@BAJJERFAN said:
How would removing the buyer's premium rejuvenate that part of the market that isn't connected to auctions?
well, if access to major auctions were free, would there be any other market segment? [Mostly sarcasm.]
I think a lot of it depends on what you collect. If you collect Mint State Early Dollars, virtually everything you buy is from an auction. If you buy raw Morgan dollars, virtually everything you buy is over the counter. To the 1st group, you don't much consider the over-the-counter market to be important or significant. To the 2nd group, you don't consider the auction market to be that important.
There are also people who will ONLY buy at auction because they view auctions as "fair" pricing and dealers as crooks. Some people actually think of auctions as "wholesale" and dealers as "retail". I run into those people all the time at a local auction house and wonder why they pay $45 + 10% BP for a raw UNC Morgan $ and think that's wholesale, but never notice that the local B&M has them for under $40.
I think a LOT of the people on this board are NOT typical of the majority of collectors. I know lots of collectors who have never spent more than $50 on a coin. I know collectors who own only 1 or 2 slabs in total. Those people don't make up the majority of $s spent in the market, but they make up the majority of transactions in the market.
@cohodk said:
Auction markets are ripe for disruption, as are other "high fee" ventures such as real estate transactions. Expect fees to collapse over the next 20 years.
Disagree.
Considering the fee structure of The Great Disrupter (Amazon) is also 20+%, I'm not sure who is going to disrupt the Disrupter.
You (as in we) will. And its already started. This thread is proof.
This thread is proof of nothing of the sort.
This thread proves people like to complain. This thread proves people don't understand business.
People think coins should somehow be different and not subject to the rules of commerce. They are not. It costs money to run a business.
Can they cut costs? Sure. But it will hurt business.
Collectors are not in the business of keeping dealers in business. And the squeaky wheel gets the grease. The current business model has about a generation (probably less), before it too succumbs to changing demographic trends. Resistance is futile.
@jchanging demographic trends. Resistance is futile.
PS--I never mentioned zero fee.
You didn't mention a zero BP, but the thread has.
There are other distribution methods already in place. Dealers, eBay, Instagram, Facebook. Each has a place and each has its problems.
Over a generation, I'd be less worried about the BP dooming the auction market and more worried about a decreasing collector base dooming the entire hobby.
Okay, let's go with a 45% ...buyer.... fee.
Then the collections will flood in as there is no cost to sell.
The buyers will flex their superior mathematical skills and know what they want to bid for coins they "can't live without" and go merrily on their way ignorant or unmindful that their cost to ...try... for the thing is going to be split with sellers to induce listing in the first place.
Just hope that eBay doesn't start something like an "eBay ELITE" for coins $5,000 and up where the seller would pay ALL the costs.
Of course how could eBay ....EVER... get the word out and get publicity for their auctions?
@topstuf said:
Okay, let's go with a 45% ...buyer.... fee.
Then the collections will flood in as there is no cost to sell.
The buyers will flex their superior mathematical skills and know what they want to bid for coins they "can't live without" and go merrily on their way ignorant or unmindful that their cost to ...try... for the thing is going to be split with sellers to induce listing in the first place.
Just hope that eBay doesn't start something like an "eBay ELITE" for coins $5,000 and up where the seller would pay ALL the costs.
Of course how could eBay ....EVER... get the word out and get publicity for their auctions?
(especially with no fancy catalogs)
Sarcasm aside, a 45% BP wouldn't change anything. There are 3 sides to the transaction. Cost to buyer. Remuneration to seller. Vig to house. Changing the BP and SP really don't change the equation at all if the house big is unchanged. Buyers will only pay a TOTAL amount commensurate with their sense of value. Consignors will only consign if they get paid what they consider fair remuneration
If a buyer wants to pay 1000, whether that's 800 +200 or 1000 doesn't matter. That really isn't that complicated. And if a seller wants 800, it doesn't matter whether it's 809 or 1000-200.
Changing the house big is the only thing that narrows the gap and no one has yet demonstrated that they could successfully do it and not go bankrupt.
It is also a mistake to focus on the percentage paid when it is the absolute cost number that matters. As a seller would you rather have 80% of 1000 or 100% of 500?
SOPHISTICATED sellers will place material where it gets the most dollars into their pocket, not where they pay the lowest fees. Those are not always the same thing.
It is higher prices which increases interest. The tacked on fees at the end serve the auctioneer or "house" but do nothing to help buyers in lowering cost.
While it may discourage many of us from participating, these records (higher prices) grow our hobby. Because the last generation always says ; "man, I should have held onto THAT coin.
Strong hands vs. weak hands.
I honestly think we (the majority) are priced out of many coins, anyway.
When 20% is 30% .... well that's what most auctioneer's charge (the seller)
I believe I misunderstood this thread since inception.
Perhaps the original question was.... if There was a much smaller vig then when I sold and my losses were less would I be tempted to buy more?
This leads me into the question of whether a mythical index of coins was rising by 7% a year would a 15% or 20 % vig matter.
IMO : the lessening interest in coins has led to stagnant/falling prices. Stagnant and falling prices = less demand. Then we face the auction fees rising structure taking away more of our net. Thus, if a buyer loses less would the market open itself up to more players? If a casino lowered it's vig would more people play the game of chance?
