Buyers Premium at auctions. Justified?

Fr45h3R · November 04, 2013, 07:31:36 PM

Hi All,

Just noticed that all of the major auction houses have upped their buyers premiums over the 19% mark (one has even gone to 20%)

I know they also charge a commission to the seller for the lots they sell, so my question to those who do buy at these auctions, do you feel there is a justification for the rates to be this high ?

-rob

trout · November 04, 2013, 07:51:50 PM

Quote from: 'Fr45h3R' pid='33450' dateline='1383555696'Hi All,

Just noticed that all of the major auction houses have upped their buyers premiums over the 19% mark (one has even gone to 20%)

I know they also charge a commission to the seller for the lots they sell, so my question to those who do buy at these auctions, do you feel there is a justification for the rates to be this high ?

-rob

I consider the buyer premium to be an absolute "Rip Off".
The Auction house charges the seller the same amount , So in reality they are getting 36-40% of the sale now.
SHEER greed IMHO.
Walters site "numisbid" only charges 10% on Slabbed coins with NO Buyers premium whatsoever :good:
That is why I imagine he regularly gets auction house prices because the buyer isn't getting ripped of with the 18-20% buyers fees .
With the buyers premium attached to the sale all the buyers will vector that cost into their bids and the coin will sell for less because of it and the vendor will "Miss out".

echidna · November 04, 2013, 08:08:34 PM

Quote from: 'Fr45h3R' pid='33450' dateline='1383555696'Hi All,

Just noticed that all of the major auction houses have upped their buyers premiums over the 19% mark (one has even gone to 20%)

I know they also charge a commission to the seller for the lots they sell, so my question to those who do buy at these auctions, do you feel there is a justification for the rates to be this high ?

-rob

I'd agree that some auction houses are gouging the market.
Makes ebay look cheap by comparison.
There is no way I would consign stuff to one of these places.
In terms of the best way to sell high value stuff its a no brainer - get it PCGS graded and then sell via Numisbid.

Goldseeker · November 04, 2013, 09:22:43 PM

If one wants to sell high priced coins then can I suggest Coinworks. Belinda Downie charges around 8% I believe it is.

trout · November 04, 2013, 09:28:01 PM

Quote from: 'Goldseeker' pid='33474' dateline='1383562363'If one wants to sell high priced coins then can I suggest Coinworks. Belinda Downie charges around 8% I believe it is.

Is there a "buyers premium " also or is the waived ?

Fr45h3R · November 04, 2013, 10:10:46 PM

I think the sellers commission for same places is a sliding scale, so as the value goes up, the % comes down.
But for buyers it's fixed.

emu666 · November 05, 2013, 10:41:26 AM

Quote from: 'Fr45h3R' pid='33450' dateline='1383555696'Hi All,

Just noticed that all of the major auction houses have upped their buyers premiums over the 19% mark (one has even gone to 20%)

I know they also charge a commission to the seller for the lots they sell, so my question to those who do buy at these auctions, do you feel there is a justification for the rates to be this high ?

-rob

I believe the aim is to make a profit after paying wages, leasing or buying premises, paying insurance premiums, printing catalogues etc.
Rather capitalistic of them.

JeffH · November 05, 2013, 11:10:39 AM

I suspect emu is right; they are in the business to make money. However, if they are extracting more than 35% total commission on sales, maybe they need to have a look at their business model. That suggests very high overheads.
It would be interesting to set up a comparison -other auctions for different types of goods too. A quick search of auction sites showed they are very coy about stating their commission structure. Surely they are not ashamed to advertise their rates?

Steveqld · November 05, 2013, 11:35:15 AM

Quote from: 'JeffH' pid='33494' dateline='1383612039'I suspect emu is right; they are in the business to make money. However, if they are extracting more than 35% total commission on sales, maybe they need to have a look at their business model. That suggests very high overheads.
It would be interesting to set up a comparison -other auctions for different types of goods too. A quick search of auction sites showed they are very coy about stating their commission structure. Surely they are not ashamed to advertise their rates?

Bargain Hunt Auctions advertises 17.6% sellers commission and 17.6% buyers premium unless bidding is on-line in which case it is 20.9% buyers premium. So potentially 38.5% to the Auctionhouse.

markn · November 05, 2013, 11:35:59 AM

Regardless of whether it's a sellers or buyers premium it all comes out of the sellers pocket in the end. Simply because they charge the seller a direct fee and buyers factor the buyers side commission into their bids. Auction houses are in the business of making money (like eBay) and like any business they can keep putting their prices up until their customers (consignors) stop consigning with them. Then they need to drop their prices or go broke.

If you don't like the fees don't use them to sell. Same as some people don't like eBay or Paypal and refuse to use them to sell. If you're buying from an auction house with a 20% buyers commission don't get caught up in the excitement and overbid. Always factor the 20% into your bidding.

drakesterling · November 05, 2013, 01:58:44 PM

Agreed with markn. From a buyer's perspective, the size buyers premium is irrelevant. You just factor the premium into the bid. The auction house could charge 90% commission and I would still participate in bidding. On the othe rhand, consigning coins to an auction house that charges a 90% commission would be an entirely different story.

Eric

Fulvio · November 05, 2013, 03:08:37 PM

Quote from: 'markn' pid='33496' dateline='1383613559'Auction houses are in the business of making money

Its always the middlemen who get rich at the expense of both producers and consumers. Its called capitalism, and for better or worse its the system we have.

If only someone could come up with a better way that actually worked, we'd probably all gladly use it. But the way things are, it comes down to choosing the lesser of the evils of auction houses, ebay or dealers.

JeffH · November 05, 2013, 03:29:58 PM

Similar with eBay to what Mark said. Always factor in the postage and subtract that from your best price to set your best bid. Some sellers make their profit with the postage markup.

oh my florin · November 05, 2013, 05:15:13 PM

I mean look at Noble's last auction which realized $2.7 Million when I believe they had a buyers premium of 16.5% and now they have increased it to 19.25% meaning an increase in profit from $445000 to $519750 based on that relized total now I think any auction company would have a hard time justifying an $74750 rise in their profit to simply just increasing costs to them. I mean I do economics at school and am about to move into university economics but you don't need me to tell you that they need to work on their business model anyway If it was sustainable then there would be no need for changes in buyers premiums.

Fr45h3R · November 05, 2013, 06:24:15 PM

Everyone has great points.
I fully support factoring in the buyers premium, and 20% is probably a bit easier in the heat of things. Postage, Insurance, C/C / Paypal fees do add up quite quickly though after the 20% is added.

I also understand companies are out there to make money.
OMF, you haven't factored in the sellers commission in your calculation.

Might be time to start my own Coin auction