers looking for nice silver and gold coins close to melt whether slabbed or raw - modern, world, or Classic.. Many US numismatic coins seem to be stuck in deep freeze or downward steady slide. Look at how Walkers, Dollars, and Commems have fallen in the sheet this year, a tremendous capitalization of material. I recently bought an NGC MS65 Peace Dollar off the Bay for $69 and at recent show some PCGS MS63 generic $20 Libs for $1440 each! 65 Walkers bid at$75, and Morgan’s in 65 at $96 bid abound.
If auction site has high 20 pct buyers fees have no use for it. eBay is kicking their rear end lol.
@ARCO said:
Just about pulled the trigger on a $3,300.00 Gold Medal last night. Coin is priced $150 under spot. Then the thought hit me. How will I sell this? This is the same thought I ask myself for every coin I look at over about $500.00 now.
Backed out and went to bed. This is the same action I took with the last 20 coins I liked and would have purchased. I backed out and went to bed.
Nothing wrong with that. I do a lot of consideration over $500 as well. But I'm also wondering if I should lower that threshold to say $100-150.
No. Because the BP (or auctioneer's fee) has always been a cut above. When we break it down to all those making money in the chain .... that premium is honestly what true collectors (or dealers) must pay for acquisition. The little, middle guys are still doing the brunt of the work, in the end.
The cost of selling is usually not understood by new collectors. They often think in terms of "for sale by owner" with no commissions. For a while Legend was running basically lower priced monthly CAC coin auctions with a simple 10% buyer's premium and no seller's commission. Apparently that business model did not work out and the program was dropped. Currently, Great Collections charges 10% buyer's premium as long as a credit card is not used for payment and a 5% sellers commission for coins under $1000. Coins over $1,000 have no seller's commission. Both auction houses did not utilize paper catalogues and the auctions strictly on-line. Other major auction houses start with a 20% seller's commission AND a 20% buyer's commission. Basically these fees are charged to cover the cost of highest quality printed catalogues, travel to major shows to provide viewing and live audience auctions. If the items are important enough, the seller's commissions are reduced; but, this is rarely offered to lesser collections. So one buys a coin at auction, bids $100 hammer plus $20 commission or $120 net and then sells the same coin for $150 hammer less $30 commission or $120. While some collectors have not experienced selling through auctions, it is a sobering experience to realize one needs to see 50% appreciation in the hammer price to breakeven. If major auction houses lower their commissions for the average collectors by finding ways to reduce their expenses, that could encourage new collectors become serious collectors.
@DisneyFan said:
The cost of selling is usually not understood by new collectors. They often think in terms of "for sale by owner" with no commissions. For a while Legend was running basically lower priced monthly CAC coin auctions with a simple 10% buyer's premium and no seller's commission. Apparently that business model did not work out and the program was dropped. Currently, Great Collections charges 10% buyer's premium as long as a credit card is not used for payment and a 5% sellers commission for coins under $1000. Coins over $1,000 have no seller's commission. Both auction houses did not utilize paper catalogues and the auctions strictly on-line. Other major auction houses start with a 20% seller's commission AND a 20% buyer's commission. Basically these fees are charged to cover the cost of highest quality printed catalogues, travel to major shows to provide viewing and live audience auctions. If the items are important enough, the seller's commissions are reduced; but, this is rarely offered to lesser collections. So one buys a coin at auction, bids $100 hammer plus $20 commission or $120 net and then sells the same coin for $150 hammer less $30 commission or $120. While some collectors have not experienced selling through auctions, it is a sobering experience to realize one needs to see 50% appreciation in the hammer price to breakeven. If major auction houses lower their commissions for the average collectors by finding ways to reduce their expenses, that could encourage new collectors become serious collectors.
While your math is solid, the problem is the idea that $100 coin should ever be sold through a major auction house.
On a $100 coin, you're going to pay a $10 premium plus shipping at GC. Then when you sell it, you're going to not realize the $10 premium + $5 SP + $5 setup fee, not to mention two sets of shipping costs. But ignoring shipping, you are at $30 in total fees.
At Stack's or Heritage, you are at $50 in fees.
eBay is the best bargain only $10 in total fees.
So, in fact, $100 coins belong at eBay or BST or your local B&M.
When you are talking $1000 coins, the numbers change. You can probably get 0% Seller's Premium from the major houses and GC which reduces the percentage paid. At GC, you have $200 in total fees. At Heritage or STack's you are at $400 in total fees.
On a $10,000 coin, you can probably get negative 10% from Stack's or Heritage which moves the needle even more.