TwoSides2aCoin says "While it may discourage many of us from participating, these records (higher prices) grow our hobby." and half an hour later, jkrk says "IMO : the lessening interest in coins has led to stagnant/falling prices. Stagnant and falling prices = less demand."
@jkrk said:
I believe I misunderstood this thread since inception.
Perhaps the original question was.... if There was a much smaller vig then when I sold and my losses were less would I be tempted to buy more?
This leads me into the question of whether a mythical index of coins was rising by 7% a year would a 15% or 20 % vig matter.
IMO : the lessening interest in coins has led to stagnant/falling prices. Stagnant and falling prices = less demand. Then we face the auction fees rising structure taking away more of our net. Thus, if a buyer loses less would the market open itself up to more players? If a casino lowered it's vig would more people play the game of chance?
You can sell any coin with zero vig.
You pay the vig because of what you get for the commission.
SOPHISTICATED sellers will place material where it gets the most dollars into their pocket, not where they pay the lowest fees. Those are not always the same thing.
I would change “SOPHISTICATED sellers will place” to “SOPHISTICATED sellers will try to place”, but the point made by jmlanzaf is extremely important and unfortunately, one which is lost on many sellers. Said another way, what counts is what the seller nets, not the commission rate.
Mark Feld* of Heritage Auctions*Unless otherwise noted, my posts here represent my personal opinions.
@jkrk said:
I believe I misunderstood this thread since inception.
Perhaps the original question was.... if There was a much smaller vig then when I sold and my losses were less would I be tempted to buy more?
This leads me into the question of whether a mythical index of coins was rising by 7% a year would a 15% or 20 % vig matter.
IMO : the lessening interest in coins has led to stagnant/falling prices. Stagnant and falling prices = less demand. Then we face the auction fees rising structure taking away more of our net. Thus, if a buyer loses less would the market open itself up to more players? If a casino lowered it's vig would more people play the game of chance?
You can sell any coin with zero vig.
You pay the vig because of what you get for the commission.
Sure you can. If I understand your point.... The seller would rather pay a 20% vig if he nets a greater amount than paying a -0- vig? No problem.
If I accept that as fact (and I don't doubt it) then I agree that lowering the vig will not encourage activity (I do agree). No problem.
The NYRA was in a similar situation a number of years ago and lowered the vig in an attempt to spur activity. In the short term there was more activity, but in the end it's product was dying so their attempt to lower fees was relatively meaningless.
That's where I think the hobby is.
Lowering the vig is not the answer to increased participation. Persistently rising prices would be the draw.
@jkrk said:
I believe I misunderstood this thread since inception.
Perhaps the original question was.... if There was a much smaller vig then when I sold and my losses were less would I be tempted to buy more?
This leads me into the question of whether a mythical index of coins was rising by 7% a year would a 15% or 20 % vig matter.
IMO : the lessening interest in coins has led to stagnant/falling prices. Stagnant and falling prices = less demand. Then we face the auction fees rising structure taking away more of our net. Thus, if a buyer loses less would the market open itself up to more players? If a casino lowered it's vig would more people play the game of chance?
You can sell any coin with zero vig.
You pay the vig because of what you get for the commission.
Sure you can. If I understand your point.... The seller would rather pay a 20% vig if he nets a greater amount than paying a -0- vig? No problem.
If I accept that as fact (and I don't doubt it) then I agree that lowering the vig will not encourage activity (I do agree). No problem.
The NYRA was in a similar situation a number of years ago and lowered the vig in an attempt to spur activity. In the short term there was more activity, but in the end it's product was dying so their attempt to lower fees was relatively meaningless.
That's where I think the hobby is.
Lowering the vig is not the answer to increased participation. Persistently rising prices would be the draw.
I agree almost completely with this. I would only add that changing expectations would also help. If you are trying to be a dealer or investor, you are more easily disillusioned. If you are buying simply to enjoy, you don't much care about the cost of flipping.
@topstuf said:
I probably could also have worded it:
If all coin purchases were tax deductible and non taxable if any profit is realized on sale, would it rejuvenate the entire coin market?
well, you're asking a lot there. LOL Coins are both tax deductible and non-taxable? I don't think you can have both. If they are tax exempt, they wouldn't be deductible.
All kidding aside, if that's the direction you're going, why not just say it:
Q: If it were easy to make money on coins, would more people buy coins.
A: Yes.
But I'm not sure any of the games you want to play with BP etc. necessarily get you where you want to go. For example, all costs are really paid by the seller. So if you move the BP to the SP, it doesn't make the coin flip more profitable.
So, stop me if I'm misinterpreting: what you really want is DECREASED COSTS of transactions.
Now, that is a complex equation. We already have zero cost venues but they have limited utility. You also have the Collector's Premium: just because you want to pay $1000 for that MS62 1922 Peace $ toner doesn't mean anyone else does, other than the underbidder at $900 who may not get to $900 if you were the only 2 bidders above $200.
