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For example, if Huggins and Scott is auctioning off an item that they determine has a "market value" of $500 from previous sales; however, the item is only currently being bid at $200.
The buyer is about to purchase the item for $200 + $39 (buyers premium - 19.5%) = $239. Huggins and Scott are going to make $39.
Huggins and Scott decide that this is below retail and decide to put a bid in for $300 (even though they do not know max bid). Here are the two scenarios that occur:
1) Huggins and Scott win auction and have bought an item at a good price (relative to determined retail) and can sell it through House of Cards for a profit. And they bought it for $300 because they are not paying buyers premium.
2) Other buyers max bid is greater than $300 and the new high bid in the auction becomes $330. Now the buyer is buying the item for $330 + $64.35 (buyers premium) = $394.35. By making a "feeler" bid Huggins and Scott just made themselves $25!
Huggins and Scott can ONLY benefit by placing bids on items in their own auction!
And they can continue to do this. They could then toss out a bid of $400 and increase their profits if the other buyer has put in a higher maximum bid.
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Andy could not have stated this more eloquently.
I have bid in several H&S auctions and have been
very pleased with their customer service and the manner in which they conduct their auctions, but I find this information concerning.
My thoughts drift back to all the auctions I have participated in with numerous auction houses and I think of how much more aggressively I could have bid had I had essentially what amounts to a ~20% discount on the final price of the item. I feel this gives certain bidders an unfair advantage.
I am interested in seeing what develops from this discussion.