BUT, BUT BUT, there is soooo much more that goes into it. There's a big difference between throwing a coin on eBay and having a coin at a Heritage ANA auction. It's final price realized, not percentage of fees paid.
Everyone wants to be a dealer or be at auction hoping for a "win". For a LOT of coins, the most efficient way to buy and sell is directly to a trusted dealer where there is probably only a 10% bid/ask spread.
@DisneyFan said:
If major auction houses lower their commissions for the average collectors by finding ways to reduce their expenses, that could encourage new collectors become serious collectors.
People are always looking for profitable business opportunities that have been overlooked. I would be surprised if your scenario hasn't been considered already.
@DisneyFan said:
If major auction houses lower their commissions for the average collectors by finding ways to reduce their expenses, that could encourage new collectors become serious collectors.
People are always looking for profitable business opportunities that have been overlooked. I would be surprised if your scenario hasn't been considered already.
Yes, I'm not sure why people think that billion dollar businesses would know less about their business than amateurs. And I'm not sure why the amateurs think that the billion dollar businesses got that way by making decisions that ran counter to their own interests.
Collectors are only looking at the coin. They are not looking at the total costs of the business. Selling a $100 coin on a $5 GROSS margin is probably impossible.
@jmlanzaf said:
Collectors are only looking at the coin. They are not looking at the total costs of the business.
It's interesting how often these businesses are called greedy by collectors who want them to lower their fees so that the collector can get more money when he goes to sell his coins.
It's unfortunate that I used a simple $100 amount to make my point. I probably should have used $1,000 for my example.
I have actually sold four figure coins and five figure collections and no one has offered or was willing to reduce or eliminate the seller's commission unless it was already part of their published fee schedule. I gave the Legend example of a firm who tried to offer lower commissions and discontinued the practice within a short period of time. It costs money to run auctions.
Great Collections appears to be succesful by limiting itself to simple online postings.
I believe it is misleading to claim one can sell average coins "... directly to a trusted dealer where there is probably only a 10% bid/ask spread." And there is a lot of work a collector needs to do to sell coins on ebay. The major auction houses continue be be successful because old time collections have been very profitable for their owners. Going forward in a flat market it's difficult for new collectors to see the investment value of coins with today's auction fee schedules.
. Going forward in a flat market it's difficult for new collectors to see the investment value of coins with today's auction fee schedules.
Well, this is part of the problem. I don't believe that collectors should think that there is ANY investment value in coins. It's a hobby, not an investment.
Even bullion. If you want to invest in bullion, physical gold is not the most cost effective way to do so. I can trade 5000 ounces of silver or 100 ounces of gold with a $6 buy/sell transaction cost. Try and do that with physical gold or silver. People "invest" in silver eagles by buying the new year's issue at $3 over spot. Good luck with that.
Even for widgets, there's at most a 20% bid/ask spread on even raw coins. [Obviously, some "trusted dealers" can't be trusted.] Coin margins suck, generally speaking.
You are correct that auctions are not cost effective for trading the majority of coins. But it has always been that way. And it is true of most collectibles including art, cars, etc. That's why, in part, it is a hobby not an investment.
As for the seller's premium, I've never consigned a $1000+ coin and had to pay a seller's premium. I always ask and they always offer to waive it. I've never gotten negative seller's premiums, but I do know volume dealers I could consign through who get a standard negative 5%.
To make it in the coin biz it takes cost plus about 40 pct. So if a coin Is $260 CPG / $200 bid I need buy it right at $185 or below. Otherwise no interest / market in downward steady slide with bids dropping......no incentive be high payer. Just smash mouth ball lol.
@Cougar1978 said:
To make it in the coin biz it takes about cost plus about 40 pct. So if a coin Is $260 CPG / $200 bid I need buy it right at $185 or below. Otherwise no interest / market in downward steady slide with bids dropping recently.
I usually aim for 20%. I'd love 40% LOL, but it's impossible to buy most saleable coins at that deep a discount. Of course, at 20% after eBay + shipping eats 10 or 12%, my net margin is single digits. Of course, that's why I don't quit my day job!
I think the biggest problem in a down market is that people feel little urgency to buy anything. They just assume that it'll be cheaper in 6 months.
I knew a guy who had a comic book store. We talked business. He said: if something's not selling, raise the price. LOL. There is something to that. It is the reason that the Fed has an inflation target. If you feel like prices are rising, you jump in before the price goes down. If you feel like prices are dropping, you wait as long as you can to get it as cheaply as you can.
