AH Blues
 

Well, I managed to get through the avalanche of auctions over the last few months and am still nearly solvent. But I just don't under stand the allure of PWCC as a consignor. I initially thought they were primarily a dumping ground for lower condition graded cards, but some of the more recent stuff on Ebay was pretty impressive. Here is my query: Why would a consignor go to PWCC with, say, a PSA5 T206 Cobb Green and pay a scheduled fee when he/she could take it to a national AH and pay nothing?

Quicker $ maybe?

Math
 

If the same PSA 5 Cobb sells for $20k through PWCC and $20k through an auction house, the consignor will cash a check for north of $18k from PWCC and somewhere around $16.6k from the AH.

This is a good question and the answer lies in the difference in the fees charged by PWCC and whatever the AH you choose. Taking a look at your example, a PSA 5 green Cobb is probably somewhere in the $15-20k range now (i could be off on that, but simplicity lets just use $15k for an example).

PWCC charges 8% commission for any card over $5k. So if the card sells for $15k, the seller will net $13,800 and PWCC gets $1200.

Most premier AH's charge around 20% buyers premiums (yes I know there are AH with lower BP and for a card of this price you could probably negotiate some percent of the buyers premium but just trying to keep it simple). In order for the consignor to net the same amount as he would with PWCC, the hammer price before the BP would need to be $13,800. Add the 20% buyers premium and the customer would have to pay $16,560. So that would mean the card would need to sell for $1500 more in the auction house for the consignor to net the same amount. As a consignor you need to ask yourself which is more likely to happen and make your choice which way to go from there.

Consigning Fees
 

On a high dollar item, the consignment fee is ZERO for many, many AH's including the biggies. At most they will charge 5% on items under $1000.

Some AH's will even give you an extra few points back!! They need stuff to sell. A Green Cobbie will be a featured item and will draw more bidders who will find other stuff to bid on!

How do you figure they are paying nothing? Unless the AH is going to kick back some or all of the buyer's premium, they are of course paying via a reduced hammer price attributable to the BP.

There's no buyer's premium on ebay ....

Saying that, a consignor usually wants to find the auction house or consignment shop that they believe will give their items the most visibility, the right buyers, and the auction ending type they believe will bring the highest price for them. There are also other factors such as the service of the AH, the payout speed, and other perks such as cash advances, discounted grading, etc.

Apparently what you call it matters more to people than the math, Sam. So in your example the AH consignor isn't paying anything he's just taking in less money. :eek:

From now on I am mandating that I pay a 20% Sellers premium on my consignments and there will be NO buyers premium. Isn't that better now, Peter? The buyers won't be paying any fee now.

Rob will be thrilled that he won't have to pay a premium.

Very true, Peter. I also didn't take into account the many folks who want to spend $20K on a PSA 5 Cobb and bid that amount in an auction, only to receive a surprising bill for $24K.

When that happens to me I get really pissed.

This is a great idea. If it's all going to work out the same in the end, why don't they do it.

There's that question again that nobody wants to answer.

Still waiting to hear your answer Peter.

If it's all the same money...Why do we need a buyer's premium at all?

Maybe from an accounting perspective it makes it simpler to keep track of what you pay the consignor and what you keep, than having to calculate percentages of the hammer price in a seller's fee world, but I really don't know or care. You have to do it one way or the other and it comes out to the same thing. Unless of course you think AHs should not take in any money.

Why don't you explain to us why you, knowing a premium is going to be added to your bid and presumably taking that into account like the overwhelming majority of people, care what convention is used for the AH's cut?

Some auction houses now show the BP right in the dropdown when you make the bid which I think is a nice feature.

For the question of why to go with an eBay consigner, I don't think there is any question that it's because you get to keep more of the total amount the buyer pays. For a graded card from a popular set, the eBay route makes a lot of sense to me. For an item that's more of a niche collectable, I think it makes sense to go with the AH, with the hope they will be able to get the right eyeballs on it. Thinking of myself, I don't even bother to keep eBay searches on programs etc. stuff that I know rarely gets auctioned off on eBay - my graded card searches on the other hand turn up hits almost every day.

if i am correctly following the logic of at least one person, he would rather buy a card on the BST or eBay for $1,000 -- with no evil buyer's premium to deal with -- than get the same card for an $800 bid from an auction house, because it means the total price actually would be $960 with the BP?

You're making a bold assumption that every winning bid is suppressed by the exact amount of the buyer's premium in every instance. Dollar for dollar. Percentage point for percentage point. BP equals 20%...High bid is suppressed 20%. BP 10%...High bid supressed 10%.

