My wife has an expression for it (which she may have taken from someone else): scam culture. Most people in this country are constantly on the grift, always looking for an advantage, and the more unfair the better.

I dont think anyone believes the AHs shouldn’t charge for what they do. Of course they need to! It’s always a question of how much and are you getting what you pay for as a consignor. I have been very happy as a consignor thus far, notwithstanding that an auction is always somewhat risky for any one item at any time. If it’s a big enough item you can use an AH that allows a reserve (like on that Mantle card described above, which is just one anecdote and I dont think represents the whole experience).

I think this explains why a lot of people have a problem with the BP or at least those that are surprised when it's added on their invoice.

I've been around a long time and have won items in many auctions including a 5K item in the last Lelands Auction. I'm a professional statistician and know as well as the next guy that I'm going to be paying another K as BP. But, I'm with raulus . Keith H Thompson

There's been some great collections built on good whiskey and pour decisions on auction night...


Correcting your typo, Phil;)

Baddum Tiss...

This is certainly true for cards that are easy to find otherwise, but for extremely high-demand key cards that are dead-centered with superior eye appeal, and thus very difficult to find, sellers can often ask pretty much whatever they want, within reason, and they'll find a buyer.

Sorry I didn't respond earlier Peter, but I see our new CPA here on the forum, Nicolo/raulus, has been having a pretty good go at you. :D

But as for this comment of yours, c'mon, you seriously want to accuse people of accusing some of our auction house owning/operating brethren here on the forum of trying to deceive people to somehow cheat them out of more money? OMG, you're so much better than this. And in another post of yours you responded about making this quoted post above because someone used the word "trick" in describing what was possibly happening. Well, the OP used the term "psychological tactic" in the very first post in this thread. It was I that used the term "psychological selling trick" back in post #6 of this thread, so quite obviously you are accusing me of saying Scott, Scott, Lee, and Al are basically trying to cheat people out of money?!?!?!

Maybe you should go back and read my post #6 again, because quite frankly, after that post of mine, no one really needed to say anything else to the OP, he already had the answer. And the last line I had in that post #6 is the biggest, most important, and most applicable of all in regard to this whole thing.

First off, AHs need to make money to stay in business, so of course they're going to charge someone a commission, and that isn't deceiving or cheating anyone. And when looking for consignors, AHs know that to consignors, it always looks better when they aren't supposedly going to pay for the entire commission out of their pocket. Go ask Scott, Scott, Lee, and Al how many consignments they'd possibly lose if instead of say charging a consignor a 15% sellers commission, and then charging the purchaser a 20% buyer's premium, one of them decided to simply charge the consignor a 29% seller's commission and there is no buyer's premium at all. (I'll explain later why the AH would only have to charge the consignor a 29% seller's commission.) Meanwhile, all their AH competitors continue to offer the split seller's commission/buyer's premium concept, and only ask for a 15 % seller's commission. So a potential consignor comes to all four AH owner's with the same item and hears three will charge him a 15% seller's commission. while one will charge him a 29% seller's commission. Who do you honestly think is most likely going to get turned down first to auction the item?

Think about it, the consignor upon hearing one auction house wants to charge him almost double what everyone else is going to charge, is likely going to immediately tune out everything else that AH owner is then going to say and try explaining to them about how they'll potentially still end up with same amount of money if they consigned the item with them at the much higher SC.

See, in your perfect world, say you as the potential bidder/buyer value this consignor's item at $120. So, if it gets consigned to one of the other AHs still doing the split seller's/buyer's fees of 15% and 20%, respectively, you immediately know you'll have a 20% buyer's premium to pay in that AH's auction, so you determine up front your max bid will only be $100, because then adding the 20% buyer's premium of $20 ($100 X 20%) to your max bid gets you to the $120 amount you feel the item is worth. And let's say you do end up winning the auction for your $100 max bid. You pay the $20 buyer's premium, the consignor ends up paying a $15 seller's commission ($100 X 15%), and the AH ends up making $35 ($20 BP + $15 SC). Meanwhile you, the winner bidder, paid $120 for the item ($100 hammer price + $20 BP), ignoring S&H and sales tax charges for simplicity's sake. And the consignor gets $85 ($100 hammer price - $15 SC).

