Interesting thread on the non-sports board

[Jim VB]

http://www.network54.com/Forum/526604/thread/1264810194/last-1264878336/Heritage+Weekly+Auction+%23410015

I'm speaking about David's response (post #3 in the thread) to Peter.


I know we've discussed this before, but it's been a while. On one hand, I like the fact that Heritage is upfront about the fact that they bid on their own auctions. On the other hand, I hate the fact that they actually do it!

Seems like this is an old time kind of practice that's still going on here. Set a minimum. Fine. Set a visible reserve. Fine. But don't use a hidden reserve to bid against me.

Thoughts?

[E93]

That rule makes me very hesitant to ever bid in a Heritage auction again. It basically says that they can shill at will in the worst possible ways (with full knowledge of private bidding), record false prices, and then re-sell in another format. Personally, I am not at all comfortable with that and would hope they change their policy.
JimB

[Fred]

I completely agree. Set a reserve (that reflects the minimum sale price) and if nobody bids on it then they'll figure out the item wasn't worth the minimum bid. Perhaps the consignors dictate how much they want for the item. If that's the case, just don't take on those consignments.

What's the difference between not selling an item where people bid on it and not selling an item where nobodey bids on it? - The difference is that you're probably going to wonder why the item is available in their next auction if you were the under bidder on that same item.

[teetwoohsix]

So,other than the possibility of the house winning the item to sell in another format,maybe the house wins the item due to their shill bidding backfiring.They bid on the item in an attempt to drive the price up,and no one bids higher,so the house ends up having to buy the item?Either way,I would not feel comfortable bidding in that environment.

[calvindog]

Hilariously ironic that Pete Calderon was the one who had to answer to the legalized shilling question. Pete has some resume in this business.

[rhettyeakley]

Now it all makes sense why that green tinted Harrington's Earl Smith card had a few bids on it at above the $10,000 minimum.

[barrysloate]

I don't even think that Harrington sold. I heard the consignor got it back.

[rhettyeakley]

Barry, that is what I was getting at. It had several bids on it and didn't even sell for the super inflated price--how odd!

Why would somebody [not trying to falsely inflate the price of a $100-200 oddity] not take a bid of $13,000 or something for the card? Answer: None of the bids were legit!

[barrysloate]

Rhett- what I heard, and this baffles me, is that mid-auction the consignor decided he no longer wanted to sell it, asked for it back, and the house capitulated. I can't of course confirm that.

When I ran auctions if a consignor had asked for his material back while my auction was in progress I would have told him tough noogies (did I spell "noogies" correctly?).

[uffda51]

I've seen it spelled "nougies," but I'm no expert.

[uffda51]

I agree completely with Jim VB. With the so-called Heritage Rule 21 in play, it ceases to be an auction and becomes something else entirely. I'm not sure what, but as Elaine Benes once said, "Do I smell something? What am I, hard of smelling? Of *course* I smell something."

[iggyman]

I have a "big" problem with an auction house bidding in its own auction, so I simply DO NOT bid on any Heritage auction! Tough titty!!!

Lovely Day...

[calvindog]

I have a "big" problem with an auction house bidding in its own auction, so I simply DO NOT bid on any Heritage auction! Tough titty!!!

Lovely Day...

Well, at least Heritage tells you upfront that they're bidding in their own auctions. That makes them more honest than the rest of them.

By the way, is it true that Frank DiRoberto is working for Heritage now? Anyone know?

[Rob D.]

I'd much rather not know I'm bidding against the house. Thankfully, I think quite a few auction houses respect my wishes.

[calvindog]

Lol

[Wite3]

I have not bid in a Heritage auction in a long time...they shill, supposedly on behalf of the consignor to protect a hidden reserve. I wonder if they go so far as letting the consignor bid themselves?

Joshua

[iggyman]

Well, at least Heritage tells you upfront that they're bidding in their own auctions. That makes them more honest than the rest of them.


True. But that so called "honesty" gives them "carte blanche" to shill and makes it real easy for them to flip the lot in a future auction/eBay, or on "Grand Slam" (Leon, I'm advertising for ya.....don't forget me when you are on the cover of "Fortune 500").

Lovely Day...

[calvindog]

Iggy, the ones that don't advertise their shill bidding also think it is their birthright to steal, as well. And unlike the other unmentioned auction houses, at least Heritage is not violating the US Criminal Code.