While the BP does suppress bidding. I don't think it's close to a dollar for dollar match....and the discrepancy there is borne by the buyer...not the seller.

And therefore it's not the same. It's additional.

Except for you and a few of your cronies. Who abide by the 20% off rule when determining your high bid...every time...without fail.

Comic gold!!!

I have a question I have been meaning to ask on this board and relates to the topic of this conversation. If I wanted to consign a high-priced item(s) with one of the big auction houses such as REA, Heritage, etc., do I:

a) pay a consignment fee PLUS the buyer's premium of, say, 20%,
b) a consignment fee ONLY,
c) ONLY the buyer's premium of, say, 20%.

Also, I have seen references to the big auction houses waiving or reducing fees for larger priced items. Are they waiving or reducing the consignment fee, the buyer's premium, and/or both? Also, is there an approximate dollar threshold that the AH's consider when determining whether to waive or reduce the fees?

I would appreciate any feedback that people could provide.

It is never additional in my case. If I am willing to pay 1000 for a card, I will snipe at 1000 (including shipping) on Ebay. If I get the card fine, if not fine. With an AH, I see where the next position is. If it is under 1000(with BP and estimated shipping), I will place the bid. If it is more than 1000, I am done. It is really not that hard. I am not bidding 1000 and then being surprised that I have to pay 1200 plus shipping. It may not work out dollar for dollar, but it is pretty close.

While I can't answer for the "big auction houses", I can tell you that when anyone consigns with my auction (Brockelman Auctions), they pay no consignment fees of any kind, the buyers pay a low 12 1/2% premium.

Scott

B.) and they're paying the consignment fee only

You can't make this stuff up. No one would believe you. LOL

In my opinion an auction house should never adjust the buyers premium in order to get a consignment. If they did adjust the buyer's premium for you, you would have an unfair advantage over other bidders in the auction. Not sure of the legality of it, but seems like creating an unfair bidding platform would at least be unethical.

Auction houses can always adjust your sellers fee for a specific item or consignor. This doesn't create an unfair bidding platform as it shouldn't give you an advantage in bidding on items. It would only put more money in your pocket for the items you consigned. This is one way they can entice a consignor. Most AH's today start with a 0% sellers fee. I know I would have to have a really good reason to consign something with a seller's premium. For high demand, high value items, you can negotiate that fee/item placement/etc and even sometime get a negative sellers fee (a portion of the buyer's premium). As far as when they will waive it or reduce it, that's all up to the individual AH. Some advertise discounts for certain items, some keep it more private. Best bet is to call the AH that you're interested in and see what they will do.

DJ

Looney logic if I have ever heard it.

When was the last time a fee was "surprised on you" mid auction? Otherwise, unless you can't read the rules, there are no surprises. Most collectors figure out how to add the 20% to their bid BEFORE the AH does it for them once the lot is closed to bids. Adding 20% (or whatever the BP is) is not that easy I guess....for some. I have bid in hundreds if not thousands of AH auctions and haven't been surprised by the BP yet.

The only time I've ever been surprised in my bidding history is with shipping a time or two.

How is it Looney logic? If I want to pay 1000, I am not paying more no matter the platform or format.

You raise up your head and you ask, "Is this where it is?"
And somebody points to you and says, "It's his"
And you say, "What's mine?" and somebody else says, "Well, what is?"
And you say, "Oh my God, am I here all alone?"
But something is happening and you don't know what it is
Do you, Mr. Jones?

Perfect. Then you bid up to the amount where you will spend $1000 with whatever fee(s) included. Problem solved. I think you are making it more difficult than it needs to be. A lot of us say to ourselves "I am not going over xx amount" then we deduct the fee pecentage and that is what we bid (assuming we are also understanding there are usually shipping charges to be thrown in too). If you can spend a $1000 then just bid up to $800......then add the Buyers Premium, which is usually 20% to your $800 bid, and that is $960, which leaves $40 for shipping.

I think you guys are in agreement, not disagreement?

Yeah, I think I am arguing with myself. Back to doing some chores :)....

How do you even make such a connection? Who am I dealing with here? Forrest Gump?

If the value of your humor had a 20% BP, I'd have nothing to complain about.

Imagine the obvious response -- change humor to -----.

apparently. after CMIZ5290, you’re the smartest guy in the room.

And there it is. "A lot" Not all...as some assume. At least Leon is being realistic.