Now what if the consignor instead went with the AH charging him a 29% SC, and there was no BP? You, in your perfect world once again, still value the item at $120. But since this AH isn't charging a BP, you put in a max bid for the full value of $120, and end up winning. In this case the AH makes approximately the same $35 as in the other scenario ($120 hammer price X 29% SC = $34.80). That's where the revised SC of 29% comes from. Meanwhile, you as the buyer pay the same $120 as in the other scenario, just now all of it as the auction hammer price. And the consignor ends up getting approximately the same net cash of $85 as in the other scenario ($120 hammer price - $34.80 SC = $85.20).

But all that only works out in a perfect world that you apparently live in. Consignors most likely aren't going to want to consign with an AH charging a higher SC, even it shouldn't make a difference in what they end up netting on their item sold (ask the brethren). Not all bidders think and act like you apparently do, and can be prone to getting caught up in the heat/excitement of an auction and forgetting about the BP. Seeing or not seeing that bid commitment amount, including the BP, on your auction bid list can, and does, influence many people, whether you think so or not. Our mind's play tricks on us, and often if we don't actually see something, we can just keep ignoring it. What's the old adage, "Out of sight, out of mind!". And there's a reason old adages are old adages, because they are very often fundamentally true!

Scott, Scott, Lee, and Al aren't trying to deceive and cheat anyone. They are trying to be competitive, and still pay the bills, and offer their services and fees in at least a somewhat consistent manner with their competition. They all fully disclose the costs and fees they charge buyers in their auctions. At the same time, they are all actually working for their consignors, who are their true clients, in trying to get them the highest final sales prices possible for their items. They do not work for the bidders and buyers in trying to get them to pay the least amount possible for things that they want. So if you actually think them using techniques like not including the BP in with current bids on auction bid pages is somehow deceptive and cheating, think again. Post #6, last line.

And isn't it you who often likes to make/use the "slippery slope" reference? Well, if all the auction houses did start including those BPs with the current bid amounts on their auction pages, you know damn well someone will then come along and start bitching about how they deceptively didn't include the sales tax, the S&H, or some other fees and charges, along with the auction bids amounts as well. And God forbid, if some AH did try to include all those other costs in updating the final total costs of items being bid on, in real time during an auction, when it turns out just one time after an auction ends that a winning bidder's final actual amount due doesn't agree with the in-auction totals because of some glitch, error, or whatever, the AH will just get bitched at some more.

And if you somehow still think AHs using or following psychological practices or tricks to get better prices for their consignors are being deceptive and thus trying to cheat people, then you better go ahead and similarly accuse most every business in the world that does any kind of marketing and advertising as being a deceptive cheat as well. Everything advertised and marketed is done so as to increase sales and profits, and ultimately get the most money possible out of every buyer. What do girls with big boobs, or NFL quarterbacks, really have to do with selling cars or home/auto insurance? As I noted in post #6, why do stores sell so many items for odd prices like $1.99, $4.95, or $9.99, why not just round off things to even dollar amounts then? Or what about how stores having sales very often list not just the sales price, but the total amount you'll save. Or even how stores will put shelves with certain items or the most expensive items always at the eye level of the average female shopper. And don't forget about impulse items at checkouts, and on and on. Marketing and advertising is all about visual and other psychological tricks and influences to get people to buy this and not that, and to pay more than less for things. And those visual influences can include showing certain things right out front, or not always showing them right out front, like BPs in auctions.

And speaking of old adages and fundamental truths, there's one that maybe kind of goes along with all this. Had something to do with when certain people's lips are moving I think. :D

Again, post #6, last line.

The real kicker is the shipping charges with most auctions houses. You think an extra 1.50 on ebay is bad...sheesh

Here in Mass, including the tax as part of the sale price is not allowed. If the tax isn't calculated on the total sale, the store ends up over or under collecting the tax.

From what I've been told, there's also an odd thing where people associate an odd number with a bargain. Supposedly a test was done with identical items placed next to each other. One marked 99 cents, the other marked either 98 or 96 cents. The 99 cent ones always sold out first.

There is been? .....
.

You are not alone. I am constantly getting seller's fees.

Awesome. Embrace the illogic!

A mechanism instilled to lower bids is so counterintuitive to the auction process and yet it's accepted without question.

That one is on Casey (Phil) as well Leon. My post was a simple copy and paste with a single letter change.

Good pickup though, y’all are getting better. However when you changed yawl, you changed it to ya’ll not y’all.

Keep up the good work.

There are millions and millions of people who idolize a guy who brags about cheating on his taxes, refusing to pay workers on his properties, and even scams people in educational endeavors. But that's a discussion for another board.

