Why are auctions so popular?

[barrysloate]

Here is something that has been bugging me for a while ( and when was the last time I started a thread?):

We have countless threads and discussions about auctions being shilled. From ebay to major auction houses, it seems like a daily occurrence. Whether it's the auction house doing the bumping, or the consignor, collectors are becoming more and more fed up with the whole process.

So why are auctions so popular? They all go on way too late, many well into the next day, prices are generally sky high with bidders always complaining they paid too much, so why isn't direct sale more popular? It seems like two reasonable people could come up with a fair price over a ten minute phone call. Instead, collectors will stay up until 5:00 o'clock in the morning to overpay for something that they might have gotten cheaper in a private sale.

And yet it feels like a new auction house pops up every week. And direct sales seem to be in decline. Does this make any sense?

[iwantitiwinit]

It's the excitement, competitiveness and the perceived possibility of getting the card for less than market value that draw people to auctions.

[Vintagecatcher]

Happy New Year Barry,

It does not make sense.

Auctions take advantage of human nature. There is the build up and excitement regarding the possibility that one might win a card or piece of memorabilia. We all hope that we can possibility "steal" the item for a decent price. Hoping for a poor listing or perhaps a well timed snipe will seal the deal. We all analyze our bidding strategy. Do I use the big opening bid and hope to survive a last second snipe? Or do I hide in the weeds, and grab it with a snipe in the final seconds.

The thrill of competing against another bidder drives the price up and up. Sometimes it becomes a competition where the prize at the end is just a bonus.


Patrick

[barrysloate]

Yes, there is the perceived notion, and the hope, that you will steal the item. But how often does one steal, versus how often one overpays?

The standard line about bidding in auctions is they allow a collector to pay only what he thinks a lot is worth. But if you are being shilled, or if you get caught up in the moment and go way past your budget, you aren't paying what YOU want, you are paying what THEY want.

[ullmandds]

Originally Posted by barrysloate

Yes, there is the perceived notion, and the hope, that you will steal the item. But how often does one steal, versus how often one overpays?

The standard line about bidding in auctions is they allow a collector to pay only what he thinks a lot is worth. But if you are being shilled, or if you get caught up in the moment and go way past your budget, you aren't paying what YOU want, you are paying what THEY want.

It IS kind of ODD. It used to be the opposite...in that ebay and other venues were conducive to getting good deals or atleast perceived good deals...and the auction houses with their excessive buyers/sellers premiums were reserved for high buck cards that would sell at a premium.

At some point this paradigm did a 180 degree turn to where we are today!

[Tao_Moko]

Originally Posted by barrysloate

Yes, there is the perceived notion, and the hope, that you will steal the item. But how often does one steal, versus how often one overpays?

The standard line about bidding in auctions is they allow a collector to pay only what he thinks a lot is worth. But if you are being shilled, or if you get caught up in the moment and go way past your budget, you aren't paying what YOU want, you are paying what THEY want.

Barry,

The other side effect is that sellers often use shilled and overpaid prices from auctions to value their card/s. I walk away from cards I have wanted and searched for just because they are in an auction all of the time. T206 Ganley w/ epdg back from Saco is a good current example. I know that patience and dilligemce will find me that card for much less.

Thanks for the topic.

Eric

[tedzan]

Your premise here is excellently stated. I rarely participate in these auctions, mainly for two reasons......


1st...... the bidding increments of 10 % is a "killer". I guess lot of people don't appreciate the power of compounded interest.

7 bids @ 10 % increments DOUBLES the starting bid. Followed by 7 more bids, and the starting bid is QUADRUPLED ! ! ! !

No wonder ridiculous sale prices are realized on many pieces.... that normally as you said Barry.... a 10 minute phone call between
two reasonable people could result in a fair price for the same item.


2nd...... the buyer's (and the seller's) fees have become ridiculous.


I guess I'll just keep hunting on ebay


TED Z
.

[barrysloate]

Ted - I know how you feel about the power of the 10 percent increment, but as I've told you, it can work both ways. It may make it too difficult for anyone to top your bid, so that you will win the lot. If the increment were 2 percent, every time you bid you would almost certainly be topped. It does work both ways.

I guess the part of the auction process I often miss is getting caught up in the moment. Because I ran my own auctions for many years, and because baseball memorabilia was my sole source of income, I rarely had the luxury of getting caught up in the emotion of bidding. I always had to look at the price of something more objectively, and did have to set limits. Maybe in that respect I missed out on a part of the hobby that others get to enjoy.