A lot probably do...especially those on this forum. And just as true...a lot probably don't. They bid to win and then endure the BP afterwards.

I think some of you have conformed your logic to fit in with the old school auction rules. "This is the way it is, so how can I rationalize it in a way that makes it more palatable?".

Funny...I looked up the definition of bid. It's the offer of a certain price for something. Didn't see anything in there about multiplying by 1.2 to get to that price.

This is actually an interesting academic question. Economics 101 would certainly tell you its completely irrational to behave differently because in one case the amount you pay is what you bid (plus shipping) and in the other case the amount you pay is what you bid + 20% + shipping. The rational thing to do is make the calculation of adding the BP and behave (bid) the same way in both cases (i.e. reduce your bid because you know you will be hit with a BP at checkout). Someone would need to do a study to see if people actually behave according to the theory or whether the fact that that 20% in not included in their bid induces them to pay more as if they are willing to momentarily forget they will be charged the 20% later. It's entirely possible, and also the reason I believe some auction houses want you to have to do the math in your head (or not do it), rather than show you the BP when you place your bid. I think its something called the framing effect where people view options that are really the same as different depending on how they are stated.

One minor point is because the bid increments are wider for AHs than eBay, sometimes I have to make a decision whether I want to go under or over my target - something I never really have to do on eBay where the bid increments are very narrow.

Let’s say you have a new home with a smallish garage and a full size car.
You are bidding to park the car in the garage. You estimate where the center of the garage is on the back wall of the garage. You aim correctly and end up scratching the right side of the vehicle, which then must be repaired. You are surprised at the cost of placing your bid to park the car and incurring the parker’s Premium.

When completed, you pick up the car and bring it home. It needs to be parked in the garage. Do you follow the exact same process to park the car and repeat getting the same result necessitating another visit to the body shop or do you make an adjustment to your aiming point and move it the required distance to the left, which results in the car not being scratched on the right side.

On the third day do you repeat the unsuccessful process of the first day or the successful process of the second day? If you answer the former, I cannot help you. If you answer the latter, congratulations. You have learned the impact of the buyer’s premium on your bid to park the car.

Being surprised by an auction house invoice, due to naïveté, not reading the rules, or whatever, could conceivably happen once to anyone. But if you are continually “surprised” by invoices, you either need a smaller car, better reading glasses, or a home without a garage. You might also consider a membership in the Audubon Society as an alternative hobby.

Hope this helps.:D

Auction houses charge a buyers premium, eBay does not. If you want to bid on anything, auction or eBay, read the damn rules and know what your getting/how it works (and that includes shipping). What is up with people bitching about rules that are clearly stated for all the world to read?? You don’t like the rules, don’t like the shipping, don’t like when or how an auction ends.... don’t participate!

And for the record, if you bid on an auction and don’t read the rules to know you are paying a buyers premium, then F-you, you are an idiot and you deserve whatever unhappiness your stupidity or irresponsibility got you.

LOL I was just reading that the buyer's premium dates back to ancient Rome. Maybe Rob had an ancestor who bitched about it back then.:eek:

I saw that too, expect back then it was XX percent

Yeah emptors have been getting whacked throughout history.

Cool story...but who said anything about being surprised?

Well that settles it. Never question anything that's clearly stated. If it's clearly stated it must be right. The government clearly states what they're taking out of your paycheck and I'm sure you never bitched about it.

By the way...The crotchety-meter is off the charts on this post. Love the ones who come in hot with instant anger.

And I think the one's on here defending it date back to ancient Rome too.

This thread has me laughing my butt off. On a serious note, if PWCC is only charging 8%, how are they making money? Doesn’t eBay charge them about 10% after their sale? What am I missing here?

I'm sure because they sell in large quantities, they've negotiated a deal with eBay to pay a much smaller fee.

Once again, the small guy gets screwed. Oh well, life goes on.

The small guy is fine and makes money on ebay. The big guy gets some benefits. No doubt PWCC gets a great ebay rate and they should. It's called business. :)

It's obvious you're full of seething rage Leon. Try to calm down a bit, OK? :)

Why so much sarcasm? If you feel the buyer's premium is unjust, you don't have to bid in the auction. Stick to ebay. Or bid w/AHs and take the BP into consideration. :)

I don't see hot and instant anger as much as the amazement that you can't comprehend a simple matter more cogently. You are griping about a rule that is plainly stated and questioning it's validity? If you don't like the rules don't bid. If it is clearly stated it is in fact correct. AH's make their rules you don't. Not sure why you are so obstinate about an easy issue. You can gripe all you want to, the rules won't change. And yes, for their respective auctions, they are "right."