My Cousin owns an apostrophe factory in Ohio and sends me a big ol' box o' 'em every Christmas so I have to use 'em up whene'er I can.

The usual red herring when this topic comes up. "If you don't like the BP, you're too stupid to understand it". Do these same people also think the consignor is too stupid to realize that they're agreeing to have their bids suppressed?

Whether or not we're all stupid, I also repeatedly read this defense, "the AHs don't charge the consignor a commission so how are they supposed to make money?". For all the times this gets repeated, you ever notice that it never gets confirmed? I highly doubt the majority of consignors are gifted zero commissions. If that's wrong, let's see some data.

And as others have pointed out (and it typically gets ignored) ebay with more overhead than any of these auctions houses, manages to keep the lights on just fine.

And on the occasions where it is questioned, it causes some offense, evidently.

I object much more to the usually unstated and often egregious (far more than it costs me, a private individual without a business account with a shipper, to ship the same way) “shipping” charges than the BP trick.

Forty-four auctions over the past fourteen years and I have never charged a sellers fee. And, in consigning over twenty-five years I have never paid a consignors fee, except for one time years ago when I paid 5% to a small AH. And further I get points back on nearly all consignments that I give to other AH's. It's not an urban myth, it's reality.

That's some good data.

or
"There has been"

My only real shipping miscalculation is with Hunt. $24.15 s/h charged on a single $400 card, and $19.15 charged on a single $200 card (after juice). They use Fedex. Would be less than $9 to ship either card via USPS Priority, even cheaper USPS First Class in a bubble mailer.

So I now have to be aware to calculate $20 shipping charge in my bids with them in case I only win one item.

I've only consigned a few times over the years but have never been charged a seller's/consignor's fee, dealing with several different auction houses. It has never even been a subject of negotiation. BTW, my items are modest or low valued cards, hardly anything to get the AH's excited.

I'll bite my tongue a little on this notion of calling people stupid, as a few have suggested, but I must express some wonderment. Many of these auction items go for large dollars to people who I would assume can afford it and who I also assume have incomes or assets that relate to some level of intelligence or sophistication. The most I can fathom is misunderstanding the BP rules or getting caught up in the frenzy ONCE, and that's giving the benefit of the doubt. To suggest that the auction house is engaging in some sort of "trickeration" or subliminal deceptive practice just to line its pockets is stu..., um, far fetched, IMO.

That being said, it would be interesting to see one or more houses advertise and conduct an auction with no BP and then compare results. Of course, the consignor would have to agree to a seller's fee and have the opportunity to opt out or wait until the next auction, and the AH should advertise prominently and often that there is no BP so the "regulars" won't get confused. Any takers?

Lucky you. I have NEVER not been charged a consignment fee. I don't think my stuff is garbage, but maybe the auction houses do?

I'm starting to have a dawning realization that maybe you and I are just taking our stuff to the AHs that charge consignment fees, whereas other posters consign with AHs that don't charge consignment fees.

Thanks, appreciate the info.

For those consigning and paying consigning fees, have you asked for it to be waived? Or maybe go to a different AH?

"This is the best that we can do"...is the response I always get when they quote me consignment fees and I ask to pay less.

Admittedly, it's been a few years since I last consigned anything. But it sounds like I'll need to do some shopping around the next time I'm ready to take something to auction.

So no one wants to pay a consignment fee or buyer's premium. Seems like a winning business formula :)

If you could guarantee that my item will double the previous high, that would be great.

And oh, BTW, I’d also like to borrow 100% up-front…

Unless I’ve misread, I don’t think anyone is objecting to the auction house getting their cut. The question is to the formatting of it, splitting your actual bid into two parts to try and mask or lose focus on one of those parts. The BP isn’t even the auction houses cut, as many here are talking about, a lot of times part of it is given to the seller too.

Auction house can charge a consignment fee or sellers premium, a buyers premium, and the final bid, or it could simply take X% of the final bid. If nobody ever forgets about any of the fees or they are not a psychological trick designed around how people think, everyone would raise their bid accordingly and the auction house would make the some amount of money with a much simpler and direct system for everyone. The only reason not to use a simpler system with the same $$$ at the end of it, is psychology and what people respond to.

They don’t do this because it is a physiological trick that works. Consigners don’t want to hear they have to give up 25% of the hammer price or whatever it is, having separate fees looks better even if it’s the same dollars at the end of the day. And buyers have an easier time raising those bids when the BP is kept separate, not having to really input their actual total spend. It works.