[Leon]

Chris Ivy, the Heritage Director of Sports Auctions, asked me to post this for him. Chris is a good friend of mine and I am happy to do it for him.

"This statement is intended to address the issue of Heritage “house bids”. For the majority of hobby insiders this policy is well known and understood, and we offer our apologies to the many for whom this explanation will be entirely redundant. We will try to keep it short.

Our bidding policy is very clearly stated in every auction catalog printed by Heritage, as well as on our website. Section 21 of the “Terms and conditions of Auction” stipulates “The Auctioneer or its affiliates may consign items to be sold in the Auction, and may bid on those lots or any other lots.

In order to clear up any misconceptions, we’ll explain the terms of the house bid policy here in explicit detail. Again, our apologies to the many who are already well informed on the topic.

· House bids are always placed at least seven days prior to a catalog auction closing, never later. For example, all Heritage bids were placed in our most recent Signature Sports auction # 716 on 09/24/09. The auction closed on 10/01/09 and 10/02/09. Heritage will not place any other house bids after the seven day point. The seven day point is also when the consignor reserves post.

· Heritage is one of the largest buyers of sports memorabilia in the world. Bids are placed on the books at wholesale prices that we would be willing to purchase this exact material from any dealer or other auction house. These bids are placed without any influence from the current standing of the bids. Heritage has no advantage with the house bids and the full buyer’s premium is paid with the invoice. If Heritage wins the lot, then the consignor is paid the same as if any other bidder had won the lot.
<O:p
· Heritage does not remove house bids once they have been placed.
<O:p</O:p
· Heritage does own some of the material in our auctions, typically less than 10% of the material. If Heritage places a bid on an item that Heritage owns, then it shows up as a reserve on the item, not a bid.

We hope that this clarification will serve to dispel any false information. The foundation upon which Heritage has established itself as the world’s largest collectibles auctioneer is our integrity, so we take issues such as this very seriously. We hear again and again from our clientele that we are the only auction house they entrust with their absentee bids, and surely there are many members of the board who can attest to having routinely won lots well below their max. Our record speaks for itself. We will not be making any further posts on the matter, but should any board member have any further questions then please feel free to contact me directly via email at CIvy@HA.com."

<O:p
Regards,
Chris Ivy
Director of Sports Auctions









<O:p

[iggyman]

Calvin, so if my wife advertises that she is going to cheat on me, does that make it right? Am I going to admire her honesty (for the record, just in case she reads this one day....."honey, you know I'm only kidding"...........)? Am I so naive to believe that other auction houses don't shill bid? Of course they do, there is just too much $$$ at play. But, I will give them the benefit of doubt until proven otherwise. At the end of the day, this debate is simple for me; is it right for an auction house to shill bid? For me, the answer is No and it is unconditional. Does that mean I better stop bidding in all auctions (from REA on down...)? I would hope the answer is no.

Lovely Day...

[Matt]

So both Hunt and Heritage have such a practice that they have disclosed in their terms. Do Goodwin/Legendary/SCP/Mile High/Memory Lane not do it, or do it but don't disclose it? I'd love to get statements from their reps. I believe both REA and B&L are on the record as not engaging in the practice.

[bbeck]

Barry-a very little known fact that knoogies has a silent k in front of it. Those silent k's are killers.

[calvindog]

Iggy, I'm satisfied with Chris Ivy's explanation. It is transparent and not unfair. That the usual Greek--woops, I mean Goodwin--chorus has not come out to loudly support Heritage also comforts me.

[PolarBear]

Good explanation from Heritage but even if it's all done honestly, it still gives the perception of a conflict of interest, and it absolutely helps their bottom line by insuring lots sell for a minimum amount, which maximizes their fees.

Just my opinion, but no auction company should be allowed to bid in their own auctions and in today's highly regulated environment, I'm surprised it's still legal. If the company wants to buy the material outright from the consignor prior to the auction, then do that. Don't play games by bidding on your own auction lots.

[iggyman]

Barry, I'm not sure about the spelling but I believe this is the proper technique....

Lovely Day

[Jim VB]

Iggy, I'm satisfied with Chris Ivy's explanation. It is transparent and not unfair.