Leon, while I believe Rob is coming across as complaining about paying the buyer's premiums, I think the real root of his question is why do auction houses charge a buyers premium and no sellers fee instead of charging a seller's fee and no buyer's premium. Responses such as "It doesn't matter" or it is just "semantics" address how to think about the buyer's premium from the buyer's prospective, those responses don't really give a reason or explanation for why every auction house charges a buyers premium.

Personally, I think the why is answered in the marketing strategy of the auction house to the consignor and trying to make the AH look as attractive as possible from a consignor's prospective. Charging a seller's fee when other auction houses don't I think would make getting consignments even more difficult, but I could easily be wrong. Leon, not to single you out, but you and Scott had one of the lowest BP and zero seller's fees, did you guys ever discuss lowering the BP even lower and charging a seller's fee instead? What was the driving forces in determining how you collected your commission?

Here are the facts of the matter:


Without consignments there will be no auction. It is much easier to get consignments for free than charging the seller to use your AH platform. The sports collectible auctions have all gone this route and don't expect them to change it anytime soon.

Without making a profit the auction house will not continue to exist. SO...
The buyers are the path of least resistance, they see something they want and are willing to pay for the right to bid and win it. As most have indicated you just have to factor in the percentage of the bp on top of your bid and you have your total cost for the item.

Other less competitive genre's still charge a buyers and sellers premium, because... wait for it... there are very few options for a seller to auction material and/or the huge costs of presenting the items for sale. So the number of additional AH's has actually lowered the overall cost of the transaction. All of these vary from genre to genre. Many more upscale antiquities, paintings, etc, garner a 20-25% seller and buyer fee(think Christies, Sotheby's, etc), as the venue's for these are farer and fewer between, if they had more competition the rates on both sides of the equation would have to give somewhat. Even Mecum and Barrett-Jackson charge sellers and buyers premium, but they are more flexible and even change at the hammer to make a deal for the house, the buyer and the seller come together.

Scott

If an AH had a 10 percent seller's fee and no buyer's premium, my guess is they would do just fine getting consignments.

Peter,

I think it would be an uphill battle for anyone trying to go that route at this point in time.

The buyer is the end consumer and would be happy to pay no fee, but the consignor/seller would not be so willing to pay 10% off the top when he could call the next guy and pay nothing. So again no consignments, no auction. It would take the majority of AH's making this change all at once to make this even plausible, and then one gets short of material and they are back to offering Zero consignor fees. Today's setup is just free market working it's way in the sports AH world.

I might add that the only way you would be able to garner more seller interest in having a consignor fee would be the premise of a bigger payout due to the AH being able to get more money for the client, which is where many/most of the problems of the AH's began with trying to get higher prices than their competitors, which in fact were not always legit sales/bids as we now know.

I don't get it. Any knowledgeable consignor would realize he is going to do better with (using my example) the AH getting a total of 10 percent of the take than with the AH getting 20, regardless of the semantics. It's just the flip side of the buyer's calculus. Even with no seller's fee the consignor isn't paying nothing, he is paying in the form of a reduced hammer price due to BP.

You are correct with the math, but people are not as comfortable with change as a whole and very resistant when they perceive that they are the one paying the tab. It's all psychological for most of them.

I agree, if you told me I got 90% of the take instead of 80% in the end, A. is the better option.

I would add that the larger houses would probably need much more than 10% for their cut to make it work out with larger overhead and that throws a wrench in the works and now you are back to 15-18%(minimally) for a sellers fee and the consignors just won't go for it.

As you know I charge 12 1/2% bp and no sellers fee. My biggest point to consignors is that they are netting 87 1/2% of each item(hammer+bp), which is more dollar in their pocket versus AH that charge 15-23%.

Then if you are right why are people consigning in droves to PWCC, where the fee clearly comes directly out of the sales price? After all they could go to an AH for free.

Exactly Scott. What matters is the AH's total take. You are making my point, I think.

Some of them are much more ebay users and not even aware of most AH's, PWCC has done a great job of marketing themselves to that niche of clients, so they are more comfortable with the venue. I would say the ebay world and AH world are largely two different groups, both when buying and selling.