Let me change the question around completely: Would it rejuvenate the coin market if there were NO slabs? After all, slabbing costs money and I could sell you a raw S-VDB for less than a slabbed S-VDB. Would YOU pay the SAME for the two coins? I'll answer for you: no you wouldn't because the guarantee of authenticity and certified grade have VALUE ADDED. And, in fact, a dealer will pay you more for a slabbed S-VDB than a raw one because you've removed all his risk.
It's different, you say? It's not different, I reply.
No one has to ever pay a BP. No one has to ever pay a seller's premium. No one ever has to pay a bid/ask spread. You can do all of your transactions face-to-face with other collectors at coin clubs: no shipping fees, no payment processing fees, no vig of any kind. It is the cheapest way to transact and it has existed as a vehicle for transactions for over 100 years.
So, given that I have an absolutely ZERO COST way of buying and selling coins, why do auction houses exist and prosper with a 20-25% vig? The answer, my friend, is value added. They enhance the collecting experience by finding material, cataloguing material, and advertising material. By virtue of their reach and reputation they get coins in front of more eyeballs than any coin club, realizing higher prices for their consignors. They get better material in front of collectors.
You aren't just removing the vig, you are removing the value added. And it is not clear that would be a positive influence at all. It might even be a big negative.
@jmlanzaf said:
No one has to ever pay a BP. No one has to ever pay a seller's premium. No one ever has to pay a bid/ask spread. You can do all of your transactions face-to-face with other collectors at coin clubs: no shipping fees, no payment processing fees, no vig of any kind. It is the cheapest way to transact and it has existed as a vehicle for transactions for over 100 years.
Inevitably, the response: "But I don't know who the buyers are, who will pay me the most money."
Unsaid: "I want somebody to spend the time and money necessary to locate them. At no cost to me."
@jmlanzaf said:
No one has to ever pay a BP. No one has to ever pay a seller's premium. No one ever has to pay a bid/ask spread. You can do all of your transactions face-to-face with other collectors at coin clubs: no shipping fees, no payment processing fees, no vig of any kind. It is the cheapest way to transact and it has existed as a vehicle for transactions for over 100 years.
Inevitably, the response: "But I don't know who the buyers are, who will pay me the most money."
Unsaid: "I want somebody to spend the time and money necessary to locate them. At no cost to me."
Yup. That is the value added. It's the same with eBay. People want eBay eyes and eBay services but think that 10% is too high a premium to pay. They don't mind paying more than 10% to a farmer to grow their food, more than 10% to their grocer to get the food to them, and sometimes even 20% to the waiter who delivers the cooked food to them. But 25% to place a coin in a major auction at a major show and on a website with millions of eyeballs...OUTRAGEOUS!
In the 1970's and early 1980's, collectors were encouraged by auction house commissions of a flat 20% to the seller and no buyer's commission. Over time those commission have increased to today's levels. It's understandable that an outright purchase of a collection by a dealer, who is tying up his money, will result less to the seller. Auction fees of 20% gave a collector a reasonable chance of making a profit. That was the attraction of auctions. Today's auction fees give no advantage to a seller over an outright sale to a dealer in spite of the fact the auctioneer does not need to tie up funds in inventory until a lot is sold.
A dealer buys a coin for $4000 and being a scarce variety, consigns the coin to a major auction house. He pays no seller fee, but the house charges a 20% buyer fee.
His $4000 coin hammers at $5000 and with the vig realizes $6000.
The $1000 "buyer" fee would represent 50% of his profit.
@Coinstartled said:
Let's expand the discussion a bit.
A dealer buys a coin for $4000 and being a scarce variety, consigns the coin to a major auction house. He pays no seller fee, but the house charges a 20% buyer fee.
His $4000 coin hammers at $5000 and with the vig realizes $6000.
The $1000 "buyer" fee would represent 50% of his profit.
Sure. I'm not sure what this means though.
Dealer still made a robust 25% profit.
Dealer would NOT have made a robust 25% profit without the value added of the auction house. If dealer could have gotten $5000 to $6000 on his own, presumably he would have.
I will gladly pay you 50% of my profit if you can increase my profit enough to justify it.
Yup. That is the value added. It's the same with eBay. People want eBay eyes and eBay services but think that 10% is too high a premium to pay.
Ebay used to be 3% remember? Ebay is a technology platform, not an auction house, the seller does all the work. Auction houses have always had their higher fees - although rising some in recent years. The auction house was the print marketing version of Ebay. These costs made perfect sense. Today with the internet? Does it now? The issue isn't about "complaining", but about continued participation in the hobby. Does it make financial sense for the collector, even for those collectors who are absolutely passionate about numismatics given the rising transaction costs (now throw in state sales tax)?
complaining is fruitless, this is the state of the market as it is. The question this thread poses is: are transaction costs hurting/inhibiting the hobby? I dunno for others, but I can say with absolute certainty that it has for me.
They don't mind paying more than 10% to a farmer to grow their food, more than 10% to their grocer to get the food to them, and sometimes even 20% to the waiter who delivers the cooked food to them. But 25% to place a coin in a major auction at a major show and on a website with millions of eyeballs...OUTRAGEOUS!
Comparing fundamental life necessities to coin collecting? I think you know the answer to this. The former I need for life, the latter just delays my ability to retire.
Yup. That is the value added. It's the same with eBay. People want eBay eyes and eBay services but think that 10% is too high a premium to pay.
