Auction estimates

[Snapolit1]

A few years ago it seemed like most of the AH's set modest estimates ahead of their auctions, hoping to blow past them and wave the pom poms after the fact. Seems to me that's changed recently, and now more often you don't see top items either not meeting the estimates or just creeping into the bottom of some broad estimate range. Have auctions changed in this regard?

[Aquarian Sports Cards]

don't know if it's systemic, but I do have to agree I see a lot of pie in the sky estimates.

[Hankphenom]

I've never understood the purpose of AH estimates, even after it's been explained to me with great certitude by their all-knowing principals. Seems to me that if you make it too low, you're inviting bidders to feel foolish or guilty when they exceed an estimate by much, and if you make it too high, you're taking the risk of discouraging bidding by bottom or middle feeders, which gets the ball rolling and is at least a bid, presumably better than no bid. If a high estimate is actually suppose to be a clue about a reserve on the item, just make the reserve the starting bid save everybody the trouble. The whole point of an auction is to let the market decide what something is worth, so what's the point of the AH trying to guess it--or even worse, not really trying to be accurate in their estimate but instead trying manipulate the bidding in some way?

[ls7plus]

Auction estimates/minimum bids used to be set low to supposedly encourage bidders (and ultimately set up a contest of "That's my card! No, it's mine!"). I used to multiply estimates by 4-5X to gain an appreciation for the realistic value of the item. Some auction houses, however, set minimums beyond what an item is realistically worth, which is a huge turn-off. I believe we will eventually follow the path of Mecom's automobile auctions, which allow realistic but low-end reserves reflecting the lot's real value as prices continue to rise on key cards.

May your collecting bring you sheer joy,

Larry

[rainier2004]

I was told those estimates were just there for tax purposes...not a CPA, but that's what I heard.

[Hankphenom]

Originally Posted by rainier2004

I was told those estimates were just there for tax purposes...not a CPA, but that's what I heard.

Not sure what use an estimate would be when you'll have the real number as soon as the auction ends. I've heard several different explanations from AH guys, and it's always some theory about how the way they do it will maximize the bidding. None of it has ever made a lot of sense to me.

[drcy]

I never quite figured them out, especially when they are clearly way off and even the auction house would, if just privately, agree. If estimates are honest estimates and they are there to be some sort of convenient guide for bidders, then I understand the point-- but, obviously, that's not always the case.

One auction house asked me what I thought something was worth, but I never checked to see if they used that as the estimate.

[ullmandds]

Originally Posted by Snapolit1

A few years ago it seemed like most of the AH's set modest estimates ahead of their auctions, hoping to blow past them and wave the pom poms after the fact. Seems to me that's changed recently, and now more often you don't see top items either not meeting the estimates or just creeping into the bottom of some broad estimate range. Have auctions changed in this regard?

I’m not sure if the impetus for this thread is the heritage mailing but oh my God those estimates are outrageous!!

[Leon]

Originally Posted by rainier2004

I was told those estimates were just there for tax purposes...not a CPA, but that's what I heard.

That sounds crazy and I have never heard that. An estimate isn't something you put on taxes, a sale is.
I can't speak for any person or auction house but when Heritage sold my first collection, if I remember correctly, their estimate, in total, was within approx. 10% of the ending price. I think AH's try to be accurate, mostly. And there are a few that inflate estimates to get the consignment but that isn't a good long term strategy imo...

[nsaddict]

I feel the reason is for future consignments. "Hey sis, this card auction had a 3K estimated but sold for over 20K. Gramps collection he left us had that same card. Let's consign with them"

[Snapolit1]

Originally Posted by nsaddict

I feel the reason is for future consignments. "Hey sis, this card auction had a 3K estimated but sold for over 20K. Gramps collection he left us had that same card. Let's consign with them"

Very likely that's it. "Look, we hit it out of the park!" But lately I am seeing ranges like "$8,000 - $20,000" and item is selling for $9,000.

[Leon]

Originally Posted by Snapolit1

Very likely that's it. "Look, we hit it out of the park!" But lately I am seeing ranges like "$8,000 - $20,000" and item is selling for $9,000.

So they were accurate. BTW, when I did an auction and did estimates to consignors, I hoped the auction would end at 10% over the high estimate. In other words if I estimated 800-1000 my hope is it would get 1100......just the way I did it.

[iowadoc77]

Interesting strategy. Good for sellers when an item eclipses the estimate. Not necessarily good for buyers.

[Hankphenom]

Originally Posted by nsaddict

I feel the reason is for future consignments. "Hey sis, this card auction had a 3K estimated but sold for over 20K. Gramps collection he left us had that same card. Let's consign with them"

On the other hand, they might think "those people have no idea what they're doing!"

[Hankphenom]

Originally Posted by iowadoc77

Interesting strategy. Good for sellers when an item eclipses the estimate. Not necessarily good for buyers.

The auction price is the auction price, what difference does it make what the estimate was, and how is it good for the seller or not good for the buyer? You really think sellers are going to think how great it is that the price beat the estimate? If that's true, AH estimates shouldn't be more than about ten dollars.

[Aquarian Sports Cards]

Originally Posted by iowadoc77

Interesting strategy. Good for sellers when an item eclipses the estimate. Not necessarily good for buyers.

One of the eternal conundrums of auctioneering. How do you please both buyers and sellers?

[drcy]

I don't know why there are or should be auction estimates, but the only reasonable reason I can think of why they would exist would be to be a general value guide for potential bidders. In the old days it was common for card auctions to list the Beckett price guide price just as a convenience for bidders.

If someone in the know at an auction house wants to explain why they are used, I'm all ears.

[Leon]

Originally Posted by Hankphenom

The auction price is the auction price, what difference does it make what the estimate was, and how is it good for the seller or not good for the buyer? You really think sellers are going to think how great it is that the price beat the estimate? If that's true, AH estimates shouldn't be more than about ten dollars.

Yeap, I never worried about buyers. I always worried about keeping my consignors happy. If I told them 1000 and they got 1100, I was king. If I told them 1000 and they got 750, I sucked.
The backend, and a fair and clean auction, is all the buyers should care about. (to me)

And David, right above, they set them to give some expectations, that is all. Nothing firm and they are often wrong. But they probably, at least, help the consignor know what the AH thinks. Again, many estimates are way off but they are what they are...

[perezfan]

Just a few observations over the years....

REA tends to estimate very low

Heritage and SCP tend to be high

Hunts is usually right on the mark.... although their Superbowl auction 2 days ago exceeded estimates by quite a bit (mainly on the stuff I wanted).

[drcy]

My opinion is if it's called a spade, it should be a spade. While estimates are just that, and often have ranges to them ($800-$1200) and are not expected to be pinpoint numbers, they should be honest estimates or not be used at all. I find it very problematic, to the point of being unethical and scam-like, when auction houses use them as something else, such as PR stunt (ala using super low so they can be broken). If you are posting auction estimates that are obviously WAY off, the only question is if you're ignorant or dishonest.

[Hankphenom]

Originally Posted by drcy

My opinion is if it's called a spade, it should be a spade. While estimates are just that, and often have ranges to them ($800-$1200) and are not expected to be pinpoint numbers, they should be honest estimates or not be used at all. I find it very problematic, to the point of being unethical and scam-like, when auction houses use them as something else, such as PR stunt (ala using super low so they can be broken). If you are posting auction estimates that are obviously WAY off, the only question is if you're ignorant or dishonest.

+1 all the way. As for keeping consignors happy by exceeding low estimates, I'd be a lot more concerned about buyers feeling guilty or stupid about bidding much over artificially low estimates. They are the ones pulling the freight for everybody, after all.