Peter, you are absolutely right it should not make a difference as long as the auction house is making the same commission and the consignor is getting the same amount. However, that is assuming everyone is rational, which is definitely not the case and where psychology plays a big role. As an example, when you shop online, which do you buy, an item for $10 with free shipping, or the same item for $8 and $2 shipping? Both are the same item, both cost you the same, but more people will choose the $10 with free shipping cause the price structure is simpler to understand and people are drawn to the word "free" (who doesn't like free stuff?). Obviously if the commission is not the same or the consignor is not getting the same amount, then one option is definitely better.

DJ

Precisely, it's all in the eye of ones perception. You can lay out several scenarios of your choosing with the same outcome, and people's choices of a, b, or c. will be greatly varied as to how to get there, even though it's the same ending.

My guess would be that those worlds are not so dramatically separate any more.

Who says the rules won't change? Maybe you hope they won't but that's not the kind of forward thinking that's made this country great. Just because it's the way it is doesn't mean it's the best way. Everything evolves except auction houses I guess. Those haven't changed since ancient Rome I hear. But I suspect they have a date with destiny. The next generation of collectors won't be as eager to fork over money for nothing as this older generation is.

And for the record...as it's been skewed here...My argument all along is that the buyer should'n't have to foot the bill for a service being provided to the seller. Not that the auction houses are wrong for charging fees.

PS...Save the suppressed bidding argument. That's only a piece...not the whole.

why do some people choose to consign with an eBay seller instead of an auction house? Could it be because it’s easier on eBay to bid on your own consignment (or a friend’s consignment) and buy it back with no fee? Or because it is easier to retract your bid (for a variety of reasons) on ebay?I bet some — not all — find that very appealing.

Bingo...What do you know. Finally, somebody gets it.

And without buyers there would be no auction. So that argument is kind of moot.

This is one of the few honest responses in this thread. The buyer is the path of least resistance. No talk of semantics or it "all being the same in the end". It is what it is. A fee the buyer has to add on....because historically they've been conditioned to.

I'd be curious to see a comparison of sale prices for similar items sold with and without buyer's premium. I'd be willing to bet the difference in most instances is the buyer's premium...and that bidding was not surpressed to the point of equilibrium.

Why? It's all the same money isn't it? Isn't the seller going to be ecstatic to know that his bids won't be suppressed? If there's no 10% BP, that means the seller will realize 10% higher bids!

Don't believe me? Just read this thread.

If you believe a card is worth $1,000 and are willing to pay $1,000, how is the buyer "footing the bill" when the buyer is still only willing to spend the same amount?

The only way that argument makes sense is if the buyer is completely oblivious of the 20 percent until after the auction is over. Anyone other than a total newbie realizes there is a 20 percent fee and adjusts their bid accordingly so that it will not surpass the maximum amount they are willing to spend.

Although I gave up active collecting 5-10 years ago, when I did consign with an auction house (always with 15-20% buyer's premium) I ALWAYS. ALWAYS. ALWAYS got more with the AH than ebay. There are many well funded collectors who just refuse to go the ebay route.

Check some PWCC prices and get back to us.

Just personal experience. And PWCC as a whole is another story for another day.

Why bother lol. DNFTT.

Whatever the story was years ago I think for many cards that sell frequently in both venues ebay prices are quite competitive. And if people are paying more to AHs it's not because they are hoodwinked by the BPs it's because for whatever reason they prefer the venue.

Think about it.
 

Winning a card at an auction is like winning a horse race. You pay the "juice".
With sports betting the loser pays the "juice".

Maybe, but they'd go out of business!

You're example applies to card collectors. And I can see how it works for them because they know, if they don't get this one...they'll get another shot at it in a month or two. So you can wait to get it at your price. You also have a wealth of previous sales to help you determine what your max price is.

I collect pennants. What I'm looking for comes around once every 10 years if I'm lucky. It's hard to place a price on something that comes along only once every 10 years...so I can't go in saying this pennant is worth $1000, not one penny more...unless I'm also willing to say "Ok...I'm never going to own it because it's probably not coming around again."

So your logic doesn't apply to everyone...Collector's of things more rare than a $1000 card don't have that luxury....and even if they did, it doesn't explain why the buyer should pay for the service provided to the seller.

This is a complete non sequitur. The fact that you don't have reliable price information for pennants has nothing whatsoever to do with the buyer's premium issue. In the end you are bidding what you decide to bid, and it makes no difference how the auction calculates its fee. You aren't "footing the bill." You are bidding what you decide to bid. The consignor is footing the bill because he is only getting a percentage of the sum you pay the AH and the AH is keeping a share. If you pay 120, the consignor gets 100. How on earth are YOU footing that bill? Good luck in your search.