@Cougar1978 said:
To make it in the coin biz it takes cost plus about 40 pct. So if a coin Is $260 CPG / $200 bid I need buy it right at $185 or below. Otherwise no interest / market in downward steady slide with bids dropping......no incentive be high payer. Just smash mouth ball lol.
P.S. If there's a China trade deal and PMs drop, I wonder if it will create an enhanced slide to the coin market. I sometimes feel like the only thing keeping the whole thing afloat right now is the run-up in PMs.
Yes many of us joking at a show does anyone actually make money in the coin business. An informal poll indicated nobody would be quitting their day job.
@Cougar1978 said:
Yes many of us joking at a show does anyone actually make money in the coin business. An informal poll indicated nobody would be quitting their day job.
I assume this poll is among collectors? Dealers have coins as their day job so it wouldn’t make sense to quit.
My informal poll was between fellow dealers set up at show with me. For many coins a sideline, sch c tax shelter, finance another hobby, or extra income supplement their job or pension / social security.
Yes many in here like deer in the headlights have naive concept about market, green on playing other side of ball (selling), wealthy, or just possibly manipulated by some fad. Wake up and smell the coffee and look at Pcgs 3000 index graph last 5-10 years. Or develop your own index like I have which reflects a hypothetical 200 k investment 50 / 50 between gold &silver and Walkers, Dollars, Commems.
Before a show I will go thru my graded inventory I am taking to the show and on about 10 pct of them put sticker w price in red say just 10 pct over bid or even as low as $5 over cost. The canary in the mine concept.
@Cougar1978 said:
My informal poll was between fellow dealers set up at show with me. For many coins a sideline, sch c tax shelter, finance another hobby, or extra income supplement their job or pension / social security.
Yes many in here like deer in the headlights have naive concept about market, wealthy, possibly manipulated by some huckster but wake up and smell the coffee and look at Pcgs 3000 index last 5-10 years.
Are these mostly part time dealers that don’t depend on coins for a living?
I wonder how many had a decent online presence with great photos.
It’s even harder to get a tax deduction with the elimination of the 2% rule.
@Zoins said:
I assume this poll is among collectors? Dealers have coins as their day job so it wouldn’t make sense to quit.
Certainly, there are plenty of people for whom dealing in coins is their only source of income, but I know that at least five of the dealers that set up at the local show here have day jobs, one has since retired and gone into coins full time. As well, I am quite familiar with a larger well known coin business where the owners have outside businesses that they devote a majority of their time to.
I think the mechanics of coin dealing are poorly understood by a significant number of collectors.
@Zoins said:
I assume this poll is among collectors? Dealers have coins as their day job so it wouldn’t make sense to quit.
Certainly, there are plenty of people for whom dealing in coins is their only source of income, but I know that at least five of the dealers that set up at the local show here have day jobs, one has since retired and gone into coins full time. As well, I am quite familiar with a larger well known coin business where the owners have outside businesses that they devote a majority of their time to.
I think the mechanics of coin dealing are poorly understood by a significant number of collectors.
I think understanding coin dealing is easier you think about where dealers source and sell their coins.
There are a few dealers that post online about their business, including sourcing coins, which can help. EOC and Legend come to mind. I believe EOC said he sources mostly or all online and Legend posts about how they source coins.
I don't understand the mechanics of smaller dealers that set up at shows and have day jobs. I don't do part-time dealing, but, if I did, I would probably lean heavily towards online.
@Cougar1978 said:
Yes many of us joking at a show does anyone actually make money in the coin business. An informal poll indicated nobody would be quitting their day job.
I assume this poll is among collectors? Dealers have coins as their day job so it wouldn’t make sense to quit.
Honestly, a lot of dealers are part-timers. And among the full-timers, don't underestimate how much of their operation is kept afloat by scrap and the like. Margins on scrap are horrible, but VOLUME VOLUME VOLUME!
@Cougar1978 said:
Yes many of us joking at a show does anyone actually make money in the coin business. An informal poll indicated nobody would be quitting their day job.
I assume this poll is among collectors? Dealers have coins as their day job so it wouldn’t make sense to quit.
Honestly, a lot of dealers are part-timers. And among the full-timers, don't underestimate how much of their operation is kept afloat by scrap and the like. Margins on scrap are horrible, but VOLUME VOLUME VOLUME!
Yeah, I understand this now. I can see how it's difficult to make money part-time given the high transaction fees. It seems like the following can help:
being focused and selective so you build up a following
focusing on areas where you can make a substantial mark up
@Zoins said:
I assume this poll is among collectors? Dealers have coins as their day job so it wouldn’t make sense to quit.