Ebay used to be 3% remember? Ebay is a technology platform, not an auction house, the seller does all the work. Auction houses have always had their higher fees - although rising some in recent years. The auction house was the print marketing version of Ebay. These costs made perfect sense. Today with the internet? Does it now? The issue isn't about "complaining", but about continued participation in the hobby. Does it make financial sense for the collector, even for those collectors who are absolutely passionate about numismatics given the rising transaction costs (now throw in state sales tax)?
complaining is fruitless, this is the state of the market as it is. The question this thread poses is: are transaction costs hurting/inhibiting the hobby? I dunno for others, but I can say with absolute certainty that it has for me.
Ebay and auction houses aren't the only venues. B&Ms and coin clubs have been around way longer than Ebay.
How is transacting at B&Ms and coin clubs (including BST) these days?
Yup. That is the value added. It's the same with eBay. People want eBay eyes and eBay services but think that 10% is too high a premium to pay.
Ebay used to be 3% remember? Ebay is a technology platform, not an auction house, the seller does all the work. Auction houses have always had their higher fees - although rising some in recent years. The auction house was the print marketing version of Ebay. These costs made perfect sense. Today with the internet? Does it now? The issue isn't about "complaining", but about continued participation in the hobby. Does it make financial sense for the collector, even for those collectors who are absolutely passionate about numismatics given the rising transaction costs (now throw in state sales tax)?
complaining is fruitless, this is the state of the market as it is. The question this thread poses is: are transaction costs hurting/inhibiting the hobby? I dunno for others, but I can say with absolute certainty that it has for me.
They don't mind paying more than 10% to a farmer to grow their food, more than 10% to their grocer to get the food to them, and sometimes even 20% to the waiter who delivers the cooked food to them. But 25% to place a coin in a major auction at a major show and on a website with millions of eyeballs...OUTRAGEOUS!
Comparing fundamental life necessities to coin collecting? I think you know the answer to this. The former I need for life, the latter just delays my ability to retire.
Necessity or not, there is a cost to doing business. [You NEED a waiter?] The point is that we pay for services, whether necessary or not. I could just has easily have used golf clubs, greens fees, golf lessons, golf balls etc. to illustrate the fact that we HAPPILY pay more than 20% for the value added of each of those suppliers.
As for eBay at 3% vs. eBay at 9% fees (6%+3% PayPal). When eBay was 3%, it didn't supply a payment platform which is 1/3 of the cost of the eBay platform. At 3%, eBay didn't have shipping labels with commercial discounts built in. At 3%, eBay didn't have any of the business services it has available now. At 3%, eBay didn't have as mane eyeballs as it does now.
Is eBay worth it at 10%? Depends on what it is and what the other options are. It is MUCH MUCH MUCH cheaper than opening a B&M store for most things, although the incremental cost model is different than it is in more fixed cost B&M environment.
Is Heritage/Stack's worth it at 20-30%? Again, depends on what it is and what the other options are.
But it is not 20% given in return for nothing. It is 20-30% given in exchange for something. If you don't value that something, don't pay it. If you do, you should gladly pay it an move on.
The same applies EVEN to groceries. You can get in your car and drive to the farm and buy direct. Is it worth it? You can plant your own garden or buy your own farm for that matter. Is it worth it?
Ebay and auction houses aren't the only venues. B&Ms and coin clubs have been around way longer than Ebay.
How is transacting at the B&M and coin clubs (including BST) these days?
Depends on what it is. As I've said repeatedly in this forum: not every coin belongs in every place.
If you've got a common date Morgan $ in an MS64 holder, it is INSANE to send it to Heritage or Stack's or GC (fees for a $50 coin run 25%). It is marginal on eBay. It may best be sold on BST or even your local B&M.
If you've got a 5 or 6-figure coin, it is doubtful that BST or coin club is the place to sell it. Your local B&M, unless it deals in such high figure coin is highly questionable. A weekly GC auction is possible but probably not likely to garner the visibility of Heritage or STack's, but the cost would be the same in all 3 venues. On a big coin like that, you are still at 10% on GC, but you can likely get 110% at Heritage or Stack's which puts you at the same ballpark. For a 6-figure coin, you might be able to get 115% which would make Heritage or Stack's cheaper than GC, unless Ian is willing to bribe you similarly.
And, if you want to throw in more complexity, some volume dealers get automatic 105-110% of hammer at the big houses. So, you could quite possible (I know 2 people who would do it) get 103-107% from those dealers by simply consigning through them.
@Coinstartled said:
Let's expand the discussion a bit.
A dealer buys a coin for $4000 and being a scarce variety, consigns the coin to a major auction house. He pays no seller fee, but the house charges a 20% buyer fee.
His $4000 coin hammers at $5000 and with the vig realizes $6000.
The $1000 "buyer" fee would represent 50% of his profit.
Sure. I'm not sure what this means though.
Dealer still made a robust 25% profit.
Dealer would NOT have made a robust 25% profit without the value added of the auction house. If dealer could have gotten $5000 to $6000 on his own, presumably he would have.
I will gladly pay you 50% of my profit if you can increase my profit enough to justify it.