Jeff,

My reading is a little different. Heritage has a rule in place that allows them to bid in their own auctions. Chris' explanation is transparent and not unfair, but he basically, just narrows down the times when Heritage DOES bid in their own auctions.

So there is still a gap between what they CAN do and what they DO do. I do happen to believe him, but their rules ought to be more narrow in scope and more specific about what they are doing.

[Fred]

The bottom line is that the prices realized in the auctions influenced by house or consignor bidding creates a somewhat inflated view of the prices realized.

Whose to say that the house doesn't put a maximum bid on an item and that the consignor doesn't also bid it up. What happens if the house and consignor bid up the auction as the only two bidders (because the actual market value for the item is less) and the final hammer price (including juice) is used as a bench mark in value for that particular card. It's all bull$hit... lets make some money and to heck with the hobby(ist)... I suppose the above scenario doesn't play out too often but once is too much...

[buymycards]

Here are my thoughts: (As if anyone cares)

1. Bidding on items that are consigned to your auction. Totally unethical. The auction house has the chance to inspect the items and make a purchase offer before they are placed in the auction. Once the auction begins, then it should be hands off.

2. Bidding on your own items that you consigned to an auction house. Totally unethical.

3. An auction house putting their own items in their own auction. OK, as long as they are disclosed as their own items.

4. An auction house bidding on their own items in their own auction. Totally unethical.

5. Employees of an auction house bidding on items in their auction. Totally unethical.

Rick

[bobbyw8469]

I actually asked this question on another board, but got no responses, so maybe I put it in the wrong board. After reading this thread, maybe I can ask this here:

The latest Legacy Rarities auction. I was the high bidder on the 1955 Bowman Football set at $1,150. I was bid #11. I was outbid with bid #12, but the bid is now $1,950. Why would the next bidder jump the bid in an $800 increment? Wouldn't he want to win the item as cheaply as possible?? I was just curious as to everyones' thoughts on this......

[calvindog]

Here are my thoughts: (As if anyone cares)

1. Bidding on items that are consigned to your auction. Totally unethical. The auction house has the chance to inspect the items and make a purchase offer before they are placed in the auction. Once the auction begins, then it should be hands off.

2. Bidding on your own items that you consigned to an auction house. Totally unethical.

3. An auction house putting their own items in their own auction. OK, as long as they are disclosed as their own items.

4. An auction house bidding on their own items in their own auction. Totally unethical.

5. Employees of an auction house bidding on items in their auction. Totally unethical.

Rick

Now imagine if auction houses do all of these things -- and don't disclose any of this to its bidders. Suddenly, Heritage doesn't look so bad.

[PolarBear]

Now imagine if auction houses do all of these things -- and don't disclose any of this to its bidders. Suddenly, Heritage doesn't look so bad.


True, but being the least unethical compared to their peers, still isn't a place where a company should want to be.

[barrysloate]

Bobby- here's a hypothetical situation:

After you were high bidder at $1150, bidder #12 came in and left a ceiling bid of at least $1950. Then somebody else came in and left a bid of say $1800, which pushed bidder #12 near or at his maximum. Was there enough time between your bid of $1150, and the point you realized the bid was now $1950? That's a possible scenario.

As far as Heritage disclosing their questionable bidding practices, it is better that it is out front rather than hidden, but it still isn't a good thing. Given all the scandalous auction practices that have been revealed of late, this information can only get bidders angry.

[bobbyw8469]

Sloate...if your theory is true, then the bid # should have went from 12 to 14. Only one more bid was placed. It left a sour taste in my mouth.
I was bid #11. Bid #12 was the $1950. No more bids came in.......if someone else had bid like you said, then the bid count would have been #13 instead of #12. I am guessing the consignor bid his maximum he was willing to take for the set (which was not worth THAT much).....

[barrysloate]

If there was a bid count and you are certain that no other bids came in, then I agree my theory doesn't work. You might want to speak to someone at the auction house, and ask them how the bids progressed the way they did.

[Exhibitman]

I call Bu*****t here. Reading Mr. Ivy's reply I note that the lack of a buyer's premium and lack of shipping costs gives Heritage an automatic 20%+ advantage over every other bidder. That allows it to bid a "wholesale" price that is 20% or more over the real wholesale price. In other words, a $120 card really costs me a base bid of $100 plus a BP and shipping cost of $20+ but it would cost Heritage only the base bid. If it decides a card is "worth" 60% of retail it could bid $72 on that $100 card. If it doesn't get it, well it just drove up the price for the buyer. If the card is hot or rare and Heritage decides it is worth 80% of retail to own it, Heritage could bid my full base bid, forcing me to go even higher, past the retail level, to get it.