[kamikidEFFL]

I dont have an issue with the auction houses i mean they do all the leg work. Its nice if your busy.Its sometimes easier to just put your cards through the auction house where they may get more exposure. I agree with the buyer fees. They are expensive or at least some are. I get they have to get paid but still. Oh well what ya goin to do I ask on here all the time for my 34 goudeys but no one ever has any and next week they are in an auction. There is positive and negatives to auction houses.

[4815162342]

Why auctions? Because, stuff.

[barrysloate]

Please understand I'm not saying that auction houses shouldn't exist. There are occasional bargains to be had, and there often are amazingly rare items that can't be found anywhere else.

There just appears to be so many auctions, more even than the market can support (I have to assume they aren't all profitable). But so many dealers who has retail businesses gave them up to start auction houses. I think a good retail business could be really successful. If I ask a dollar and you agree to pay a dollar, we can't shill it up from there. It's a clean transaction.

It just seems to me that bidders would be pretty fed up with all the crap that goes on and would be looking to buy cards in a different manner.

[sportscardtheory]

It's a near-guaranteed sale. That's why people use it. They may not want/like to sit and wait for weeks/months/years, they want the sale/money ASAP. Plain and simple.

[1952boyntoncollector]

Originally Posted by barrysloate

Please understand I'm not saying that auction houses shouldn't exist. There are occasional bargains to be had, and there often are amazingly rare items that can't be found anywhere else.

There just appears to be so many auctions, more even than the market can support (I have to assume they aren't all profitable). But so many dealers who has retail businesses gave them up to start auction houses. I think a good retail business could be really successful. If I ask a dollar and you agree to pay a dollar, we can't shill it up from there. It's a clean transaction.

It just seems to me that bidders would be pretty fed up with all the crap that goes on and would be looking to buy cards in a different manner.

You would be surprised how hard it is to do person to person sales on decent value cards. The buyer all of the sudden has bills to pay and cant pay..lots of headaches that can be avoided with an auction house.....I have had it occur on more than one occasion when a buyer tells me he cant pay a certain price then I see the same buyer bid higher on my item when its listed on ebay a few days later....even winning the item where now the buyer pays more than I asked off ebay and I net less after fees....

I also keep hearing how everyone saying prices are real high on auctions....you forget all the people on net54 that have complained their cards have sold less than market or 'cheap' at auction houses...it cant go both ways.

[ALR-bishop]

If I was a seller , it would be to get the most possible for my item .

As a buyer it is because the stuff I still seek ( mostly unissued Topps test set items) only come up in such venues ( because sellers want to maximize their prices).

[mark evans]

I think one reason auctions are popular is because the alternative, direct sale, permits the seller to seek far more for the item than its fair market value. Just take a look at eBay now that it is predominated by BINs. The amounts sought by sellers typically far exceed VCP values. Auctions, with all their flaws, at least hold out the prospect of a buyer paying fair market value.

Of course, once a person 'overpays' via direct sale, he's then stuck with the item as he is unlikely to recoup his investment except by a similar direct sale.

[Leon]

Originally Posted by barrysloate

Please understand I'm not saying that auction houses shouldn't exist. There are occasional bargains to be had, and there often are amazingly rare items that can't be found anywhere else.

There just appears to be so many auctions, more even than the market can support (I have to assume they aren't all profitable). But so many dealers who has retail businesses gave them up to start auction houses. I think a good retail business could be really successful. If I ask a dollar and you agree to pay a dollar, we can't shill it up from there. It's a clean transaction.

It just seems to me that bidders would be pretty fed up with all the crap that goes on and would be looking to buy cards in a different manner.

I made a good 4 figure deal with a good friend of yours yesterday Barry. He reads the board but has never posted. We emailed back and forth and I eventually sent it to him on approval. He got it and loves it. It's just not so easy to make individual sales anymore as most people want a steal and a direct sale might not be the steal they hoped for. As for our bargaining, I was asking one price, he wanted another, we met in the middle and both are happy.

[GregMitch34]

i've never understood the complaints about buyer's fees. I presume everyone always factors that into the bidding--and the items usually sell for less than they would at eBay because of that--until fee is added. In other words, the same card might go for 420 at eBay but at an auction it would go for 350 plus 70 for the fee. Same difference. And VCP and others always include the buyer's fee in the price that card got. So again: 420 either way. If I see a card that seems to be worth about 420 I might set 350 as the limit--and know most others will do the same.

