outrageous auction fees
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7 hours ago, BillJones said:

I used to look at the Heritage auctions as a primary bidding source. No more. I look at what they have, but EVERY BID will now be reduced by a factor of 120%. I will not be doing any more stretching.

There are two sides to the auction equation, the consignors and the bidders, and the auction houses are forgetting the bidders.

What about the poor consignors who don't have collections worth several hundred thousand dollars to negotiate better rates?

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9 hours ago, BillJones said:

and the auction houses are forgetting the bidders.

I would argue they are actually screwing the consignors over more than the bidders. As a bidder, I'll pay $100 for a coin. Doesn't matter to me what the buyer's premium is. I'm willing to pay $100 for the coin, and so I bid such that my total cost is $100. 

Now, when I do that calculation, what that means is my "bid" is actually now only $83.3 instead of $85.11. To the bidder, the result is the same - to the consignor, the result is several dollars less. Extrapolate that to the thousands, and the consignor is getting screwed even harder. 

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I would think lowering bids in an attempt to compensate would most likely result in very few new additions to your collection, and ultimately no additions. All collectors would have to employ the same strategy - otherwise you would mostly be out bid. At some point you would either have to stop collecting or again bid competitively. 

I have only purchased three or four items from Heritage, and I will continue to do so when I cannot find what I want at a more accommodating venue.

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I'm not lowering my hammer price. I think most collectors are savvy enough to realize that the auction fees are added on top. A $100 coin didn't suddenly become a $105 coin because Heritage made a cash grab. 

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I do not think anybody is being screwed. The owner of the item being auctioned made a conscious decision as to what venue to use to sell the item. The buyer/bidder made a conscious decision of how much to pay for the item. The auction house made a conscious decision to facilitate the transaction. The business model of the auction house is to facilitate the transaction in a professional manner and operate profitably. The profit percentage is a variable that is controlled by market forces. To high, competition moves in and erodes the customer base. To low, quality of service and delivery of the business model in a professional manner are reduced and customer base erodes and competition moves in.

The owner/seller and buyer/bidder control the auction houses, not the other way around.

Free will is still available to people (and hopefully will remain so).

Just an opinion, of course, but as an example, consider the profit level on a cup of coffee and the various venues that offer coffee for sale. A person made a conscious choice where to buy the coffee this morning. How many of us question whether the profit margin is 60, 100 or 230% (these figures are real) when deciding where to buy? 

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2 hours ago, physics-fan3.14 said:

I'm not lowering my hammer price. I think most collectors are savvy enough to realize that the auction fees are added on top. A $100 coin didn't suddenly become a $105 coin because Heritage made a cash grab. 

Heritage, Stack's et al know that we will absorb the additional cost-of-fee, and coins will still sell for record prices (and pretty good prices). If you are diligent, find the  certified "mistakes" and bid on them:
https://coins.ha.com/itm/morgan-dollars/silver-and-related-dollars/1881-o-1-ms63-prooflike-pcgs-pcgs-population-217-105-ngc-census-206-117-/a/131731-21579.s?ic4=ListView-Thumbnail-071515

img784.jpg

Edited by kidrootbeer

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Yes, and everyone claimed they would either stop bidding or would reduce their bids.  Lots of people still seem to be bidding, and prices are still rising.  And if you don't bid the coins still get purchased, many by dealers and then people end up paying the bid price+buyers fee+ dealer mark up.

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14 hours ago, physics-fan3.14 said:

Now, when I do that calculation, what that means is my "bid" is actually now only $83.3 instead of $85.11.

It sounds like you are lowering your bid to me.

 

5 hours ago, physics-fan3.14 said:

I'm not lowering my hammer price.

 

The hammer price does not include the buyer's premium, so you are lowering your hammer price in an attempt to compensate. Even if most of the collectors bidding against you did follow your strategy, most would not be enough. It would only require one more bid to take you out of the running.

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I see what you are saying, @Afterword. I get your point. But if what you said were true, there would be a jump in average hammer price every time the auction company raised its fees. I don't think we see that (although I haven't done the data mining to prove it).

I suspect the actual truth is somewhere between our positions. 

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1 hour ago, physics-fan3.14 said:

I see what you are saying, @Afterword. I get your point. But if what you said were true, there would be a jump in average hammer price every time the auction company raised its fees. I don't think we see that (although I haven't done the data mining to prove it).

I suspect the actual truth is somewhere between our positions. 

Hard to demonstrate this point to isolate it to the fee change due to constantly changing prices, whether up or down.

I can see it both ways.  Bidders don't lower their bids for the coins which are more desirable and everything else gets a lower bid.

