Huggins and Scott Auction bid increments good for buyers, bad for consigners
 

I was just looking over the current Huggins and Scott auction. They have some really great items!! I was noticing some listings with lots of bids and was surprised by how low the current high price with so many bids. Seemed to me the bid should be higher with so much activity.

Just to pick out one lot as an example see:

1914 T222 Fatima Cigarettes Grover Alexander Rookie - SGC 2 Good

The starting bid was $250 and after 22 bids the current high bid as I write this is $775. Most auctions have a 10% bid increment, which if my math is correct would have the current high bid at $1850 not $775, a difference of $1075!!

As a consignor I would not be happy with this. However I looked at the H&S rules and it clearly states the increments as

$50-$249 increment of $10
$250-$999 increment of $25
$1000-$9,999 increment of $100

Using their increments the high bid of $775 after 22 bids is correct. I assume the thinking is to get more people to bid. And I understand that if the increments were to be 10% some of the bidders may not have bid which would bring down the $1850 figure above. However I have to believe the bids would be higher than the current bid. Just my take.

Curious if the increments H&S uses would cause pause for consignors? Have any of you who have consigned in the past known this? If so how did it work out for you? Were you pleased? Did your item go for less, what you expected or more?

If you were looking to consign to an auction house would this knowledge sway you not to consign or encourage you to consign with H&S?

Maybe I am forgetting/missing something. I would be interested in others thoughts.

As a footnote, I am not a consignor in this auction.

OMG. The sales price is based on what a bidder is willing to pay, not the number of bids.

Increments don't matter, astute collectors have known about thrH&S offerings for weeks, those cards are going to find market price no matter what.

Don’t co-sign

I guess you can look at this the other way too (good for consignors and bad for bidders).

The bad news for bidders is that with the smaller bid increments comes a plethora of bidders during the extended bidding session. This is bad for the bidder because that puts more potential bidders in the extended bidding session when the real bidding takes place.

I think your assumption that 10% bid increments is the standard is flawed. Yes there are a few AH's that use the 10% increment, but a lot use a flat bid increment at different intervals such as REA, LOTG, H&S, and Goldin. Honestly, I would be less inclined to consign to an AH with a 10% increase as the variance between bids makes it so that a lot can easily be undervalued at one bid, but the next bid is significantly overvalued. I know with AH's that have the 10% increment I will place bids early to get the sweet spot bid that is undervalued.

Exactly!

That’s why no one uses them anymore. :rolleyes:

Um...there's still 4.5 days to go in this auction. I don't think any of the prices right now will matter much come the final day.

Seems to me the final price is really the only one that matters.

Interesting take on people's mentality. I used to bid my max bid first when the auction opened so I didnt have to beat myself by someone else's 10%

RE: Huggins and scott
 

They always do well and they are honest auction house. Not only are they a great auction house, but they get huge action from collectors and dealers. Sorry to say but that post really does not reflect even close to the years of quality results they produce. I wish more auction houses used their model!

Thank You!

I like their auctions a great deal and have always done nicely with them. I like their mix of items.

As a consignor, I wouldn't mind the small increments at all. If my item is sitting at $7500, and it's not going to go to $8,000, I'd rather someone bounces it up to $7,800 than not.

Ken,

About 5-6 years ago we changed our format from larger bid increments to lesser bid increments because our prices realized on larger increments was substantially lesser. It does seem counterintuitive but since we've gone to the smaller increment model our prices realized for similar items is almost universally higher. I appreciate your concern for our consignors but there has also been a dramatic increase in that regard as well...and I think all will be thrilled with the items we've held back for the August auction! With 4-1/2 days until auction close, this period is definitely "the calm before the storm" and I ask for thoughts and prayers on my behalf as I will be one of the guys manning the phones on Thursday evening. :eek:

The OP started this same thread, with the exact same opening post, in the post-war up to 1980 forum. Check it out as I believe the thinking over there is that smaller bid increments are likely better for consignors in the long run, not worse.

+1

Could not agree more with this. 10% increments leave too large a gap between bids. There can indeed be a "sweet spot" where the low bid is too low and the high bid is too high. IMO consignors lose.

Agreed.....I just don't get how a smaller bid increment could be a bad thing.

I would think so. I consigned a few times with H&S and was very happy with the results. Not just $$$ but their level of customer service.

agreed I think it works well for both the buyer and seller. As a Seller I get the buyer who may not want to jump to the next big increment if it is past there buy number/limit and those potentially I get some extra money and for the buyer they have a chance to bid on a card to their comfort level

I remember when REA used to have big increments, like $100 increments between $500 - $999. On a $500 item, I might be willing to go to $525 or $550, but not $600, so there were times an item may have sold for less than it should have. Now there are $25 increments at that price level, so I certainly think it encourages more bidding and higher prices.

