Sotheby's vs. Mastro et. al.

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Posted By: ramram

I don't know, maybe it's me, but Sotheby's doesn't even let me dream about winning a lot when you see their presell estimates. At least Mastro's and some of the others allow you to dream a while when you see their minimum opening bids. Sometimes dreaming is half the fun.

Rob M.

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Posted By: joe maples

You are right Bill Mastro and his crew start auctions at very very low reserves and it does make it fun. You know the end auction prices could probably be 5 to 10 times the reserve sometimes higher, but who cares? We all know the auction prices will be higher.

Joe

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Posted By: Harry Wallace (HW)

There is some sort of law in auctions that if there is a hidden reserve then it cannot be more than the low estimate (or something like that).

For example, if an item has an estimate of $10,000 to $15,000 then the hidden reserve cannot be more than $10,000. But, it could be $9,000 which means that if someone is not willing to bid more than the $9,000 reserve then the card will go unsold.

This is common practice at Sotheby's and Christies. I also believe that this is why Hertiage lists an estimate in their catalogs. Usually these reserves are done with very expensive pieces of art, cars, etc. but I bet it trickles down to the sports memorabilia and lesser auctions as well.

I think that Corey Shanus mentioned something about this in another thread and I am sure that he knows much more that I, but this is how I understand the estimate/reserve relationship to work.

No estimate = no hidden reserve.

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Posted By: Andy Baran

Some of Sotheby's estimates are much lower than the lots will sell for.

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Posted By: Corey R. Shanus

From what I understand, Harry has it right. At the major auction houses (e.g., Sothebys, Christies), there is a hidden reserve and it cannot be higher than the low-end estimate. The lower the consignor is willing to allow the reserve, the lower the auction house can put the estimate. From the auction house's perspective, the most important thing is that the item sell. That generates their buyer's premium and seller's consignment fee, which is how they make their profit. They therefore have every incentive to have as low a reserve as possible. In my view, for the items in which a defined market exists (which is usually the vast majority of items in an auction catalogue), it is in the consignor's interest to have as low a reserve/estimated value as possible. That allows more people (to use Rob M's word) to dream about winning the lot and therefore be more likely, not only to participate, but to bid higher than they otherwise might. For example, if I was selling a T206 Wagner, I would know the item is so liquid and the market so deep that it won't matter what the reserve was. I would therefore be very comfortable with a very low reserve/estimated value because in the end it won't have any bearing on the the item reaching its market level, yet generate much more interest in the lot; and the more interest, the greater the chance of the item selling at a higher price. Where this strategy could be dangerous is where the item is so esoteric and/or the market so thin that a higher reserve genuinely is needed to protect the consignor from the item selling for less than it reasonably should. Another rationale for a high reserve/estimated value is where the consignor is so enamored of his item that he is willing to sell it only at a very high price. Auction houses do not like those situations because of the high risk the item will not sell. They usually agree to take a lot with an unreasonably high reserve only if the lot is particularly prestigious, or if the consignor has unusual leverage with the auction house.

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Posted By: barrysloate

Sotheby's and Christie's always want the total sales of an auction to exceed the high end estimate if possible. It makes for a good press release, as it appears like they even outdid themselves. Of course, this can be easily achieved by having low estimates. REA has used the system of estimates that are generally low and pieces will nearly always go higher than the top number. It's just good business.

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Posted By: Harry Kress

Andy, did you consign items to Sotheby's/SCP?

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Posted By: Cat

Although, my favorite auction house, as a buyer, is Mastro, the opening bid is meaningless. It allows many buyers to bid before it gets close to the value. With there "30 minute Rule" format, this makes sense, since it allows everyone with a previous bid to participate during that period. I really only have my heart set on one card, but I will bid on 10-15 (early Monday) and then during the 30 minute period if a card turns out to be a good buy, I may submit a winning bid.

I am actually a bit frustrated that I have no earthly idea what the T206 Cobb with Cobb back will go for. I would bet Mastro doesn't actually have much of an estimate either. It is just one of those cards that could go crazy or POSSIBLY be quite reasonable. But, I have a feeling it will garner far more money than the balance of the auctions with a $2,500 starting bid.

But, all this being said, I tend to dream of winning a few cards that I probably won't, as well.

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Posted By: davidcycleback

As far as the Sotheby's V MastroNet debate goes, don't look at MastroNet's starting bids, but at their bids 24 hours after the auction has started. Some people who noted MastroNet's low minimum bids will be complaining that their' maximum bids were out bid hours after the auction started.

In REA, Sotheby's and Christies, the winning bid is commonly higher than the estimate. Sometimes their estimates appear low from the start, sometimes they are offering material for the first time and the winning bid establishes the current pricing.

Then there's that Jayco fellow or whatever is his name on eBay. His pre-auction estimates are multiple times higher than the realized price, even if you are paying in yen. I think he takes the normal book price and times it by the number of times he shows the same picture in the auction.

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Posted By: Andy Baran

I have not consigned any items to SCP/Sotheby's. I was merely stating what I thought was obvious. Cards such as the E107 Wagner (I have one, but it is not the one in the auction) has an estimate of $15,000. That card will sell for many times that estimate. I'm not exactly sure why you would even ask if I had consignments.