I feel soooo used...

[HRBAKER]

Adam, exactly.

[calvindog]

I call Bu*****t here. Reading Mr. Ivy's reply I note that the lack of a buyer's premium and lack of shipping costs gives Heritage an automatic 20%+ advantage over every other bidder. That allows it to bid a "wholesale" price that is 20% or more over the real wholesale price. In other words, a $120 card really costs me a base bid of $100 plus a BP and shipping cost of $20+ but it would cost Heritage only the base bid. If it decides a card is "worth" 60% of retail it could bid $72 on that $100 card. If it doesn't get it, well it just drove up the price for the buyer. If the card is hot or rare and Heritage decides it is worth 80% of retail to own it, Heritage could bid my full base bid, forcing me to go even higher, past the retail level, to get it.

I feel soooo used...

This is a good point. That being said, at least it's revealed, unlike the rest of the great guys who are criminals instead of just unethical.

[CTDean]

I actually asked this question on another board, but got no responses, so maybe I put it in the wrong board. After reading this thread, maybe I can ask this here:

The latest Legacy Rarities auction. I was the high bidder on the 1955 Bowman Football set at $1,150. I was bid #11. I was outbid with bid #12, but the bid is now $1,950. Why would the next bidder jump the bid in an $800 increment? Wouldn't he want to win the item as cheaply as possible?? I was just curious as to everyones' thoughts on this......

Bobby, my guess would be the lot had a reserve (say $1900). If the bid following yours was a MAX bid that exceeded the reserve, the new lot price jumps past the reserve.

[teetwoohsix]

Out of the book "The Card",written by Michael O'Keeffe and Teri Thompson,page 180-181,regarding Robert Edward Auctions...........

Under the heading "No Conflicts of Interest" on his website,Lifson has delineated the ills of the industry,from auction houses that bid on material in their own auctions,to shill bidding,to selling their own wares at their auctions.

We are not dealers.Robert Edward Auctions will never place a bid on material in our own auction.Robert Edward Auctions will never purchase material outright to offer at auction.With Robert Edward Auctions,bidders are guaranteed that they never have to worry about the auction house bidding against them on any lot in the auction-EVER.With Robert Edward Auctions,bidders also never have to worry about secret hidden reserves-EVER.

You will never see a "Wanted to Buy" ad placed by Robert Edward Auctions....These firm policies translate directly into greater and well deserved bidder confidence,and in turn higher prices for consignors.Many auctions are run by dealers offering material they own.This common practice exposes consignors and bidders to numerous conflicts-conflicts which can and do cost bidders and consignors money,and can ultimately make bidders uncomfortable even participating in the auction.

These are conflicts that DO NOT EXIST with Robert Edward Auctions.

Under no circumstances does Robert Edward Auctions,LLC allow for a "house account" to bid on lots in the auction.Under no circumstances are executives or employees of Robert Edward Auctions,LLC permitted to place bids in the auction.Under no circumstances are consignors permitted to bid on their own lots.This is a consignment auction,conducted by Robert Edward Auctions,LLC on behalf of consignors.

Under no circumstance is material offered at auction by Robert Edward Auctions,LLC owned in part or whole by Robert Edward Auctions,LLC....Everyone likes an honest auction.


I thought this was interesting.I have no affiliation with them(REA),or with any auction house,for the record.

[bobbyw8469]

No..no lot in Legacy Rarirties had a reserve...the opening bid (minimum bid) was the reserve.....just something really smells funny, and I am not sure that I like it!:(

[PolarBear]

Exhibitman makes a good point.

The only way auction companies will stop is if people refuse to consign and bidders refuse to bid.

I doubt that going to happen though. Unfortunately, collectibles are a lot like drugs. Buyers just have to have certain things and the desire for those things overrides any sense of ethics or long term self interest. Dealers know this and have no incentive to clean up their business in order to make everything 100% ethical and transparent.

[Wesley]

Here are my thoughts: (As if anyone cares)

1. Bidding on items that are consigned to your auction. Totally unethical. The auction house has the chance to inspect the items and make a purchase offer before they are placed in the auction. Once the auction begins, then it should be hands off.