Generally.

Auctions also can appeal because you sometimes gets a dozen cards from the same issue that you may be interested in and can bid on them all, to a point, and jump from one to another, which you can't do in one-shot purchase.

[barrysloate]

I appreciate all the responses and see that by an overwhelming margin everyone likes auctions despite all the problems involved. I know there is still the feeling that auction allows the bidder to go as high as he wants, and that is good. It's just that rarely a day goes by without a discussion about shilling, so I wanted to see if collectors are burned out by the whole process. Apparently not, as auctions seem to still be the favorite way for buyers and sellers to conduct business.

[bnorth]

I would guess auctions are popular because there isn't any other option for most. B/M card shops are almost nonexistent because with their overhead. They can't compete with the person who still lives in their Moms basement selling cards on eBay or internet forums.

I think all the auction houses popping up is for a similar reason. There is a lot less overhead running an auction house than a B/M card shop. B/M stores have rent, heat, lights, payroll, ect, ect. and no way to know if anything will be sold. An auction house has no $ in the inventory and they get a % of what is sold no matter if it is for profit or loss to the owner. They also know exactly what and when it will be sold.

[ullmandds]

Originally Posted by barrysloate

I appreciate all the responses and see that by an overwhelming margin everyone likes auctions despite all the problems involved. I know there is still the feeling that auction allows the bidder to go as high as he wants, and that is good. It's just that rarely a day goes by without a discussion about shilling, so I wanted to see if collectors are burned out by the whole process. Apparently not, as auctions seem to still be the favorite way for buyers and sellers to conduct business.

Some of us are burned out/getting burned out by the process!!!!

[jbsports33]

I have seen a change in online auctions, and there always seems to be a problem – which is why I slowed down the amount I post on eBay and stopped sending large amounts of items to larger auction companies. It can be very hard to trust anyone, but you need to in order to move forward with your goals as a collector or a dealer. That is why this site gives others more options to buy and sell from each other, much like a show, and I feel it works great. Online and in person auctions are getting too competitive and most of the time I just sit and watch. I try to bid at times, but it can get frustrating

Over the last 5 years or so I have taken it very slow and even wanted to start my own yearly auction, but currently happy with a few eBay auctions here and there, buying when I can and at some point open my webstore - always good to hear from you Barry

I miss your auctions - you always did a good job!

Jimmy

[T206Collector]

There is a perception that if you buy a card at an asking price that you must have overpaid for it. When you buy at auction, you are (shilling aside) buying the item at a nominal increment above the next highest bidder. It is a closer approximation of true market value at that moment in time and under those circumstances. That is why auction values are most useful in determining markets (VCP, card target, etc.), and why triggered BINs only tell you what one person was willing to pay at a certain point in time.

I recently had a guy try to sell me a card I valued at $50 for $250 because that was what he paid for it in a private sale. That $250 is an irrelevant number unless there was someone also willing to pay $240 for it. You'd like to know there may be other potential buyers out there for your card than the seller himself, who is getting out of the market on that card.

I assume this phenomenon would hold true for all scarce collectibles, where markets can more easily be determined at auction than in private sales. The rise in small auction houses exists in response to the decline of eBay as a global auction house.

[kamikidEFFL]

Looks like everyone has their own opinion on auction houses. Love these type of topics

[jcmtiger]

Originally Posted by barrysloate

Here is something that has been bugging me for a while ( and when was the last time I started a thread?):

We have countless threads and discussions about auctions being shilled. From ebay to major auction houses, it seems like a daily occurrence. Whether it's the auction house doing the bumping, or the consignor, collectors are becoming more and more fed up with the whole process.

So why are auctions so popular? They all go on way too late, many well into the next day, prices are generally sky high with bidders always complaining they paid too much, so why isn't direct sale more popular? It seems like two reasonable people could come up with a fair price over a ten minute phone call. Instead, collectors will stay up until 5:00 o'clock in the morning to overpay for something that they might have gotten cheaper in a private sale.

And yet it feels like a new auction house pops up every week. And direct sales seem to be in decline. Does this make any sense?

It's not that easy for 2 reasonable people to come up with a price. Once you send the item to an auction house, 1 reasonable person is out of the picture. And the item will sell for whatever price it is bid up to.

Joe

[Fred]

It's like Vegas or an indian gaming casino.... the house always wins!