Certainly, there are plenty of people for whom dealing in coins is their only source of income, but I know that at least five of the dealers that set up at the local show here have day jobs, one has since retired and gone into coins full time. As well, I am quite familiar with a larger well known coin business where the owners have outside businesses that they devote a majority of their time to.
I think the mechanics of coin dealing are poorly understood by a significant number of collectors.
I think understanding coin dealing is easier you think about where dealers source and sell their coins.
There are a few dealers that post online about their business, including sourcing coins, which can help. EOC and Legend come to mind. I believe EOC said he sources mostly or all online and Legend posts about how they source coins.
I don't understand the mechanics of smaller dealers that set up at shows and have day jobs. I don't do part-time dealing, but, if I did, I would probably lean heavily towards online.
Honestly, neither EOC or Legend are typical of most dealers I know.
EOC is in a collecting niche where it is easier for him to buy coins at auction and then mark them up and resell them. That is MUCH harder to do if you are selling type coins as the bid/ask spread is less than the shipping cost from the auction house.
Legend is one of the top 5 (?) houses at this point.
Most dealers rely on shows and over-the-counter purchases and sales of generally lower value, lower margin material.
If you wanted to go into a retail business, coins would be among the LAST you would choose. The margins are too tight. And in the modern period, you can't even rely on things like supplies and annual coin sets to boost the bottom line. 30 years ago, there wasn't an internet so you bought your blue books and price guides locally. That matters a lot because supplies are typically one of those things you can buy in bulk with a 40% (or more) margin.
The online store has performed better for me but I love the excitement of the bourse at shows even though many times not clearing enough make show expenses. I have had many show buys sell at retail from online store within a week after a show. Much of this material bought from other dealers before show opens to public.
I view shows like a TE in a smash mouth offense like a guy who is a good edge sealant - not gonna catch many balls making many yards but super blocks knocking defenders out of the play so speedster back can break one for big score.
@Cougar1978 said:
Yes many of us joking at a show does anyone actually make money in the coin business. An informal poll indicated nobody would be quitting their day job.
I assume this poll is among collectors? Dealers have coins as their day job so it wouldn’t make sense to quit.
Honestly, a lot of dealers are part-timers. And among the full-timers, don't underestimate how much of their operation is kept afloat by scrap and the like. Margins on scrap are horrible, but VOLUME VOLUME VOLUME!
Yeah, I understand this now. I can see how it's difficult to make money part-time given the high transaction fees. It seems like the following can help:
being focused and selective so you build up a following
focusing on areas where you can make a substantial mark up
This is true in some ways, but being focused and selective is easier for a part-timer. A full-timer needs to be buying and selling constantly or they don't eat.
There are not a lot of areas where you can make a substantial mark up. Certainly almost no U.S. coins other than maybe errors and some exonumia. The internet squeezes margins even more and also allows people to move material without going to a dealer.
Pick any coin with a reasonable mintage and ask yourself how easy it would be to buy it and mark it up 30% or 40%.
Let's say I have a coin with a $100 value in the price guide. Unless I have a blind widow, everyone looking to sell it will know the price guide says $100. If I offer $60, how many people will think that's a reasonable offer? How many people who saw the same coin selling for $100 on the internet would think I was anything but a crook? And I can't very well mark the coin over $100 or someone will find another one on the internet for $100 to buy.
The only place you will get margins is things that don't have clear price guides (errors, some exonumia) and/or things that come up so infrequently that finding another example is challenging.
I would also point out on this thread itself, almost everyone on here thinks the 30% BP+SP is EXORBITANT!!! People are arguing that they should be able to trade coins on a 10%ish margin. Therein lies the dealer problem.
Comments
Miracle Gro?
Have you ever noticed that some threads just keep going even after there’s nothing left to say?
Smitten with DBLCs.
It is a huge hassle trying to figure out what my real price will be when trying to bid on the other auction sites.
maybe I'm missing something, but what's to calculate?? before I finalize a bid there always seems to be a line which says the amount of the bid with the "premium" factored in, how hard is that to work with??
following this thread it seems to me that the bidders who are most affected by a premium and most against its use are dealers or bidders who are looking to re-sell what they bid on. they are at a distinct disadvantage when bidding against someone like me who is a collector.
I get the same impression as Aotearoa above, members are just debating in circles about nothing.
Removing BP probably would not greatly impact the market.
It seems more that auctions have been cheapened by the fact that there are so many of them. You have online auctions every few days with some really average quality material. Does anyone get excited by that?