2. Bidding on your own items that you consigned to an auction house. Totally unethical.

3. An auction house putting their own items in their own auction. OK, as long as they are disclosed as their own items.

4. An auction house bidding on their own items in their own auction. Totally unethical.

5. Employees of an auction house bidding on items in their auction. Totally unethical.

Rick


That pretty much sums up my thoughts as well, Rick. Whether it is spelled out in their policies or not, I am simply not comfortable with Heritage placing bids.

[vintagechris]

I once bid in an auction with a company I thought was pretty honest( I won't name them as I have no real proof they did anything unethical) basically they had several small autograph lots of less than 20 cards each. They were all worth about the same. I put in bids on them willing to pay between $100 and $150. To my horror on the last day of bidding I went to check my bids and noticed I had mistakenly put a ceiling bid of $1350 on one of them! I thought about calling them and telling them this but then just decided how much higher could it go for what I really wanted to pay for it?

So, the auctions end that night all selling for around $150 and how much do you think the one I screwed up on sold for? $570 and there is no way those cards were worth anything near that and I just had a hard time believing a legitimate bidder kept bidding that lot up and was willing to pay that much for them.

[calvindog]

That pretty much sums up my thoughts as well, Rick. Whether it is spelled out in their policies or not, I am simply not comfortable with Heritage placing bids.

Of course, you guys are right, but good luck finding a single auction company that is fully ethical and honest -- you simply will not. Finding one that does not break the law is difficult enough.

[E93]

"21. The Auctioneer or its affiliates may consign items to be sold in the Auction, and may bid on those lots or any other lots. Auctioneer or affiliates expressly reserve the right to modify any such bids at any time prior to the hammer based upon data made known to the Auctioneer or its affiliates."


The following scenarios are perfectly acceptable in a Heritage auction according to this rule as I understand it:

1. Chris Ivy can consign his own card. He can watch to see if any top all bids come in. When one comes in, with full knowledge of it, he can bid that person up to their maximum by stopping one increment short of the top all bid.

2. If no top all bid is placed, Chris can simply be an aggressive bidder in the closing minutes of the auction, continuing to artificially drive the price up, while watching who the other bidders (with knowledge of their previous bidding habits) are and how they are reacting. When it seems that his last bidding opponent won't go any further, Chris can simply withdraw ("modify") his last bid two seconds before the hammer falls, leaving the "underbidder" as the actual winner.

3. Chris can bid up a $1000 card of his own up to $4000, creating a new threshold of a "realized price" for that card. He can then re-sell the card in another format with that high number of a "price realized" on the record in places like VCP.


I don't know any of the folks at Heritage other than Peter (who I like) and have no evidence to suggest that they have done any of these things. But it seems reasonable to infer that they have these rules there for a reason. Chris Ivy suggested in this thread that they do not utilize the full powers of rule #21. If that is the case, why not change it. It leaves a terrible impression about the motivations and potential activities of the auction house. It makes me very uncomfortable bidding in their auctions.
JimB

[Rob D.]

I once bid in an auction with a company I thought was pretty honest( I won't name them as I have no real proof they did anything unethical) basically they had several small autograph lots of less than 20 cards each. They were all worth about the same. I put in bids on them willing to pay between $100 and $150. To my horror on the last day of bidding I went to check my bids and noticed I had mistakenly put a ceiling bid of $1350 on one of them! I thought about calling them and telling them this but then just decided how much higher could it go for what I really wanted to pay for it?

So, the auctions end that night all selling for around $150 and how much do you think the one I screwed up on sold for? $570 and there is no way those cards were worth anything near that and I just had a hard time believing a legitimate bidder kept bidding that lot up and was willing to pay that much for them.

Chris,

One of the things I've been fortunate to learn from a handful of posters on this board is that descriptions in an auction catalog can greatly influence selling prices. You might see totally out-of-this-world prices realized, and the reason might be the really cool descriptions in the catalog. Marketing is another thing that can drive up prices in an auction.

So maybe the write-up for the lot that sold for much more than its counterparts simply had a really great description, and maybe that one lot was marketed a lot better.

[Wesley]

Maybe we will know soon enough whether Heritage's practices are legal or not. There is an ongoing lawsuit filed last summer in TX by a former Heritage employee or consultant that alleges shilling, bidding manipulation, RICO violations, etc. Who knows. It is possible their disclosures will be enough to protect them.