Any reasonable logic in my mind says +1 on this.

The smaller increments encourages additional bids due to every piece of marketing knowledge since the beginning of written time. Under no premise can I believe that the current bid price would be that much higher at this second with a higher percentage. People pay what it is worth to them, no one without a possible diagnosis of a mental disorder has an obligation to bid more money just to satiate an obsession to bid. I would say that you are completely eliminating more bidders with an obscene bid jump from the pool prior to extended bidding far more than improving end value for consigned items.

I wouldn't go as far as "under no premise" but certainly that's the case as a general rule. Still, I suspect there are plenty of collectors who might have some formula for calculating what they're willing to bid (based on prior sales and adjusting for buyer's premium, sales tax, shipping charges or whatever) then calculate that they're willing to bid up to, say, $594 for the card. And among those people are surely some who would bid $575 but not $600 if both options were available but who absolutely would have bid $600 if it was the first increment available after $550. On balance though, sure, smaller increments lead to slightly higher sale prices.

Hey Glenn!

I think I would stick with the "under no premise" based on the statements second half of "at this second". I agree, most folks have a set budget and the OPs math is sound, but it's leaving out the all important psychology.

I think the more people you don't scare off prior to extended bidding, the higher chance you have of the psychology changing to the auction house's advantage. Those late night bidding wars are simply people getting caught in the excitement and lowering defenses. With days on the timer, that excitement is replaced with logic. This leaves out prospective bidders from extended bidding and lowers the chances of additional back and forth to extend time.

Opinion based on my observations and trying to use my psychology college work that I never use in my real job, lol.

Justin,

That is a great point. In the other thread about this topic, in the post-war forum, I even said that if AHs were really smart they should actually think about decreasing the bid increments the farther along they got into the extended bidding period. As you stated, psychology can play a huge part in bidding. It is a heck of a lot easier for a bidder to rationalize going an extra $10-$25 on something they already bid $500 on than it is to suddenly go say another $100. People bidding want to win, and rationalizing going an extra bid or two isn't that hard when the increment is seen as small compared to the overall bid.

Plus, anybody ever go to a real live auction and not see the auctioneer throw the bid increments out the window as the bidding was coming to an end? They aren't stupid, so why don't these AHs find someone to tweak the software to have a similar effect? Shouldn't be that difficult, yet no genius has thought of doing it yet. Heck there's even sign language for that. A live auctioneer has something at $600 and he/she's asking for $700, you make a motion with your hand like you're slashing your throat, and almost universally the auctioneer will give you the lead at $650. Or does nobody do that anymore and you have to be an old fart like me to even know what I'm talking about?

Bob:

There is at least one AH (Clean Sweep) that does basically the exact opposite of what you suggest. That AH has the 10% increments that the OP has suggested would be better for the consignor. But as the auction goes into extended bidding their policy is to add an additional 5% to the buyers premium for bids received after 1:30 AM and an additional 10% after 2;30 AM.

What is everyone's take on that policy?

Fred,

I forgot about them doing that. But think about it, say you've been after a particular lot in one of their auctions all night, going head-to head with another just as determined bidder. It's late, you're tired, and the other guy just went over your last bid that was just about the top amount you'd pay for the lot. You really like and want the card in that lot and have been working and bidding to get it all night. Now say that last bid topping you was at $500, and it just went past 2:30 AM. Are you more likely to say WTF and throw in another bid if the bid increment was suddenly cut to $25 (5.0%), or go the extra $125 (25.0%) to now cover the higher increment imposed by Clean Sweep?

I think any normal person with half a brain would know the answer to that without thinking. Using Clean Sweep's increasing bid increment philosophy, you probably aren't going to suddenly go 25% over what you thought a lot was worth in one single bid. But if in this case that next bid is only $25, you may just think, hell yeah, I'll go a little bit more and see if the other person drops out. And even if the other bidder comes right back to top you again, so now you drop out to let them win, that lot just went for about 10% more than it would have otherwise if the increased bid increments were in place.

Quite honestly, the increasing bid increment philosophy seems to have more to do with getting the auction to end earlier so the AH employees can go home than it does with trying to always get the most money for the consignors. And assuming the employees are getting paid by the hour, I can understand why an AH might want to curtail how long the auctions run to cut their payroll, but to the potential detriment of some consignors.