Perhaps he could have gotten $6000 on his own but expected $9000 via the auction route. We have all seen fails.
@jmlanzaf said:
Necessity or not, there is a cost to doing business. [You NEED a waiter?] The point is that we pay for services, whether necessary or not. I could just has easily have used golf clubs, greens fees, golf lessons, golf balls etc. to illustrate the fact that we HAPPILY pay more than 20% for the value added of each of those suppliers.
I am a business owner, I understand the cost of business. I don't eat out (well, rarely) and I don't golf. If others do, I give you a big thumbs up. Again, Ebay is a technology platform. Ebay is a also a large, very profitable publicy traded corporation. They can charge what the market will bear and the participants can elect to stay or leave. I have left. Others too. Anyone notice that coin prices are dropping? Is this the result of higher transaction costs and/or other market factors? Do you know how much is due to rising transaction costs? I don't but, I imagine it plays a part.
As for eBay at 3% vs. eBay at 9% fees (6%+3% PayPal). When eBay was 3%, it didn't supply a payment platform which is 1/3 of the cost of the eBay platform. At 3%, eBay didn't have shipping labels with commercial discounts built in. At 3%, eBay didn't have any of the business services it has available now. At 3%, eBay didn't have as mane eyeballs as it does now.
Is eBay worth it at 10%? Depends on what it is and what the other options are. It is MUCH MUCH MUCH cheaper than opening a B&M store for most things, although the incremental cost model is different than it is in more fixed cost B&M environment.
Ebay is probably the best venue for the small collector / dealer to sell coins no doubt, but if the overall transactions costs continue rising - no matter what the rationale - then collectors decide to continue on to leave the hobby. That is the nature of the discussion here, not whether auction venues "should" charge and what is "fair".
Is Heritage/Stack's worth it at 20-30%? Again, depends on what it is and what the other options are.
But it is not 20% given in return for nothing. It is 20-30% given in exchange for something. If you don't value that something, don't pay it. If you do, you should gladly pay it an move on.
The ultimate option is to opt out. Hence, the whole premise of this thread.
The same applies EVEN to groceries. You can get in your car and drive to the farm and buy direct. Is it worth it? You can plant your own garden or buy your own farm for that matter. Is it worth it?
Back to necessities vs discretionary. Just by changing your dietary habits you can spend a fraction of what others pay and eat healthier. There is also the time value. My time is worth a lot. Planting a garden to save money or driving to the farm costs me more than it saves. This is not true with coins. Leaving just saves me in every which way.
@jmlanzaf said:
Necessity or not, there is a cost to doing business. [You NEED a waiter?] The point is that we pay for services, whether necessary or not. I could just has easily have used golf clubs, greens fees, golf lessons, golf balls etc. to illustrate the fact that we HAPPILY pay more than 20% for the value added of each of those suppliers.
I am a business owner, I understand the cost of business. I don't eat out (well, rarely) and I don't golf. If others do, I give you a big thumbs up. Again, Ebay is a technology platform. Ebay is a also a large, very profitable publicy traded corporation. They can charge what the market will bear and the participants can elect to stay or leave. I have left. Others too. Anyone notice that coin prices are dropping? Is this the result of higher transaction costs and/or other market factors? Do you know how much is due to rising transaction costs? I don't but, I imagine it plays a part.
As for eBay at 3% vs. eBay at 9% fees (6%+3% PayPal). When eBay was 3%, it didn't supply a payment platform which is 1/3 of the cost of the eBay platform. At 3%, eBay didn't have shipping labels with commercial discounts built in. At 3%, eBay didn't have any of the business services it has available now. At 3%, eBay didn't have as mane eyeballs as it does now.
Is eBay worth it at 10%? Depends on what it is and what the other options are. It is MUCH MUCH MUCH cheaper than opening a B&M store for most things, although the incremental cost model is different than it is in more fixed cost B&M environment.
Ebay is probably the best venue for the small collector / dealer to sell coins no doubt, but if the overall transactions costs continue rising - no matter what the rationale - then collectors decide to continue on to leave the hobby. That is the nature of the discussion here, not whether auction venues "should" charge and what is "fair".
Is Heritage/Stack's worth it at 20-30%? Again, depends on what it is and what the other options are.
But it is not 20% given in return for nothing. It is 20-30% given in exchange for something. If you don't value that something, don't pay it. If you do, you should gladly pay it an move on.
The ultimate option is to opt out. Hence, the whole premise of this thread.
The same applies EVEN to groceries. You can get in your car and drive to the farm and buy direct. Is it worth it? You can plant your own garden or buy your own farm for that matter. Is it worth it?
Back to necessities vs discretionary. Just by changing your dietary habits you can spend a fraction of what others pay and eat healthier. There is also the time value. My time is worth a lot. Planting a garden to save money or driving to the farm costs me more than it saves. This is not true with coins. Leaving just saves me in every which way.
There are no right answers, just choices.
Honestly, I agree with most of this. I'm not sure we really disagree.
Also remember that eBay is under constant pressure from shareholders to increase fees until you scream and leave, then they may have to back off, but until you actually leave (instead of just screaming) those fees HAVE to keep increasing, or the execs there will lose their cushy jobs.