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1 hour ago, physics-fan3.14 said:

But if what you said were true, there would be a jump in average hammer price every time the auction company raised its fees. I don't think we see that (although I haven't done the data mining to prove it).

 

Heritage did not raise the hammer price - they raised the buyer's premium, which is added to the hammer price. Perhaps you mean price realized - where there would be a jump in price reflecting the change in buyer's premium. 

At any rate, I doubt Heritage would bother to raise the buyer's premium if it made no difference in the amount of profit they took in.

Initially, there might a lowering of the hammer price due to bidders employing your strategy to compensate for the raised buyer's premium, but this, if it happens at all in sufficient numbers to make a difference, will not last long. The desire to compete and acquire will, in the end, win the day. 

That is, if I actually know what I am talking about. Quite frankly, I am never certain that I do know what I am talking about. 

This probably means that I do not.

 

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Heritage, Stack's et al need to make 15%, and they DO offer 5% on top of Hammer to Dealers and High Volume sellers (or for the "right" coins, etc). I think very very few bidders will feel terribly impacted by the .025% rise. And if you are, well, great. Stick to your guns... some auction buying fees are higher than 20% for several categories: Wine and Jewelry spring to mind

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That's a 2.5% increase not .025%.  One reason it probably gripes people is that the increase from 15% to 17.5% wasn't that long ago.

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It's not so much that it "only" went up by 2.5%. It's the fact that it keeps going up over a relatively short period of time. Heritage has a rate of 25% on political items, which generally makes them the supplier of last resort for me. That's where it will probably be in the future given the current mindset.

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It is all a game of semantics, and I think the concept of a buyer's fee is incredibly stupid.  It only complicates the math for bidders that may be numerically challenged.  We all know that the seller ends up paying the "buyer's fee" in addition to the "seller's fee."  Why not state that Heritage charges a 25% commission rate of the hammer price? The end result is the same, and the rates would be just as negotiable as the rates currently are without the smoke and mirrors.  Do auction houses really think their consignors are stupid and fail to grasp that by increasing the "buyer's fee," it is a net price hike for consignors?  

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Guess I don't feel so bad purchasing from specialized dealers when I get hand picked gems that have fees hidden, coins received quickly and get full refund no questions asked if necessary.

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On ‎8‎/‎8‎/‎2017 at 4:03 PM, World Colonial said:

I won a lot from Stack's for the first time in last Friday's session B world coin session.  It was for a coin previously listed on a dealer site as a consignment.  I ended up paying more, about 50% more with the BP.  However, it is a coin I wanted badly and if another exists, I am unlikely to find it anytime soon.  The 17.5% BP is excessive but it was either pay up or miss out.

As for selling in the future, I'll have four realistic options if the same firms are around:  Heritage, Stacks, Dan Sedwick and Aureo & Calico (a Spanish firm).  However, I suspect that the two smaller firms don't get the same results, even though I concurrently suspect that those with whom I  compete against mostly know of both.

I have had the opposite experience with Stacks. So far every thing I have gotten has been less than HA and legend. I bid on a 1877 PCGS IHC au58 CAC and with buyers premium it went a little over $4000. The same coin came up at Stacks and I was able to get it for just over $3300

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The fact that the auction houses need to acknowledge is that every time they raise the buyers' fees, the bids will go down unless that the market for item offered goes up. The lower the bids, the less money there will be available for everyone. Yes, a few bidders seem to ignore the buyers' fee, but most don't. They lower their bids.

Edited by BillJones

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Except, that, Bids don't "go down". For most Serious coin buyers/collectors, the 20% vig is a speed bump, per se, and they remain unaffected by it. Money comes and goes, but Nice or Rare coins, not so much. Adjust your thinking, and the fee won't be as or so painful

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It is to me, but I know that does not count. Nevertheless they are working toward having me think of alternative ways to sell my collection. In total among other collectors, who have significant collections, that will mean something.

Edited by BillJones

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When you look at auction results on the various pricing sources, you need to deduct the auction cost for a coin's value in a lot of cases.  I have heard that brought up over and over when people are offering coins to sell them.

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I just won a 1853 Seated Quarter at GC.  Because I didn't send them a check, my BP was 12.5%.  If you pay by check or wire, it's still only 10%.  They're still the most reasonable when it comes to BP, there shipping is very fast, but I still think they could do a better job with their pictures.  

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On ‎8‎/‎17‎/‎2017 at 2:12 PM, kidrootbeer said:

I remember when the Big 3 auction houses were floating the idea of adding a Buying Premium, "like they do in Europe". We all had the same Anti-fee arguments then

Not every idea that comes from Europe is a good one. The buyers' fee has grown from a nuisance to a monster that is hurting buyers and consigners.