Even with BP as it is, most lots sell.
So how would lowering BP rejuvenate coins? Have even more auctions with even weaker material? Don’t see how that helps the market.
Again?
Huge hassle? And some collectors wonder why some dealers assume they can eat a collector's lunch
Here's the rundown.
I can count to 9 without taking my shoes off.
You can't, but don't get that it's essential.
You go broke because you're not only innumerate, but fatally narcissistic (that "stable genius" you see in the mirror has expensive blind spots).
Who ever told you that (essentially) day-trading coins (except on the bourse floor) was a money-making proposition?
They LIED
Huge hassle? And some collectors wonder why some dealers assume they can eat a collector's lunch
we're on the same page as long as you understand the "huge hassle" was jwitten's post on page three and not mine. as for lunch, if we ever meet at a show I'll gladly treat you to a meal as long as we both get to eat.
You will get to eat, because the colonel will likely be talking (a lot!).
Mark Feld* of Heritage Auctions*Unless otherwise noted, my posts here represent my personal opinions.
The reason they have BP is so they can give you 110% or 115% of hammer. But not for widgets.
If the real question is: would cost-free transactions change the hobby, then the answer is yes. Would it invigorate the hobby? The answer is not so obvious.
Auction houses do not exist as charities. They are not cost-free and need to cover costs somehow. If you think it is so easy and cheap to run a major auction, ask yourself why there aren't more auction houses undercutting the existing ones.
You want major placement, you want advertising, you want services. Those things cost money.
It's not an accident that ALL the houses have essentially 10-12% fees on major coins and 20% on widgets. And I mean ALL. In fact, eBay is cheaper for widgets and really expensive coins. But total fees at Heritage and Stack's are 30%, but when you get 110% of hammer, your total fees are only 10%. eBay is 6.15% + PayPal for a total of 9.15% (with store). GC is 10%. Gee, surprise, they are all the same.
For inexpensive widgets, Heritage and Stack's are going to be 25% but so is GC, only eBay is in the 13% range (10% no store + 3% PayPal).
Now, for the more obtuse collectors out there who can't do the math, they may THINK that GC is cheaper when it generally is not (some things yes, some no). They may think that no BP would make coins cheaper but that is generally a fallacy as MOST people know how to account for the other fees. But if you really look past the headlines: EVERY MAJOR AUCTION HOUSE has total fees that are PAID BY THE SELLER ONLY that amount to the same value.
Now, are some people confused by the fee structure? Yes. Would they be less confused by no fee structure? Probably.
But I'm not sure it is clear whether it is all positive. You would have less advertising, less fancy catalogs, fewer high end coins.
It should have zero effect. As a buyer, you should calculate your net expenses for a purchase. It makes no difference how it's broken down. If I'm willing to pay $1000 for a coin it doesn't matter if it's $1000 straight up or $200 plus $800 in various costs/fees... Either way I'm paying $1000 for the same object.
The only potential consideration would be what your cost would be selling the item. If you had to sell the item on the same venue at the same price what's going to be the haircut you take.
@keets - lost the "quoting >> @jwitten" electrons somewhere along the line. Your tendencies towards rationality have been noted
While you and I might value the processes of the hero of Robert Heinlein's "The Smartest Man in the World", the productions of @jwitten's neurons are, based on newly emerged evidence, somewhat suspect, though vitiated by his estimable appetite for crust.
@MFeld - based upon our (up until now generally pleasant) long association, you surely know how gratuitously cruel and painful such utterances can be, especially in such an instance as when they might be true. As was shown in the (sigh) previous paragraph. Well played
I must be doing something wrong as buyers fees and auctions don’t bother me. 94% of the time I enter my max bid and then watch Real Housewives with my wife. The auction house either sends me an invoice or they don’t. Either way I know what I was willing to spend all fees included.
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 must be doing something wrong as buyers fees and auctions don’t bother me
has Jessup ever tried to eat YOUR lunch??
No but we went out to dinner once and he ate a French Fry off my plate
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......
True recent story. My wife and I drove up to Monecito for our anniversary. We ate at Lucky’s which is the premier steak house there. Sitting across from us was Ivan Reitman (Director of Animal House/ Ghostbusters etc). Next to him was Molly Shannon from SNL who my wife has worked with. So I’m taking to my wife about all that famous people who graced SNL and asked her who she liked better. Steve Martin or Bill Murray. She answers Steve Martin.
