ebay finds that PWCC engaged in shill bidding?

hcv123 · #11 08-20-2021, 10:59 AM

I do not participate in, nor in any way support or condone shill bidding! I agree with Travis that while shilling is 100% wrong on every level it in and of itself doesn't have as large an impact on a given market - people's fear and greed have a much more significant impact.

From what I have read here I think people are getting confused between shill bidding and "fair market value" or the effect that shill bidding has on fair market value. I think it might be helpful to start by borrowing the following from Investopedia:

"In investing, fair value is a reference to the asset's price, as determined by a willing seller and buyer, and often established in the marketplace.

Fair value is a broad measure of an asset's worth and is not the same as market value, which refers to the price of an asset in the marketplace.

In accounting, fair value is a reference to the estimated worth of a company's assets and liabilities that are listed on a company's financial statement."

In my opinion, while there have been many excellent and accurate points made, the ultimate answer lies in consideration of all of them.

A fairly run auction is in a best case scenario a fair determinant of market value on that day, with all the participants in the auction that day Someone (inaccurately) stated once the high bidder has won an item in an auction the item is theoretically only worth what the second highest bidder was willing to pay. What is inaccurate about that is it assumes all willing buyers participated in the auction - and that variable theoretically can change day to day both with peoples knowledge of and participation in a given auction on a given day as well as different collectors decisions to add and remove cards from their want lists. It is just not simple. Do you know some auction houses (At least a couple of "biggies") per their rules (how many times have you read them?) have the right to bid on a consignor's behalf up to a "reserve" price. How is that different than "shilling"? It is disclosed as a term of the auction - does that make it okay?

If there is a private sale at a certain price level, similarly it is in a best case scenario a fair determinant of market value on that day, with all the participants in the market where it sold that day

The more sales there are, the more useful information exists to help as a guide for an interested buyer to have an idea of what a "fair market value" might be. But what about all the other variables - Is the example raw or graded? Who graded it? Although the card is theoretically "the same" - I don't think many would argue that there are different "fair market values" for raw vs graded cards as well as cards graded by different companies.

As highlighted in a previous post - auctions are NOT always the best place to get the highest price for your cards - I love buying certain items out of auctions for this very reason! It is also (SHAMELESS PLUG COMING) why part of my business is private consignment sales - it offers true price protection with integrity! If my consignor doesn't like an offer, it doesn't "sell to the highest bidder" - we wait for someone willing to pay more.

A factor that has been touched on, but not addressed directly (I think) is the inefficiency of the market - or the opportunity for arbitrage. Unlike the stock market which is a single destination for all potential buyers to meet all potential sellers, there is no such place for trading cards - The market is hugely fragmented - multiple small and large auction houses, shows, bulletin boards, Ebay, garage sales, etc. The way it exists currently - there is NO WAY anyone can make a claim that any single sale is a "fair market value"

So what is a collector to do? Know your market. As Travis stated the more current recorded sales there are of a specific card/grade/grader - the higher degree of confidence we can have of current "market value". The fewer the sales the less confidence we can have (lower OR higher) of the "market value".

There is no pricing ("market value") perfection. To some, the card matters more than the money, to others, the price they pay more than the card - neither approach is wrong! There is nothing wrong with Butch's approach - he bids what a card is worth to him (however he choose to determine that!)

Remember CPU? CCP? Beckett? SPort Americana guides? Standard catalog? Were they fair indicators of "current market value"? Sometimes - but more often not.

Overall just so well stated I wanted to repeat it:

Quote:

Originally Posted by BobC

As you said, your definition is market price at "auction". I always heard the FMV of something was what a willing buyer would agree to pay an unrelated willing seller for something in an open, arms length transaction. So if the party looking to buy a particular card is willing to pay $100 for it, but because they are seeking to buy it through an auction and end up getting it for less than their max bid, it doesn't mean they couldn't have run across that same card with a dealer at some show and gladly paid the $100 he was asking for it, right? So if that is the case then what is the correct market value of that card, at least at that point in time? It sure isn't just one increment over $50.

Plus, when dealing with an auction you are limited by who decides to participate. There is no guarantee that all potentially interested parties are participating or even aware of a particular auction, or a specific card in it. Of course the same goes for card shows and individual dealers selling a card outright, they don't have all potential buyers necessarily aware of and looking to buy a card they have for sale either. And the thing about an auction is that you normally don't know the maximum amount someone who ends up winning an item for is actually willing to pay for it, which to me would be it's true market value. We really only know what the second highest bidder attending/participating in that particular auction was willing to pay.