In most cases the house collects from both the buyer and seller. Isn't that a bit insane. Yes, I get it, the auction house has a bit of overhead.

To me, if you have something that isn't rare or scarce and the prices are known, then you could probably figure out the value of the item based on past sales and then put it up for sale with a discount that takes into account the auction houses take (buyer and seller premium). Oh no, now I've opened up myself to being called an idiot because I made a comment with how I feel about this... go ahead, it's open season, call me an idiot and get it over with...

[Luke]

I prefer a straight sale. I've yet to consign anything because I like to have control over the fees and the price I net. In the last year I made a number of four-figure buys from fellow net54 members and I think everybody went home happy. To me getting the item is the exciting part, not the bidding process. If I can come to an agreement with someone on a card I want, and only have to wait 4 days to get it, that beats an auction.

That said, auctions are great too. They can be fun, educational (seeing new issues you aren't familiar with), and exciting. Also, if a family collection surfaces, there's no way I'm getting any of those cards in a straight sale, so I'm glad that auction houses provide the service they do.

[barrysloate]

Thanks Jimmy for the kind words, but truth be told, I burned out. I did many auctions over a long period of time, and finding quality consignments was getting really difficult. As I like to say, nothing lasts forever.

[Jantz]

Hi Barry

Auction Houses are making perfect sense to me.

Especially in the past few weeks. When I got my mail today I received another baseball card completely mangled.

This is the third item in the last month I've bought through Ebay to arrive damaged. No fault of the Post Office in any way either.

Ebay in their infinite wisdom has decided to start taking a cut of S&H fees, so sellers have been failing to properly package items for mailing.

I'm not saying auction houses couldn't improperly package an item, but for all the years I've been buying on Ebay, I've never received a damage package until after Ebay starting scalping S&H fees.

The Ebay seller of today's acquisition states that he doesn't take returns. That's about to change. I will be mailing him the card back just to educate him. No way can he resell the card since its so mangled that it won't even come out of the toploader.

Just for laughs, I thought about starting a "Guess the grade" thread.


Jantz

[freakhappy]

They are popular because it enables the market to determine the true outcome sans shilling, etc.,

And as mentioned before, it gives buyers a chance to win an item at a good price...exciting all the way through the auction.


Sent from my iPhone using Tapatalk

[jefferyepayne]

A great thread. I would much, much prefer to purchase items directly from other collectors because:

1. There are often no fees involved (for either side)
2. I like knowing where my items came from and understanding a little bit about their provenance
3. I like to help other collectors

Unfortunately collector to collector transactions aren't always possible:

1. Disagreement on value
2. Can't find another collector with what you want/need

So I end up picking up more than I want to through auctions.

jeff

[1952boyntoncollector]

Originally Posted by T206Collector

There is a perception that if you buy a card at an asking price that you must have overpaid for it. When you buy at auction, you are (shilling aside) buying the item at a nominal increment above the next highest bidder. It is a closer approximation of true market value at that moment in time and under those circumstances. That is why auction values are most useful in determining markets (VCP, card target, etc.), and why triggered BINs only tell you what one person was willing to pay at a certain point in time.

I recently had a guy try to sell me a card I valued at $50 for $250 because that was what he paid for it in a private sale. That $250 is an irrelevant number unless there was someone also willing to pay $240 for it. You'd like to know there may be other potential buyers out there for your card than the seller himself, who is getting out of the market on that card.

I assume this phenomenon would hold true for all scarce collectibles, where markets can more easily be determined at auction than in private sales. The rise in small auction houses exists in response to the decline of eBay as a global auction house.

the logic of the underbidder really only matters about how many bidders...

if a card sells for 250 and there was someone willing to bid 240 it..thats great ..but what if the item was bid to 250 based on just those 2 bidders from 150.......so buy it nows tell you only about one guy....but on some auction houses...what a card sells for is only between 2 guys....and 1 guy already has the card now......at least on ebay you can see the amount of unique bidders at a certain price point...you don't get to see that at other houses........yes its a better tool than buy it nows but maybe not by as much as you think

[ejharrington]

Go to a card show and every dealer there prices the cards multiple times what they are really worth trying to suck in inexperienced / impulsive buyers. It's almost impossible to buy anything of value for a reasonable price, even with negotiations. Auctions don't have that issue.