Six minutes go by and we look up and Steve Martin is standing in front of us. Without saying a word in one sweeping motion he snatches an onion ring off of my plate and eats it. I inform him it’s gluten free which seemed to delight him as he reached down and ate another. We had an awesome conversation and then he scooted away and left.
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......
It could be a short-term stimulus, but I see no reason why removing these fees would help the real factors influencing price declines: aging collector demographics and shrinking collecting base. Younger potential collectors don't necessarily have less of an "appreciation for history", they have reduced buying power, student loan debt, and a desire for financial independence, none of which encourage them to spend whatever discretionary income they might have on coins.
**_The buyer premiums and the shipping nonsense is too high.
Dealers can't move a coin at the prices realized and you're giving 20% plus? No Brainer back to 10% max.
Ever try to sell a coin from an auction and have the dealer research the coin for just an extra minute to find
it came from an auction and then He wants to remove the auction fees and buy for 20% back? No matter how
nice your coin is.
Coins are unsustainable and getting more so
Further look at the up and coming population of potential collectors 20 to 40 years old. They see this as folly._**
Would it rejuvenate the coin market if Steve Martin delivered our coins?
Should this be a poll?
I'd rather not throw my money away.
Never used one & doubt I ever will.
Did get a couple of massive rips off Heritage though.
Feel bad for the idiots that listed them.
Doubt I would have had the stomach to do it face-to-face.
My Saint Set
Just about pulled the trigger on a $3,300.00 Gold Medal last night. Coin is priced $150 under spot. Then the thought hit me. How will I sell this? This is the same thought I ask myself for every coin I look at over about $500.00 now.
Backed out and went to bed. This is the same action I took with the last 20 coins I liked and would have purchased. I backed out and went to bed.
"Everything is on its way to somewhere. Everything." - George Malley, Phenomenon
http://www.american-legacy-coins.com
No - the return of well heeled hot to buy wanna bulk it up investors is needed. Just go to eBay - it has no buyers fees
The market has shifted to buyers looking for nice silver and gold coins close to melt whether slabbed or raw - modern, world, or Classic.. Many US numismatic coins seem to be stuck in deep freeze or downward steady slide. Look at how Walkers, Dollars, and Commems have fallen in the sheet this year, a tremendous capitalization of material. I recently bought an NGC MS65 Peace Dollar off the Bay for $69 and at recent show some PCGS MS63 generic $20 Libs for $1440 each! 65 Walkers bid at$75, and Morgan’s in 65 at $96 bid abound.
If auction site has high 20 pct buyers fees have no use for it. eBay is kicking their rear end lol.
Nothing wrong with that. I do a lot of consideration over $500 as well. But I'm also wondering if I should lower that threshold to say $100-150.
No. Because the BP (or auctioneer's fee) has always been a cut above. When we break it down to all those making money in the chain .... that premium is honestly what true collectors (or dealers) must pay for acquisition. The little, middle guys are still doing the brunt of the work, in the end.
``https://ebay.us/m/KxolR5
See how easy? You don't even have to do the math. It's then really simple:
If you want to pay $800 for the coin - DON'T BID!
If you want to pay $980 for the coin ($20 shipping) - BID!
I believe auction history should show what the buyer paid (winning bid plus buyers fee).
That's what ...I... have always said. What kinda nut would suggest anything else?
The cost of selling is usually not understood by new collectors. They often think in terms of "for sale by owner" with no commissions. For a while Legend was running basically lower priced monthly CAC coin auctions with a simple 10% buyer's premium and no seller's commission. Apparently that business model did not work out and the program was dropped. Currently, Great Collections charges 10% buyer's premium as long as a credit card is not used for payment and a 5% sellers commission for coins under $1000. Coins over $1,000 have no seller's commission. Both auction houses did not utilize paper catalogues and the auctions strictly on-line. Other major auction houses start with a 20% seller's commission AND a 20% buyer's commission. Basically these fees are charged to cover the cost of highest quality printed catalogues, travel to major shows to provide viewing and live audience auctions. If the items are important enough, the seller's commissions are reduced; but, this is rarely offered to lesser collections. So one buys a coin at auction, bids $100 hammer plus $20 commission or $120 net and then sells the same coin for $150 hammer less $30 commission or $120. While some collectors have not experienced selling through auctions, it is a sobering experience to realize one needs to see 50% appreciation in the hammer price to breakeven. If major auction houses lower their commissions for the average collectors by finding ways to reduce their expenses, that could encourage new collectors become serious collectors.
While your math is solid, the problem is the idea that $100 coin should ever be sold through a major auction house.
