Posted By:
Ed HansBarry,
As always, an interesting and thought-provoking post. As usual, the answer lies in market economics. Two decades ago, sellers of high end sports memorabilia had a fairly limited number of choices when it came to liquidating their material. Today there are scores of auction companies with expertise in this arena and the resources to attract a large pool of potential buyers. Simply put, there is fierce competition for top end material. In order to woo potential consignors, auction companies have reduced their fees to potential sellers to the current point of negative percentages (ie hammer plus x%). All the while their costs have risen roughly in proportion to the rate of inflation. The only way they can stay in business is to make it up on the back end (the buyer's premium).
In theory, the market will factor the BP and shipping cost into the final bid, thus negating any benefit to the consignor, since the hammer price should depressed due to the back end costs. While this may not apply to museum quality, one-of-a-kind pieces, it usually does with 90% or more of the merchandise in auctions. At some point, we will reach the point where hammer fees simply can't be increased further. I suspect 25% is not the top.