REA increasing their BP and making other changes

[jayshum]

From the REA newsletter email I received:

Later this summer, we will roll out changes to the closing times and procedures for auctions in an effort to end auctions earlier, a practice we pioneered in 2016. More specifics will be forthcoming, but we are confident this will result in the same spirited bidding on a quicker basis while still allowing lots to remain open for as long as needed in the presence of competitive bidding. Additionally, effective September 1, 2025, the Buyer’s Premium for auction items will be 23%. There will continue to be no Buyer’s Premium on Marketplace purchases, and our introductory commission of 5% on any successful sale will continue through the end of the year.

[theshowandme]

[oldjudge]

Really sorry to hear that. I thought they were one of the good guys. Just because you can doesn't mean you should.

[Yoda]

Originally Posted by oldjudge

Really sorry to hear that. I thought they were one of the good guys. Just because you can doesn't mean you should.

Why? They are a profitable company. Rob Lifson once cut the BP from 20% to 19%.

[bandrus1]

Can somebody explain to me the reasoning behind adding a BP vs taking a total amount of a final hammer price?

Is there a known psychology that people will bid higher with BP's vs total price

[Musashi]

Originally Posted by bandrus1

Can somebody explain to me the reasoning behind adding a BP vs taking a total amount of a final hammer price?

Is there a known psychology that people will bid higher with BP's vs total price

It actually has nothing to do with the bids or bidders, and is about consignors. Consignors expect to pay little or no commission on high end items, and at the top of the market, expect a piece of the buyer premium as well. Buyer premium is how auctions maintain their profit margin while competing aggressively for high end consignments.

[Aquarian Sports Cards]

Originally Posted by bandrus1

Can somebody explain to me the reasoning behind adding a BP vs taking a total amount of a final hammer price?

Is there a known psychology that people will bid higher with BP's vs total price

It started with Christie's and Sotheby's in the art auction world (I forget which one but this is what we were taught in auction school) using BP as a tool to be able to say to consignors "Hey we're only charging you X% the other guy is charging Y%. Of course when you add X% and the newfangled BP it equaled, or even surpassed Y%, but when you're the first to do something it works. Of course you also get copied, and the other company followed suit pretty quickly because they got tired of hearing "The other company only charges X%"

It's pretty hard to get away from once a the market starts to do it. This may well actually be to get them competitive again with Goldin and Heritage on the CONSIGNMENT end of things, because, as we all know, BP SHOULDN'T make a difference in the money an auction makes as people SHOULD account for it in their bidding.

[Exhibitman]

Originally Posted by bandrus1

Can somebody explain to me the reasoning behind adding a BP vs taking a total amount of a final hammer price?

Is there a known psychology that people will bid higher with BP's vs total price

Since the commission and the buyer’s premium both are paid to the auctioneer from the proceeds of the sale, they are functionally the same, so why split them? If you’ve read my Substack for a while you know my answer: to manipulate people. It is a jazz hands misdirect. Labeling 1/3 of the AH take as a “commission” and the other 2/3 as a “buyer’s premium” tends to suggest that they are somehow different and that the consignor only pays the “commission” because the buyer pays the “buyer’s premium”. It's salesmanship: "I tell you what: I am going to make you a special deal and completely waive the commission on your consignment." Nevermind the 20%, er 23%, Biuyer's Premium. That’s a bullshit framing, but a significant percentage of the public (especially the novices or hon-collectors) falls for it when consigning. They don't have the knowledge or the stomach to ask for a piece of the BP.

Something I am going to cover in more detail in another column is the follow-on effect of the confusion that the split causes to some percentage of bidders.

[jayshum]

Originally Posted by Yoda

Why? They are a profitable company. Rob Lifson once cut the BP from 20% to 19%.

Curious how you know their current financial state. Care to provide a source for your claim?

[Snowman]

Originally Posted by jayshum

Curious how you know their current financial state. Care to provide a source for your claim?

Ya, his source is 'No Shit Sherlock'. What's yours?

[G1911]

Originally Posted by jayshum

Curious how you know their current financial state. Care to provide a source for your claim?

As we do not have the complete financial records to account every penny of the companies finances, it seems more reasonable to think REA runs a profit than that REA runs a loss at this point in their business, at or near the top of a very profitable sector with auction prices exploding the last few years. Does anybody genuinely, seriously believe that REA is actively losing money?

[jayshum]

Originally Posted by oldjudge

Really sorry to hear that. I thought they were one of the good guys. Just because you can doesn't mean you should.

They're a business that's trying to make money, and usually that means as much as possible. I don't consider them to be bad guys for that.

[taul166]

Maybe someone else asked this, but is Huggins and Scott (REA's sister) also increasing their BP?

[Jewish-collector]

If you really want the card(s), sometimes you just gotta say WTF and not worry about the BP, tax, shipping, etc,...

[Republicaninmass]

Originally Posted by Jewish-collector

If you really want the card(s), sometimes you just gotta say WTF and not worry about the BP, tax, shipping, etc,...

Nobody buys cards anymore...they're too expensive