On a $100 coin, you're going to pay a $10 premium plus shipping at GC. Then when you sell it, you're going to not realize the $10 premium + $5 SP + $5 setup fee, not to mention two sets of shipping costs. But ignoring shipping, you are at $30 in total fees.
At Stack's or Heritage, you are at $50 in fees.
eBay is the best bargain only $10 in total fees.
So, in fact, $100 coins belong at eBay or BST or your local B&M.
When you are talking $1000 coins, the numbers change. You can probably get 0% Seller's Premium from the major houses and GC which reduces the percentage paid. At GC, you have $200 in total fees. At Heritage or STack's you are at $400 in total fees.
On a $10,000 coin, you can probably get negative 10% from Stack's or Heritage which moves the needle even more.
BUT, BUT BUT, there is soooo much more that goes into it. There's a big difference between throwing a coin on eBay and having a coin at a Heritage ANA auction. It's final price realized, not percentage of fees paid.
Everyone wants to be a dealer or be at auction hoping for a "win". For a LOT of coins, the most efficient way to buy and sell is directly to a trusted dealer where there is probably only a 10% bid/ask spread.
People are always looking for profitable business opportunities that have been overlooked. I would be surprised if your scenario hasn't been considered already.
Yes, I'm not sure why people think that billion dollar businesses would know less about their business than amateurs. And I'm not sure why the amateurs think that the billion dollar businesses got that way by making decisions that ran counter to their own interests.
Collectors are only looking at the coin. They are not looking at the total costs of the business. Selling a $100 coin on a $5 GROSS margin is probably impossible.
It's interesting how often these businesses are called greedy by collectors who want them to lower their fees so that the collector can get more money when he goes to sell his coins.
It's unfortunate that I used a simple $100 amount to make my point. I probably should have used $1,000 for my example.
I have actually sold four figure coins and five figure collections and no one has offered or was willing to reduce or eliminate the seller's commission unless it was already part of their published fee schedule. I gave the Legend example of a firm who tried to offer lower commissions and discontinued the practice within a short period of time. It costs money to run auctions.
Great Collections appears to be succesful by limiting itself to simple online postings.
I believe it is misleading to claim one can sell average coins "... directly to a trusted dealer where there is probably only a 10% bid/ask spread." And there is a lot of work a collector needs to do to sell coins on ebay. The major auction houses continue be be successful because old time collections have been very profitable for their owners. Going forward in a flat market it's difficult for new collectors to see the investment value of coins with today's auction fee schedules.
. Going forward in a flat market it's difficult for new collectors to see the investment value of coins with today's auction fee schedules.
Well, this is part of the problem. I don't believe that collectors should think that there is ANY investment value in coins. It's a hobby, not an investment.
Even bullion. If you want to invest in bullion, physical gold is not the most cost effective way to do so. I can trade 5000 ounces of silver or 100 ounces of gold with a $6 buy/sell transaction cost. Try and do that with physical gold or silver. People "invest" in silver eagles by buying the new year's issue at $3 over spot. Good luck with that.
Even for widgets, there's at most a 20% bid/ask spread on even raw coins. [Obviously, some "trusted dealers" can't be trusted.] Coin margins suck, generally speaking.
You are correct that auctions are not cost effective for trading the majority of coins. But it has always been that way. And it is true of most collectibles including art, cars, etc. That's why, in part, it is a hobby not an investment.
As for the seller's premium, I've never consigned a $1000+ coin and had to pay a seller's premium. I always ask and they always offer to waive it. I've never gotten negative seller's premiums, but I do know volume dealers I could consign through who get a standard negative 5%.
To make it in the coin biz it takes cost plus about 40 pct. So if a coin Is $260 CPG / $200 bid I need buy it right at $185 or below. Otherwise no interest / market in downward steady slide with bids dropping......no incentive be high payer. Just smash mouth ball lol.
I usually aim for 20%. I'd love 40% LOL, but it's impossible to buy most saleable coins at that deep a discount. Of course, at 20% after eBay + shipping eats 10 or 12%, my net margin is single digits. Of course, that's why I don't quit my day job!
I think the biggest problem in a down market is that people feel little urgency to buy anything. They just assume that it'll be cheaper in 6 months.
I knew a guy who had a comic book store. We talked business. He said: if something's not selling, raise the price. LOL. There is something to that. It is the reason that the Fed has an inflation target. If you feel like prices are rising, you jump in before the price goes down. If you feel like prices are dropping, you wait as long as you can to get it as cheaply as you can.