You may be biased in that you operate an auction house and possibly tell potential consignors that an auction is the best way for them to get the highest possible market value for their items they look to sell, but is it always? I've heard of people saying items they put up for auction didn't go for what they thought they would and were sometimes disappointed in what an item ended up selling for, and I would suspect that has happened in your auctions as well. At best, auction and Ebay results are good indicators of where the "market" is approximately on cards, but to truly know what someone is really willing to pay for an item you need to know the max amount they would have gone for that item. That would be a more true "market" value. But still, think about how many times here just on Net54 you've seen someone post how after the fact they heard about something they didn't know was being auctioned, or how they were in an auction, but because there were so many items they were going after they couldn't afford to go more on some items they wished they could have. Those kinds of things affect final hammer prices negatively, but is that hammer price on such items truly an indicator of accurate "market" prices then?

I've always felt that most people acquiring items through auctions are doing so because they expect to get things for less than what they perceive market value to be. Why else would you always hear of so many people talking about being run up in their max bids? They are ticked because they fully expected to pay less, and they have every right to be if somehow their max bid amount became known and was used solely to run up what they paid. Granted, there are marquee and uber rare items, like the recent PSA3 Wagner sale, where no one has any idea where the market truly is. So they consign it to auction to hopefully get the top price, and it sells for a record $6.6M. But what if instead of an auction the consignor instead put it up for sale at say $7.5M, and the same person who won it for $6.6M happily pays the $7.5M for it because he/she thinks it is really worth $10M. So in that case your "auction" value is way below what a more true FMV should be.

And maybe a more measurable indicator that auctions aren't always perceived as the best way to get maximum market value for a card is Ebay itself. When Ebay started out it was primarily an auction platform, but if you looked at pre-war vintage card sales over most recent years, the number of actual auctions is usually around 1,000-2,000 at any point in time. Meanwhile the total number of pre-war vintage cards being listed was more like 40,000-50,000. At least it used to be before Ebay changed the search filters and you could look up pre-war baseball as a specific category. Point is, the vast majority of sellers did not feel auctions would get them the max market value. And yes I know there are certain dealers well known for their pages and pages of supposedly overpriced BIN listings, but that doesn't change the fact that if they felt they would get a comparable/higher max price by putting their items up for true auctions instead that that is what they would be doing.

There is no perfect indicator of a card's FMV, and it most definitely fluctuates over time, especially during this current pandemic period we're going through. But at least to me, it isn't as simple or accurate to say a card's FMV is what it just sold for in the most recent auction.

What you are missing is the potential inclusion of potential buyers who did not participate in that auction on that day as possible changes in market demand:

Quote:

Originally Posted by egbeachley

Except that after that sale occurs, that buyer is no longer in the market and the “price” becomes what the next person will pay. And now we are back to the auction scenario of second highest bidder plus one increment

Franklin was wrong!! A penny saved is worth more than a penny earned. You will have to pay tax on a penny earned and it is therefore worth less than a penny whereas a saved penny is in post tax dollars and worth a full penny:

Quote:

Originally Posted by drcy

As Benjamin Franklin said, "A penny saved is a penny earned."

SUPER question! Any tax professionals?:

Quote:

Originally Posted by BeanTown

So for those PWCC customers who want to take their items out of the PWCC vault, will that create a taxable event?

Firstly I don't think your assumption is accurate. That said, as I think you stated in another post - how you determine your asking price for cards you sell - we do the best we can with the information we have and make individual choices of what makes sense or works for each of us:

Quote:

Originally Posted by Peter_Spaeth

So let's assume PWCC prices have been widely inflated AND they have had a gravitational effect on other prices. The whole market is inflated. What's the appropriate response assuming you still want to try to win certain cards?

Perhaps a new term needs to start being used - "Auction price" rather than "market price" or "fair market value". I have sold comparable cards for more and for less than recent auction sales. A single auction (or other) sale is not a reasonable determinant of "fair market value". It was the highest price a specific auction participant was willing to pay for that card on that day - it is certainly a relevant piece of information in a market value conversation, but not market value in and of itself:

Quote:

Originally Posted by Aquarian Sports Cards

Market price at auction needs two people to determine it accurately, and they need to be working in good faith. If one person is willing to pay $100 and the next highest is willing to pay $50, the market price is one bid past $50, not $100.

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