Quote:
Originally Posted by mordecaibrown
Im confused by why some people think this is an alright practice. Ill try to lay out an example to illustrate how Huggins and Scott can only win by bidding on items in their own auction.
For example, if Huggins and Scott is auctioning off an item that they determine has a "market value" of $500 from previous sales; however, the item is only currently being bid at $200.
The buyer is about to purchase the item for $200 + $39 (buyers premium - 19.5%) = $239. Huggins and Scott are going to make $39.
Huggins and Scott decide that this is below retail and decide to put a bid in for $300 (even though they do not know max bid). Here are the two scenarios that occur:
1) Huggins and Scott win auction and have bought an item at a good price (relative to determined retail) and can sell it through House of Cards for a profit. And they bought it for $300 because they are not paying buyers premium.
2) Other buyers max bid is greater than $300 and the new high bid in the auction becomes $330. Now the buyer is buying the item for $330 + $64.35 (buyers premium) = $394.35. By making a "feeler" bid Huggins and Scott just made themselves $25!
Huggins and Scott can ONLY benefit by placing bids on items in their own auction!
And they can continue to do this. They could then toss out a bid of $400 and increase their profits if the other buyer has put in a higher maximum bid.
I do not know if they are alone in this practice or if other auction companies also do this, but I do not see how it is anything other than a conflict of interest by the auction house.
Andy Ken-nedy
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If I could Andy, I would like to fix a couple of things in your equation. Let's not forget that in addition to the buyers premium, they are also getting more commission from the seller. I don't know what they charge but let's just say 10%.
So in your example # 1 they would be getting the item for $270 instead of $300, thus giving them even more "wiggle room" or advantage.
Now in your example # 2, if HOC puts in a bid of $300 and someone else outbids them and the bid goes up to $330, not only do they make the extra money for the buyers premium, they also make an additional $13 from sellers commission based on charging the seller 10%. Now this is only on a $200 item. You take a $2000 item and you just multiply those numbers by 10. That starts to become some pretty significant numbers and that is only making one bid on an item. What about auctions where they make more than one bid?
I personally don't see how anyone can defend this practice or how an auction house can think this is acceptable.
So it would almost seem that they are working with an almost 30% buffer or advantage to other bidders while also allowing them should they choose to take more chances bidding on items and therefore getting paid more on the backside should they not win the item.
Very disturbing indeed.
ch..r i-s. shr..e-v..e