P.S. If there's a China trade deal and PMs drop, I wonder if it will create an enhanced slide to the coin market. I sometimes feel like the only thing keeping the whole thing afloat right now is the run-up in PMs.
Yes many of us joking at a show does anyone actually make money in the coin business. An informal poll indicated nobody would be quitting their day job.
I assume this poll is among collectors? Dealers have coins as their day job so it wouldn’t make sense to quit.
My informal poll was between fellow dealers set up at show with me. For many coins a sideline, sch c tax shelter, finance another hobby, or extra income supplement their job or pension / social security.
Yes many in here like deer in the headlights have naive concept about market, green on playing other side of ball (selling), wealthy, or just possibly manipulated by some fad. Wake up and smell the coffee and look at Pcgs 3000 index graph last 5-10 years. Or develop your own index like I have which reflects a hypothetical 200 k investment 50 / 50 between gold &silver and Walkers, Dollars, Commems.
Before a show I will go thru my graded inventory I am taking to the show and on about 10 pct of them put sticker w price in red say just 10 pct over bid or even as low as $5 over cost. The canary in the mine concept.
Are these mostly part time dealers that don’t depend on coins for a living?
I wonder how many had a decent online presence with great photos.
It’s even harder to get a tax deduction with the elimination of the 2% rule.
Certainly, there are plenty of people for whom dealing in coins is their only source of income, but I know that at least five of the dealers that set up at the local show here have day jobs, one has since retired and gone into coins full time. As well, I am quite familiar with a larger well known coin business where the owners have outside businesses that they devote a majority of their time to.
I think the mechanics of coin dealing are poorly understood by a significant number of collectors.
I think understanding coin dealing is easier you think about where dealers source and sell their coins.
There are a few dealers that post online about their business, including sourcing coins, which can help. EOC and Legend come to mind. I believe EOC said he sources mostly or all online and Legend posts about how they source coins.
I don't understand the mechanics of smaller dealers that set up at shows and have day jobs. I don't do part-time dealing, but, if I did, I would probably lean heavily towards online.
Honestly, a lot of dealers are part-timers. And among the full-timers, don't underestimate how much of their operation is kept afloat by scrap and the like. Margins on scrap are horrible, but VOLUME VOLUME VOLUME!
Yeah, I understand this now. I can see how it's difficult to make money part-time given the high transaction fees. It seems like the following can help:
Honestly, neither EOC or Legend are typical of most dealers I know.
EOC is in a collecting niche where it is easier for him to buy coins at auction and then mark them up and resell them. That is MUCH harder to do if you are selling type coins as the bid/ask spread is less than the shipping cost from the auction house.
Legend is one of the top 5 (?) houses at this point.
Most dealers rely on shows and over-the-counter purchases and sales of generally lower value, lower margin material.
If you wanted to go into a retail business, coins would be among the LAST you would choose. The margins are too tight. And in the modern period, you can't even rely on things like supplies and annual coin sets to boost the bottom line. 30 years ago, there wasn't an internet so you bought your blue books and price guides locally. That matters a lot because supplies are typically one of those things you can buy in bulk with a 40% (or more) margin.
The online store has performed better for me but I love the excitement of the bourse at shows even though many times not clearing enough make show expenses. I have had many show buys sell at retail from online store within a week after a show. Much of this material bought from other dealers before show opens to public.
I view shows like a TE in a smash mouth offense like a guy who is a good edge sealant - not gonna catch many balls making many yards but super blocks knocking defenders out of the play so speedster back can break one for big score.
This is true in some ways, but being focused and selective is easier for a part-timer. A full-timer needs to be buying and selling constantly or they don't eat.
There are not a lot of areas where you can make a substantial mark up. Certainly almost no U.S. coins other than maybe errors and some exonumia. The internet squeezes margins even more and also allows people to move material without going to a dealer.
Pick any coin with a reasonable mintage and ask yourself how easy it would be to buy it and mark it up 30% or 40%.
Let's say I have a coin with a $100 value in the price guide. Unless I have a blind widow, everyone looking to sell it will know the price guide says $100. If I offer $60, how many people will think that's a reasonable offer? How many people who saw the same coin selling for $100 on the internet would think I was anything but a crook? And I can't very well mark the coin over $100 or someone will find another one on the internet for $100 to buy.
The only place you will get margins is things that don't have clear price guides (errors, some exonumia) and/or things that come up so infrequently that finding another example is challenging.
I would also point out on this thread itself, almost everyone on here thinks the 30% BP+SP is EXORBITANT!!! People are arguing that they should be able to trade coins on a 10%ish margin. Therein lies the dealer problem.