REA increasing their BP and making other changes

jayshum · #1 06-16-2025, 08:55 AM

Quote:

Originally Posted by G1911

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?

It's certainly easy to say they must be making a lot of money because of what prices have done over the past few years. However, it also seems strange they would raise their BP just to make more when doing so is also likely to upset a (probably) large percentage of their customers. Maybe it's for the reason that Scott provided in an earlier post or maybe it's for something else. Without knowing their overall financial situation, it's hard to know why they would make this change.

Aquarian Sports Cards · #2 06-16-2025, 10:21 AM

Quote:

Originally Posted by jayshum

It's certainly easy to say they must be making a lot of money because of what prices have done over the past few years. However, it also seems strange they would raise their BP just to make more when doing so is also likely to upset a (probably) large percentage of their customers. Maybe it's for the reason that Scott provided in an earlier post or maybe it's for something else. Without knowing their overall financial situation, it's hard to know why they would make this change.

One last time. They are not raising their BP to make more money in the direct sense. As numerous people point out the BP shouldn't have any impact on the money generated by a lot, just shift things around.

They are raising the BP to better secure consignments. If it makes a few extra bucks because people aren't smart enough to incorporate the information into their bids, that's a only a side bonus.

parkplace33 · #3 06-16-2025, 10:36 AM

Quote:

Originally Posted by Aquarian Sports Cards

One last time. They are not raising their BP to make more money in the direct sense. As numerous people point out the BP shouldn't have any impact on the money generated by a lot, just shift things around.

They are raising the BP to better secure consignments. If it makes a few extra bucks because people aren't smart enough to incorporate the information into their bids, that's a only a side bonus.

Definitely true.

Another piece that I find interesting is the behind the scenes negation between the seller and AH about getting a piece of that BP. For example, if you were getting 50 percent of the 20 percent before, do you now ask for 50 percent of the 23 percent?

jsfriedm · #4 06-16-2025, 10:43 AM

Quote:

Originally Posted by parkplace33

Definitely true.

Another piece that I find interesting is the behind the scenes negation between the seller and AH about getting a piece of that BP. For example, if you were getting 50 percent of the 20 percent before, do you now ask for 50 percent of the 23 percent?

Absolutely. Or more.

Johnny630 · #5 06-16-2025, 10:49 AM

Quote:

Originally Posted by parkplace33

Definitely true.

Another piece that I find interesting is the behind the scenes negation between the seller and AH about getting a piece of that BP. For example, if you were getting 50 percent of the 20 percent before, do you now ask for 50 percent of the 23 percent?

Or lager percentage in cash advance....idk I bet all kind of negations happen if the consigner has the material a auction house really wants to showcase. Who knows people always want it both ways...sometimes it's the diamond sometimes the stone...idk

parkplace33 · #6 06-16-2025, 03:06 PM

Quote:

Originally Posted by Johnny630

Or lager percentage in cash advance....idk I bet all kind of negations happen if the consigner has the material a auction house really wants to showcase. Who knows people always want it both ways...sometimes it's the diamond sometimes the stone...idk

Oh I am sure it quite the discussion between consignor and AH

A prominent guy on a FB group posted that he will not buy from REA anymore with this news. I am sure he won't.... until a huge card appears at the next REA auction. Then all bets are off

Johnny630 · #7 06-16-2025, 03:30 PM

Quote:

Originally Posted by parkplace33

Oh I am sure it quite the discussion between consignor and AH

A prominent guy on a FB group posted that he will not buy from REA anymore with this news. I am sure he won't.... until a huge card appears at the next REA auction. Then all bets are off

The complaining will end soon enough and they will be back to buying from REA. The real winner is REA they will still get tons of bidders and consigners.

Exhibitman · #8 06-16-2025, 03:50 PM

Scott, besides the fact that the antecedents for having a BP are totally irrelevant to today's business, I do not buy any explanation for the commission-BP structure other than it makes the auctioneer more money. If I 'win' a card at REA now, I pay REA the hammer price plus 23%. 123% of the hammer price is the true price of the card. On a $1,000 bid the auction house receives $1,230 from the winning bidder. How the proceeds are chopped up does not change that math. When a middleman (and auctioneers are middlemen between buyer and seller) has two choices of how to do things, a simple one and a more complex one, there is no reason to use the complicated one, other than in the belief that it makes more money for the middleman to do it that way. I've had many negotiations with auctioneers big and small, and they all use the bifurcated structure because they all 'sell' a low or zero commission knowing that the buyer's premium is still going to them.

I am not begrudging an auctioneer the right to make a living, I am expressing a preference for simply admitting that the commission and buyer's premium are one and the same, and dropping the pretense.

oldjudge · #9 06-16-2025, 10:56 AM

Quote:

Originally Posted by parkplace33

Definitely true.

Another piece that I find interesting is the behind the scenes negation between the seller and AH about getting a piece of that BP. For example, if you were getting 50 percent of the 20 percent before, do you now ask for 50 percent of the 23 percent?

If you were getting 10% before to be equivalent you should be getting 13% now. I wonder if REA is passing this along to consignors. My guess is no. This is why consignors should negotiate not what amounted of the BP they get back but rather what amount of the BP that the auction house keeps.

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