@shorecoll said:
Also remember that eBay is under constant pressure from shareholders to increase fees until you scream and leave, then they may have to back off, but until you actually leave (instead of just screaming) those fees HAVE to keep increasing, or the execs there will lose their cushy jobs.
Shareholders don't need or want higher fees. They are fine with higher volume.
Comments
well, if access to major auctions were free, would there be any other market segment? [Mostly sarcasm.]
I think a lot of it depends on what you collect. If you collect Mint State Early Dollars, virtually everything you buy is from an auction. If you buy raw Morgan dollars, virtually everything you buy is over the counter. To the 1st group, you don't much consider the over-the-counter market to be important or significant. To the 2nd group, you don't consider the auction market to be that important.
There are also people who will ONLY buy at auction because they view auctions as "fair" pricing and dealers as crooks. Some people actually think of auctions as "wholesale" and dealers as "retail". I run into those people all the time at a local auction house and wonder why they pay $45 + 10% BP for a raw UNC Morgan $ and think that's wholesale, but never notice that the local B&M has them for under $40.
I think a LOT of the people on this board are NOT typical of the majority of collectors. I know lots of collectors who have never spent more than $50 on a coin. I know collectors who own only 1 or 2 slabs in total. Those people don't make up the majority of $s spent in the market, but they make up the majority of transactions in the market.
300 - 20% to the house
Collectors are not in the business of keeping dealers in business. And the squeaky wheel gets the grease. The current business model has about a generation (probably less), before it too succumbs to changing demographic trends. Resistance is futile.
PS--I never mentioned zero fee.
Knowledge is the enemy of fear
You didn't mention a zero BP, but the thread has.
There are other distribution methods already in place. Dealers, eBay, Instagram, Facebook. Each has a place and each has its problems.
Over a generation, I'd be less worried about the BP dooming the auction market and more worried about a decreasing collector base dooming the entire hobby.
Okay, let's go with a 45% ...buyer.... fee.
Then the collections will flood in as there is no cost to sell.
The buyers will flex their superior mathematical skills and know what they want to bid for coins they "can't live without" and go merrily on their way ignorant or unmindful that their cost to ...try... for the thing is going to be split with sellers to induce listing in the first place.
Just hope that eBay doesn't start something like an "eBay ELITE" for coins $5,000 and up where the seller would pay ALL the costs.
Of course how could eBay ....EVER... get the word out and get publicity for their auctions?
(especially with no fancy catalogs)
It seems like there are two discussions going on here.
I think the OP is about the first but many of the comments are about the second.
And now look! All the wasted words we carefully posted.
Sarcasm aside, a 45% BP wouldn't change anything. There are 3 sides to the transaction. Cost to buyer. Remuneration to seller. Vig to house. Changing the BP and SP really don't change the equation at all if the house big is unchanged. Buyers will only pay a TOTAL amount commensurate with their sense of value. Consignors will only consign if they get paid what they consider fair remuneration
If a buyer wants to pay 1000, whether that's 800 +200 or 1000 doesn't matter. That really isn't that complicated. And if a seller wants 800, it doesn't matter whether it's 809 or 1000-200.
Changing the house big is the only thing that narrows the gap and no one has yet demonstrated that they could successfully do it and not go bankrupt.
It is also a mistake to focus on the percentage paid when it is the absolute cost number that matters. As a seller would you rather have 80% of 1000 or 100% of 500?
SOPHISTICATED sellers will place material where it gets the most dollars into their pocket, not where they pay the lowest fees. Those are not always the same thing.
It is higher prices which increases interest. The tacked on fees at the end serve the auctioneer or "house" but do nothing to help buyers in lowering cost.
While it may discourage many of us from participating, these records (higher prices) grow our hobby. Because the last generation always says ; "man, I should have held onto THAT coin.
Strong hands vs. weak hands.
I honestly think we (the majority) are priced out of many coins, anyway.
When 20% is 30% .... well that's what most auctioneer's charge (the seller)
``https://ebay.us/m/KxolR5
I believe I misunderstood this thread since inception.
Perhaps the original question was.... if There was a much smaller vig then when I sold and my losses were less would I be tempted to buy more?
This leads me into the question of whether a mythical index of coins was rising by 7% a year would a 15% or 20 % vig matter.
IMO : the lessening interest in coins has led to stagnant/falling prices. Stagnant and falling prices = less demand. Then we face the auction fees rising structure taking away more of our net. Thus, if a buyer loses less would the market open itself up to more players? If a casino lowered it's vig would more people play the game of chance?
TwoSides2aCoin says "While it may discourage many of us from participating, these records (higher prices) grow our hobby." and half an hour later, jkrk says "IMO : the lessening interest in coins has led to stagnant/falling prices. Stagnant and falling prices = less demand."
It's all so confusing.
I...thought... it was simple. HAR!
You can sell any coin with zero vig.
You pay the vig because of what you get for the commission.
How I SHOULD have worded the OP is...........
If you collect coins valued from $1 to $1,000, would you be more inclined to search for them in auctions if there was no fee to bid?
I would change “SOPHISTICATED sellers will place” to “SOPHISTICATED sellers will try to place”, but the point made by jmlanzaf is extremely important and unfortunately, one which is lost on many sellers. Said another way, what counts is what the seller nets, not the commission rate.