[ElCabron]

If it's so ethical to only bid on items in their own auction 7 days before they close, why not post a list of items they've bid on? That way, 7 days before any of their auctions end, potential bidders can go check this list to see if any of the items they're bidding on, or going to bid on, are being bidding on by the auction house.

Or would bidders then be less likely to bid on those items? Yeah, I guess that kind of transparency wouldn't be good for business.

-Ryan

[barrysloate]

While Chris himself may choose to hold his own actions to a high ethical standard, and not run up bids, Heritage's system would certainly allow a rogue employee to consign lots and then pull a lot of shenanigans during the auction. This is a horrendous policy. That said, they are the biggest collectibles auction house in the world, selling a few hundred million dollars worth of rare coins every year. Sports is a drop in the bucket. So something must be working for them.

[vintagechris]

Chris,

One of the things I've been fortunate to learn from a handful of posters on this board is that descriptions in an auction catalog can greatly influence selling prices. You might see totally out-of-this-world prices realized, and the reason might be the really cool descriptions in the catalog. Marketing is another thing that can drive up prices in an auction.

So maybe the write-up for the lot that sold for much more than its counterparts simply had a really great description, and maybe that one lot was marketed a lot better.


Anything is possible which is why I don't mention the Auction House but the write up was very generic only telling what autographed cards were in the lot and marketing I am pretty sure had nothing to do with it because each lot was really only worth about $150.

All the cards were from the same set as well. Basically someone consigned them as one large group and the Auction House broke them up in smaller similar lots to sell. The one I just happened to make the mistake on was the only one that got extra action. All the others sold for what they should have.

Needless to say I was sick to my stomach watching this happen. But it was a lesson learned as I always make sure to double check my bid before clicking now.

[barrysloate]

I think Rob was being:rolleyes:

[Rich Klein]

http://blogs.dallasobserver.com/unfairpark/2009/09/lawsuit_claims_heritage_auctio.php

As an aside, Sam Merten, who wrote this story for the Dallas Observer, used to work in the Beckett grading department and has a good knowledge of collectibles. I did not re-read the whole article or through all the comments; but I will later. There is no doubt that this is a fairly well balanced story and comments WERE well balanced and very interesting.

Rich

[jbsports33]

Interesting post, just not surprised by any of this, we have seen many issues come up in recent years and some how everyone is still in business. The policy for sure is to protect the consignor, but what about the buyer that has no knowledge about what lot may be getting bids from the house.

Jimmy

[calvindog]

I'm not here to defend Heritage, just trying to point out the hilarity of piling on them while defending Goodwin to the grave. Based on the following auctions, which occurred within months of each other I believe, I suppose Heritage's proclaimed shill bidding did not do much to help them with these auctions:

Heritage: D304 Young SGC 80 $17,925
Goodwin: D304 Young SGC 80 $80,053

Heritage D304 Mathewson SGC 70 $8,365
Goodwin D304 Mathewson SGC 60 $45,123

Imagine if Bill Goodwin was able to shill bid as per his published auction rules! Things could really get out of hand; I mean it would be legendary.

[bijoem]

I mean it would be legendary.


poetic!

[bobbyw8469]

WOW! I am AMAZED at the price differences for the EXACT same card for the Young, and a lower condition card got WAY MORE money than his higher grade counterpart!! Should I start consigning to Goodwin????

[PolarBear]

http://blogs.dallasobserver.com/unfairpark/2009/09/lawsuit_claims_heritage_auctio.php

As an aside, Sam Merten, who wrote this story for the Dallas Observer, used to work in the Beckett grading department and has a good knowledge of collectibles. I did not re-read the whole article or through all the comments; but I will later. There is no doubt that this is a fairly well balanced story and comments WERE well balanced and very interesting.

Rich


Wow, great article.

I couldn't believe the pseudonym of their in house "bidder", N.P. Gresham. Greg Rohan, the President of Heritage Auctions, says the N.P. is for "New Purchase" but claims he doesn't know the significance of Gresham.

I'm calling B.S. (Baloney Sandwiches) on that one. Heritage is primarily a numismatic (coin) based company. One of the widely known axioms in coin collecting is Gresham's Law. The use of it here is clearly meant to mock the bidding process. I'm shocked at the audacity.

