The DEMISE of the Auction Houses?

[GoldenAge50s]

Seems like it was just a year or 2 ago a thread was started (I think by the Bruces) predicting the fall of several auction cos in the coming year, mainly because of the economy.

Well, the economy is STILL not right and yet I don't think I've ever seen so many new auction ventures springing up as we have in the last few months!

Seems like every day lately Leon has a new banner advertiser & I've had more EM's announcing the startup of a new company that wants my bids & consignments than I've EVER had!

As far as I can see, card prices are still generally depressed except for the "cream of the crop".

What is going on here?

[Exhibitman]

Same thing that's going on in other sectors of the economy: since there's no work elsewhere, people are trying to create jobs for themselves. Franchises, direct sales, multilevel marketing, all of them grow when jobs are scarce. Starting an auction business is just the card industry way of doing it. Hell, if I had the time I'd be inclined to try it too.

[scooter729]

I think with the way eBay has upped its fees over the past couple of years, coupled with the way sellers can often fall victim to scamming buyers (thanks to PayPal always siding with buyers), we're obviously seeing fewer auctions on eBay.

I'm guessing some of the new auction houses have opened in anticipation of a higher perceived demand for their services, for those who want to avoid the chaos that can be eBay.

[tbob]

Fred- as a consignor in the upcoming REA auction I am going to be watching very carefully to see whether the economy has an effect on the selling prices for items. I have believed all along that the last year and a half has been the time to be buying, not selling, but I think the REA prices might give a clue as to how soft or how resilient the card market is. I do know that I took Rob's advice and all my cards in the auction are graded (SGC). I think buyers now more than ever feel more comfortable buying graded cards, even if those graded cards are graded lower (so what else is new) than the consignor anticipated.
tbob

[GoldenAge50s]

3 very inciteful replies. Tried to find the old thread about failing auction houses for review of what actually was predicted, but couldn't. I'm sure there were some who supported the theory at the time.

I just find it ironic that there are SO MANY new ventures in the field at this point in time.

I agree folks have to be inventive when jobs are scarce, but they MUST have Buyers too!

[ls7plus]

Have to agree with tbob that now is the time to be buying, as I believe many collectors have been forced to part with some very nice items due to the economy. On the other hand, if you're selling desireable yet not so very tough cards, it can seem like you're making gifts to strangers with the depressed prices of the much more common '50's and '60's stuff. It will be interesting to see how REA fares, but it seems that the big boy buyers always have great gobs of bucks for significant stuff (whoa--three alliterations in one sentence!).

Larry

[ChiefBenderForever]

As long as they get good stuff they will be fine. I am always amazed at the amount of really great cards offered month after month by all the different places. For stuff that is really tough sure is a steady supply usually getting strong prices

[Matthew H]

Now is the time to buy, as opposed to 2007, but card prices are still higher than they were in say 2003. It's not a complete slide.

[alanu]

The rise in the number of auction houses continues, but at some point there will be an oversaturation and the marginal companies will be forced out of business.

I think Ebay is especially hurt by the economy, some to their own doing, and therefore people (high volume sellers, low volume sellers and collectors) are looking at other avenues to sell their cards.

[bbcard1]

Over the next few months, I am planning to consign with five different houses, relatively smaller stuff...Good items, not great items. Why so many? Four reasons...I have excess stuff because of a collection I am disposing of. I have a lot of items and spreading them out seems the best way to avoid firesaling them. I don't know much about auctions so I am trying to find the best fit for the items, and lastly, although I trust all the people I am working with and heaven forbid it would happen, but if I were to get burned by an auction house, either by cashflow problems or just underpromotion of my items I will have spread out my risk. It's a keep your eye on the ball thing...I hope to recover my friend's initial investment in the cards and I expect i will...which is saying something because while I am sure I will do handsomely on the T cards, maybe more or less break even on the 50s and 60s, I will lose big on the 70s, 80s and 90s.

[Delray Vintage]

I buy high quality cards and love the expansion of auction houses. While REA is the one I look forward to, I have found great acquisitions at several smaller ones. The fact that the frequency of auctions is increasing creates a more transparent market. This will smooth out trends in prices realized since even the rare items will be available more often. Also having an auction active almost every week is a lot of fun.

[novakjr]

In a bad economy the auction houses for the most part will be booming. Sure there's less bidders, BUT you only need two to run up a price. One of the local vintage guitar stores actually gave me some nice perspective into this a few years back, when I noticed a bunch of absolutely incredible vintage guitars and amps that he seemed to get all at once, after a long dry spell. He basically said, "The economy is bad enough that people are parting with things that they would never have parted with. And the market is now seeing things that most buyers would have never dreamed would hit the market."

[Delray Vintage]

As a follow up to my last post I will add that it will be very hard for all the new entrants to succeed. It is a high fixed cost business if catalogs are printed. The costs of auctioning low priced cards are almost as high as high priced cards given a printed page costs the same. If New companies can convince buyers to use web catalogs exclusively then these smaller companies can survive. I would only consign my high value cards to the most established houses given I want maximum assurances on financial stability. I think the newer houses will have to show they can survive to attract a consistent consigner base.

[Exhibitman]

Or estabish a niche specialty.

To date myself w/an expression IMO the success of a start-up is really all about the rolodex. If the wannabe auctioneer has good industry contacts and a strong base of collector contacts he will do just fine even w/o a printed catalog running an internet only auction. He won't be selling T206 Wagners but that's OK. Not everyone caters to wealthier collectors. There is a lot of money to be made supplying collectors w/three-figure budgets.

[Delray Vintage]

Exhibitman makes a good point that some new houses will cater to the under $1000 card buyer and succeed. The issue though is making $150 on those cards in commission and paying the fixed costs. I see a number of those auctions bringing in under $100k in sales. Tough to make a profit on those.

I guess as long as each of those houses can convince a few collectors to consign some Hof t-206 or CJ or a Ruth or two they can make enough to survive.

Good luck to all of those start ups as competition keeps a fluid and more accurately priced market. It also keeps those buyer commissions in check which at 20% are getting ridiculous.

[ls7plus]

I believe David is absolutely right on in commenting that the economy has caused many collectors to put quality items on the market that they otherwise would never have sold. It's been a great time to buy, in the last year or so, if you're able to be a buyer, since key cards that otherwise might not have seen the light of day for decades are coming out.

Larry

[sycks22]

I like what Paragon auctions is doing with no buyers premium / consignor fees. More money in the pocket of the seller.