Mark Feld* of Heritage Auctions*Unless otherwise noted, my posts here represent my personal opinions.
Sure you can. If I understand your point.... The seller would rather pay a 20% vig if he nets a greater amount than paying a -0- vig? No problem.
If I accept that as fact (and I don't doubt it) then I agree that lowering the vig will not encourage activity (I do agree). No problem.
The NYRA was in a similar situation a number of years ago and lowered the vig in an attempt to spur activity. In the short term there was more activity, but in the end it's product was dying so their attempt to lower fees was relatively meaningless.
That's where I think the hobby is.
Lowering the vig is not the answer to increased participation. Persistently rising prices would be the draw.
I agree almost completely with this. I would only add that changing expectations would also help. If you are trying to be a dealer or investor, you are more easily disillusioned. If you are buying simply to enjoy, you don't much care about the cost of flipping.
I probably could also have worded it:
If all coin purchases were tax deductible and non taxable if any profit is realized on sale, would it rejuvenate the entire coin market?
well, you're asking a lot there. LOL Coins are both tax deductible and non-taxable? I don't think you can have both. If they are tax exempt, they wouldn't be deductible.
All kidding aside, if that's the direction you're going, why not just say it:
Q: If it were easy to make money on coins, would more people buy coins.
A: Yes.
But I'm not sure any of the games you want to play with BP etc. necessarily get you where you want to go. For example, all costs are really paid by the seller. So if you move the BP to the SP, it doesn't make the coin flip more profitable.
So, stop me if I'm misinterpreting: what you really want is DECREASED COSTS of transactions.
Now, that is a complex equation. We already have zero cost venues but they have limited utility. You also have the Collector's Premium: just because you want to pay $1000 for that MS62 1922 Peace $ toner doesn't mean anyone else does, other than the underbidder at $900 who may not get to $900 if you were the only 2 bidders above $200.
Let me change the question around completely: Would it rejuvenate the coin market if there were NO slabs? After all, slabbing costs money and I could sell you a raw S-VDB for less than a slabbed S-VDB. Would YOU pay the SAME for the two coins? I'll answer for you: no you wouldn't because the guarantee of authenticity and certified grade have VALUE ADDED. And, in fact, a dealer will pay you more for a slabbed S-VDB than a raw one because you've removed all his risk.
It's different, you say? It's not different, I reply.
No one has to ever pay a BP. No one has to ever pay a seller's premium. No one ever has to pay a bid/ask spread. You can do all of your transactions face-to-face with other collectors at coin clubs: no shipping fees, no payment processing fees, no vig of any kind. It is the cheapest way to transact and it has existed as a vehicle for transactions for over 100 years.
So, given that I have an absolutely ZERO COST way of buying and selling coins, why do auction houses exist and prosper with a 20-25% vig? The answer, my friend, is value added. They enhance the collecting experience by finding material, cataloguing material, and advertising material. By virtue of their reach and reputation they get coins in front of more eyeballs than any coin club, realizing higher prices for their consignors. They get better material in front of collectors.
You aren't just removing the vig, you are removing the value added. And it is not clear that would be a positive influence at all. It might even be a big negative.
@jmlanzaf do not argue with me. This was MY poll.
Yes, sir
Inevitably, the response: "But I don't know who the buyers are, who will pay me the most money."
Unsaid: "I want somebody to spend the time and money necessary to locate them. At no cost to me."
Yup. That is the value added. It's the same with eBay. People want eBay eyes and eBay services but think that 10% is too high a premium to pay. They don't mind paying more than 10% to a farmer to grow their food, more than 10% to their grocer to get the food to them, and sometimes even 20% to the waiter who delivers the cooked food to them. But 25% to place a coin in a major auction at a major show and on a website with millions of eyeballs...OUTRAGEOUS!
In the 1970's and early 1980's, collectors were encouraged by auction house commissions of a flat 20% to the seller and no buyer's commission. Over time those commission have increased to today's levels. It's understandable that an outright purchase of a collection by a dealer, who is tying up his money, will result less to the seller. Auction fees of 20% gave a collector a reasonable chance of making a profit. That was the attraction of auctions. Today's auction fees give no advantage to a seller over an outright sale to a dealer in spite of the fact the auctioneer does not need to tie up funds in inventory until a lot is sold.
Let's expand the discussion a bit.
A dealer buys a coin for $4000 and being a scarce variety, consigns the coin to a major auction house. He pays no seller fee, but the house charges a 20% buyer fee.
His $4000 coin hammers at $5000 and with the vig realizes $6000.
The $1000 "buyer" fee would represent 50% of his profit.
Sure. I'm not sure what this means though.
Dealer still made a robust 25% profit.
Dealer would NOT have made a robust 25% profit without the value added of the auction house. If dealer could have gotten $5000 to $6000 on his own, presumably he would have.
I will gladly pay you 50% of my profit if you can increase my profit enough to justify it.