No wonder he claims he doesn't know the significance of Gresham. That sure wouldn't come across too well in a lawsuit about shill bidding.

[Rob D.]

Heritage: D304 Young SGC 80 $17,925
Goodwin: D304 Young SGC 80 $80,053

Heritage D304 Mathewson SGC 70 $8,365
Goodwin D304 Mathewson SGC 60 $45,123

One word: marketing.

[rhettyeakley]

The fact that their house bidder includes the name "Gresham" is absolutely hilarious. Yeah, I'm sure he had no idea what that meant!

[autograf]

one word: strategery........

[JK]

Bobby,

My guess is that a bidder did place a straight bid at that level despite it being higher than the next bid increment. While we would all generally like to win items as cheaply as possible, as a matter of strategy, I know that some bidders will preemptively place a bid at a particular bidding increment in an effort to discourage further bidding. For example, lets say a card is worth $1100 and the current bidding is at $500. For the sake of example, lets say its a must own card and Im actually willing to pay more than fair value for the card - say $1400. Now, if I know that the card wont sell anywhere close to the next bid increment of $550 (or whatever it happens to be) and believe that it will at least sell for its fair value, I might, instead of placing the bid at the next increment, consider placing a $1000 straight bid. With the 20% BP added in, the card would sell for $1200 - more than the market value, but still less than what I'm willing to pay. My hope would be that the price, which is already higher than market value once you consider the BP, would discourage further bidding but allow me to pick up the card for less than what my maximum bid might be.

The inability to snipe, the extended bidding and the 10% (or more) bidding increments used by auction houses changes the typical "ebay" strategy of trying to pick everything up as cheaply as possible and not showing your hand until the last few seconds of an auction.

[Exhibitman]

Wow, great article.

I couldn't believe the pseudonym of their in house "bidder", N.P. Gresham. Greg Rohan, the President of Heritage Auctions, says the N.P. is for "New Purchase" but claims he doesn't know the significance of Gresham.

I'm calling B.S. (Baloney Sandwiches) on that one. Heritage is primarily a numismatic (coin) based company. One of the widely known axioms in coin collecting is Gresham's Law. The use of it here is clearly meant to mock the bidding process. I'm shocked at the audacity.

No wonder he claims he doesn't know the significance of Gresham. That sure wouldn't come across too well in a lawsuit about shill bidding.

Don't misunderestimate Rohan. There's definitely something stinky in the potpourri at Heritage. I have to wonder how much of the $ I dropped there last year were bids against the house...

[PolarBear]

Don't misunderestimate Rohan. There's definitely something stinky in the potpourri at Heritage. I have to wonder how much of the $ I dropped there last year were bids against the house...

Indeed.

There's an old saying in Tennessee. I know it's in Texas, probably in Tennessee that says, fool me once, shame on you. Fool me, you can't get fooled again.

[rman444]

I call Bu*****t here. Reading Mr. Ivy's reply I note that the lack of a buyer's premium and lack of shipping costs gives Heritage an automatic 20%+ advantage over every other bidder. That allows it to bid a "wholesale" price that is 20% or more over the real wholesale price. In other words, a $120 card really costs me a base bid of $100 plus a BP and shipping cost of $20+ but it would cost Heritage only the base bid. If it decides a card is "worth" 60% of retail it could bid $72 on that $100 card. If it doesn't get it, well it just drove up the price for the buyer. If the card is hot or rare and Heritage decides it is worth 80% of retail to own it, Heritage could bid my full base bid, forcing me to go even higher, past the retail level, to get it.

I feel soooo used...

Adam -

I think a portion of the 20% is used to advertise, pay for the catalog and misc other expenses that they would not be able to recoup, so the house's advantage would be less than the full 20%.

[Exhibitman]

Those are sunk costs--expended regardless of whether they win the item--so it is not realistic to count them into the equation. But let's not forget that they would also have the benefit of the commissions that they charge to the sellers as well as all of the bids they run up but don't win, so I think their advantage remains very high.

All I can say is that when I am agonizing over that last bid increment I am no longer inclined to pull the trigger with Heritage but am inclined to instead formulate a single max bid at the start of the auction and walk away from their auctions if the card goes higher, as I do with auctioneers I distrust w/r/t shilling.