[1952boyntoncollector]

Originally Posted by ejharrington

Go to a card show and every dealer there prices the cards multiple times what they are really worth trying to suck in inexperienced / impulsive buyers. It's almost impossible to buy anything of value for a reasonable price, even with negotiations. Auctions don't have that issue.

right I hate putting a price on a card that is the lowest I would take because buyers always want to offer less...so I can see why sellers price the card higher then they are willing to take

[ullmandds]

Lottery mentality...the hopes that 2 or more guys really really want your card and beat the crap out of each over it...and the result is you win a lottery of sorts! That is a big draw of the auctions.

Additionally the fact that many people cannot price their cards...mostly in fear that they will sell too low...auctions usually take care of this too.

Finally that most auction houses will not charge consignment fee if you have quality shit...before this trend I had never consigned nor would I have with this 15-20% skimmed right off the top....a trend which is somewhat unique in the antiques/collectibles auction world.

[ejharrington]

I have offered fair market values for cards at shows. I know they are FMV offers because I track these cards closely and have a relatively limited collection scope. The dealers across the board never even get close to FMV. It's like they are there to show off their cards and if an inexperienced / impulsive buyer comes along they can make a killing. I don't even bother with the card shows anymore.

[ullmandds]

Originally Posted by ejharrington

I have offered fair market values for cards at shows. I know they are FMV offers because I track these cards closely and have a relatively limited collection scope. The dealers across the board never even get close to FMV. It's like they are there to show off their cards and if an inexperienced / impulsive buyer comes along they can make a killing. I don't even bother with the card shows anymore.

Agreed...most card shows dont have much vintage and the ones that do can be a lot like museums! But there are people at the national(which is really the only show I attend these days/...and not every year) who want to move cards...you just have to find them and hope they have something u want!

[barrysloate]

A couple of more thoughts:

Many don't like direct sales because they have had bad experiences, particularly at shows where dealers put obscene prices on things. So wouldn't it stand to reason that a dealer who puts realistic prices on cards would have a very viable business model?

Collectors also feel that auction prices are the best indicator of market value, assuming there hasn't been any shilling. But if shilling is as rampant as some believe, then in the end auction prices really aren't that good of a barometer.

[jbsports33]

Barry,

I understand - I help a lot of dealers that just get burned out selling and buying, so instead of going the auction route I have spent time helping others. Back in the day your site gave me some great ideas for my website, but to start an auction site you need time. I am happy with the progress I have made and even had ads on this site, maybe I can again at some point for my webstore

The Saco Maine Auction is getting a lot of bids

Good Post!

[Runscott]

Barry, since I don't have the visibility to have major finds walk into my office at cut-rate prices, for me auctions are the only way of obtaining inventory at a price that allows me to make a profit. If everything were sold at market value I would have to get a real job.

[barrysloate]

I realize it's easier for a dealer to sell his inventory than to replace it. That partially explains why retail prices are often so high.

[ls7plus]

My 2 cents: A good auction house such as REA, Goodwin, Mile High, etc., will have the ability to reach the largest possible number of potential buyers through its extensive mailing list and other sources of marketing. That fact thus maximizes the demand side of the equation with regard to the selling price, which is what the seller's objective is. Because of the potential for maximizing the seller's return, these auctions tend to draw out more of the truly desireable and/or rare items that are ordinarily not seen, making it a win-win scenario for seller, auction house and buyer.

Highest regards to all,

Larry

[Leon]

Originally Posted by 1952boyntoncollector

right I hate putting a price on a card that is the lowest I would take because buyers always want to offer less...so I can see why sellers price the card higher then they are willing to take

and in other news snails are slow

[dgo71]

Originally Posted by bnorth

I would guess auctions are popular because there isn't any other option for most. B/M card shops are almost nonexistent because with their overhead. They can't compete with the person who still lives in their Moms basement selling cards on eBay or internet forums.

I think that's key. Buyers eventually have to follow the sellers, and more sellers are going this route to maximize their profits. Why pay to set up at a card show and hope I can sell at my asking price when I can post in an auction, and not only sell more items with far less overhead, but also reach an infinitely greater customer base. The fact that the sellers started trending towards auctions made it inevitable that buyers would have to follow suit.

Additionally, and I know this has been proven false on many occassions right here on this site, to most collectors there is a perceived sense of authenticity coming from an auction house. I'm sure the casual collector or even one who is more advanced but lacks a resource such as this forum may have no questions about an item purchased through a major AH, but have doubts about the same item sold by some stranger set up at a card show. Really nothing logical to that line of thought but it seems to be the case.