Ebay used to be 3% remember? Ebay is a technology platform, not an auction house, the seller does all the work. Auction houses have always had their higher fees - although rising some in recent years. The auction house was the print marketing version of Ebay. These costs made perfect sense. Today with the internet? Does it now? The issue isn't about "complaining", but about continued participation in the hobby. Does it make financial sense for the collector, even for those collectors who are absolutely passionate about numismatics given the rising transaction costs (now throw in state sales tax)?
complaining is fruitless, this is the state of the market as it is. The question this thread poses is: are transaction costs hurting/inhibiting the hobby? I dunno for others, but I can say with absolute certainty that it has for me.
Comparing fundamental life necessities to coin collecting? I think you know the answer to this. The former I need for life, the latter just delays my ability to retire.
Ebay and auction houses aren't the only venues. B&Ms and coin clubs have been around way longer than Ebay.
How is transacting at B&Ms and coin clubs (including BST) these days?
Most of the points made in this thread are valid. I will quibble a bit with the fee structure.
Bring one coin to Heritage and the seller probably will pay a 20% fee .
Bring a rather large estate sale and the seller fee will be reduced to about 0 though there still will be the buyers fee.
The question as posed is whether Heritage's value added is worth 10% more than E-Bay to the seller?
Necessity or not, there is a cost to doing business. [You NEED a waiter?] The point is that we pay for services, whether necessary or not. I could just has easily have used golf clubs, greens fees, golf lessons, golf balls etc. to illustrate the fact that we HAPPILY pay more than 20% for the value added of each of those suppliers.
As for eBay at 3% vs. eBay at 9% fees (6%+3% PayPal). When eBay was 3%, it didn't supply a payment platform which is 1/3 of the cost of the eBay platform. At 3%, eBay didn't have shipping labels with commercial discounts built in. At 3%, eBay didn't have any of the business services it has available now. At 3%, eBay didn't have as mane eyeballs as it does now.
Is eBay worth it at 10%? Depends on what it is and what the other options are. It is MUCH MUCH MUCH cheaper than opening a B&M store for most things, although the incremental cost model is different than it is in more fixed cost B&M environment.
Is Heritage/Stack's worth it at 20-30%? Again, depends on what it is and what the other options are.
But it is not 20% given in return for nothing. It is 20-30% given in exchange for something. If you don't value that something, don't pay it. If you do, you should gladly pay it an move on.
The same applies EVEN to groceries. You can get in your car and drive to the farm and buy direct. Is it worth it? You can plant your own garden or buy your own farm for that matter. Is it worth it?
Depends on what it is. As I've said repeatedly in this forum: not every coin belongs in every place.
If you've got a common date Morgan $ in an MS64 holder, it is INSANE to send it to Heritage or Stack's or GC (fees for a $50 coin run 25%). It is marginal on eBay. It may best be sold on BST or even your local B&M.
If you've got a 5 or 6-figure coin, it is doubtful that BST or coin club is the place to sell it. Your local B&M, unless it deals in such high figure coin is highly questionable. A weekly GC auction is possible but probably not likely to garner the visibility of Heritage or STack's, but the cost would be the same in all 3 venues. On a big coin like that, you are still at 10% on GC, but you can likely get 110% at Heritage or Stack's which puts you at the same ballpark. For a 6-figure coin, you might be able to get 115% which would make Heritage or Stack's cheaper than GC, unless Ian is willing to bribe you similarly.
And, if you want to throw in more complexity, some volume dealers get automatic 105-110% of hammer at the big houses. So, you could quite possible (I know 2 people who would do it) get 103-107% from those dealers by simply consigning through them.
Perhaps he could have gotten $6000 on his own but expected $9000 via the auction route. We have all seen fails.
I’d say it was certainly worthwhile for the Armstrong Family Collection, essentially an estate sale.
I am a business owner, I understand the cost of business. I don't eat out (well, rarely) and I don't golf. If others do, I give you a big thumbs up. Again, Ebay is a technology platform. Ebay is a also a large, very profitable publicy traded corporation. They can charge what the market will bear and the participants can elect to stay or leave. I have left. Others too. Anyone notice that coin prices are dropping? Is this the result of higher transaction costs and/or other market factors? Do you know how much is due to rising transaction costs? I don't but, I imagine it plays a part.
Ebay is probably the best venue for the small collector / dealer to sell coins no doubt, but if the overall transactions costs continue rising - no matter what the rationale - then collectors decide to continue on to leave the hobby. That is the nature of the discussion here, not whether auction venues "should" charge and what is "fair".
The ultimate option is to opt out. Hence, the whole premise of this thread.
Back to necessities vs discretionary. Just by changing your dietary habits you can spend a fraction of what others pay and eat healthier. There is also the time value. My time is worth a lot. Planting a garden to save money or driving to the farm costs me more than it saves. This is not true with coins. Leaving just saves me in every which way.
There are no right answers, just choices.
Twas brillig and the slithy toves did.....
Honestly, I agree with most of this. I'm not sure we really disagree.
The boards are just a great way to air opinions, float ideas and vent. I really appreciate the insightful dialog from everyone.
Also remember that eBay is under constant pressure from shareholders to increase fees until you scream and leave, then they may have to back off, but until you actually leave (instead of just screaming) those fees HAVE to keep increasing, or the execs there will lose their cushy jobs.
Shareholders don't need or want higher fees. They are fine with higher volume.