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On 10/21/2017 at 7:40 AM, BillJones said:

Not every idea that comes from Europe is a good one. The buyers' fee has grown from a nuisance to a monster that is hurting buyers and consigners.

It started with the reign of Augustus. It was called tax, btw.

The next big move was the Knights Templar auctioning (although that is not what it really was, because it was closed to all but a Knight) the possessions of a deceased Knight or the possessions  of a deceased person that had entrusted property to the Knights banking system and died without heirs.

The next big move after that was the slave trade...universal at that time in history. Every country involved in the trade was guilty of this abomination, but greedily participated in the payment of fees and did so without complaint, and governments even figured out how to get their fair share of the wampum.

The point is, it is not an us against them thing. It is a business model. Participate or not. Every individual can sell his/her holdings directly and to as large an audience as any other business model, if they don't want to participate in other auction venues. 

I remember the introduction of the present system when Sotheby's and Christies presented their version in 1975 (which of course they did at arms length and without any prior knowledge of the plan of their respective organizations:eyeroll:). The less wealthy complained. The wealthy didn't complain, because it lessened competition.

So, how does it hurt buyers and sellers? What is unfair? All participants are aware of the terms of the auction. All participants decide to participate or not. All participants have a monetary interest.

An opinion was offered that the practice of a buyer's fee is stupid. I don't think so, when the subject of taxes is introduced to the equation, as an example. 

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You are correct, Mr. know it all. One either knuckles down “the business model,” or you find alternative venues to sell your collection. The trouble with “the business model” is that it is taking a lot of the fun out of the hobby for me. I still greatly enjoy the history, the die variety studies and the sense of accomplishment I feel when I complete a goal.

 

What I don’t enjoy is the impression that I have been overpaying for almost everything I buy. Time was one could figure that dealers were making a 20 to 30 percent mark-up on a substantial purchase, say $5,000 or more. Today I feel like it’s a lot more that which leaves the buyer WAY behind the eight ball. When you get ready to sell your collection, you might get 105% of the hammer price from an auction house if you have enough of the right material. Yet, as the buyers’ fee increases, the hammer prices decrease. The figure upon which your realized amount is calculated, keeps getting smaller.

 

Add to that the coin grading service games. “Grade-flation” lowering the quality of the coins you buy. At the same time “grade-flation” is prompting collectors to resubmit their previously graded coins in order to get the higher grades which are predicated on lower standards.

 

Then you have the CAC minions. These people have been brain washed to think that any coin that is not in a PCGS CAC approved holder is suspect. NGC-CAC approved coins don’t cut it for them. They either don’t have the desire or the talent to learn how to grade for themselves. ONE MAN is THE EXPERT, and NO ONE can disagree with him. They need a label and a sticker, and the interesting part is that the label and the sticker are blowing it more and more often. I am compiling a file with pictures of such items.

 

Overall the marketing games are ruining this hobby. The fun is going out of it, not because of the fundamentals of the pastime, but because the marketing games that are ruining it.  

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The same observations have always existed, and the same concerns have always existed, just in different forms and different expressions and different attitudes. Nothing new.

A person is either primarily a collector or an investor. If the investor concern is paramount, the exit plan will change and will normally be a disappointing result, regardless.

I can scream to the Heavens that I collected the best of the best of the best and nobody wants to pay because no sticker/the holder is wrong/they don't recognize quality/they don't know how to grade/they are using market grading, etc., etc., but all it really means is my exit plan didn't change and collectors have different expectations now and investment has become a greater preference in the market. This business model is easier to accept if I admit I am getting old and a little grumpy. I just have to concentrate on what I really enjoy...collecting.

It is not the auction entities or dealers or grading entities ruining the hobby. It is people that are changing the model and want a different type of satisfaction.

There is still a heck of a lot of fun to be had. It is relative, to me.

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It is unfortunate that you chose to ignore all of my points and blow me off as "an old man."

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1 hour ago, BillJones said:

It is unfortunate that you chose to ignore all of my points and blow me off as "an old man."

I believe you have misinterpreted. If you read carefully, you will note that I am, in the entirety of my post, referring to myself, my attitude about collecting, and most importantly my acceptance that I am old, and my exit plan has to, and has been adjusted. 

You were not blown off. I stated my own personal thoughts on the status of collecting, to me. You have a different interpretation and/or opinion of how other entities in the collecting community effect the hobby. I don't think everything and every entity and every business plan and every business model is terrible and destroying the hobby.

Don't assume a personal attack happens when someone has another opinion. 

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