To recognize it works this way and why is not to say auction houses should work as a charity and not make any money.

I was responding to the original post, which read as follows…

“So I get it, you have to think about the Buyer's Premium and take it into account and bid accordingly. But what is the actual point? The only possible motive I can come up with is that's a psychological tactic by the auction house to make you feel like you're paying less than you actually are, or even worse, hoping for ignorance on the part of the buyer.

Sorry if this has been discussed.”

There is no “trickery”… sorry to disappoint all of you conspiracy types. I suppose if you ran a business such as an auction house, you’d do it as a courtesy with zero fees. Very generous… Good for you!

But how do you propose paying the employees, the server host, the printing company, the photographer, the description writers, the shipping/packaging personnel, the consignment director, and the social media specialist? I guess they’ll all work for free as well. Got it.

And that's just the half of it!

Someone said that to me once and we never spoke again.

As I replied to you yesterday, I have no idea what you are offering as a consignment or to which houses but but only 1 time I was told there would be a fee and I knew that house was not for me. I took what ended up being a 75K consignment elsewhere.

Awesome. I haven’t ever consigned anything that valuable before, so maybe that’s my issue.

I would think a buyer's premium also has to simplify accounting and other records.

Maybe I misunderstand but I take the opposite view. At best is doesn't make a difference and at worst it actually confuses the issue rather than making it clear cut. Appraisals are based on fair market value and include buyer's premiums. So if no auction houses charged a BP, then we'd have an even playing field. Plus I'm not sure if all AH's post completed prices including BP, so an appraiser might be comparing apples and oranges as they research historical prices to determine FMV.

When I win an auction lot I never pay the Buyer's Premium, just the winning amount and shipping. Surprisingly, and so far without fail, the auction house sends back my money and never ships the card(s). And perhaps coincidentally, my bids are not accepted in future auctions either.

Brian

But seriously, I remember reading an article by Lew Lipset in his Old Judge newsletter from the mid to late 1980's (?) detailing the shift of auction houses from charging a larger seller's commission to charging a buyer's premium, which evidently was not standard for auction houses at the time. I think back in the day auction places were traditionally dealer/collectors that were auctioning their accumulations, and therefore a seller's premium obviously made no sense, but would of course charge you for the privilege of consigning cards. I remember the article identified the shift to following the example of art auction houses, who had established the practice of a charging a Buyer's Premium with less emphasis on Seller's Premium so as to attract the higher value consignments.

I guess it was just a natural progression for sports auction houses to follow this lead, as cards and memorabilia became more of a commodity.

Brian

I do!!
 

1) I did not see the card in hand and was sent some less appealing angles by the owner. In this case I would have wanted to see the card in hand prior to purchase (another advantage to hand to hand transactions) - good quality auction scans notwithstanding.

2) There is a negative psychology in play as well which didn't occur to me till giving thought to your question - why ISN'T the card being bid higher!? Did I miss something that others have seen? This would be a mute point if I had the card in hand.

3) As mentioned I will buy "the right" cards at 80% of FMV. Had the guy offered me the Mantle at 87,500 in a private transaction there is a good chance I would have pulled the trigger. The next bid would have put me over 80%. I need a margin to earn a living as well.

4) That all said, as you well know, as your auction is one of them - I place hundreds of bids in a year in various auctions and have done quite well with the things I have purchased. Once things get past my 80% threshold (INCLUDING buyers premium) I have no further incentive to bid.

I want to be clear in case it came off otherwise - I believe auctions are a valuable part of the hobby and there are some guys (yourself included) that run above board top notch houses. I simply don't believe an auction format is the best place for interested sellers to sell most cards. I also understand perfectly an auctions need to "get paid" and earn a living somewhere (buyers or sellers side). It does feel a bit deceptive to me (and as mentioned I have heard it too many times directly from the sellers) when a house tells an "unsuspecting" seller that it "doesn't cost them anything because that is simply not true - the fact that they don't charge them anything doesn't equate to zero cost!

Thanks for the question.:D

No?!?!?!?!? Nobody does?? I wish you would let some of the auctions I deal with realize this.

Howard provided some very thoughtful answers for his thinking here. I'll maybe add a few more.

Maybe as a quick preamble, I think we can all acknowledge that there's a difference between buying an item for our own collection and buying it to make a profit. When we're buying for our own collection, we're typically planning to keep it for a long time, possibly decades, or even until the end, and so our willingness to pay outlandish sums is often very strong for something that we plan to treasure so greatly. On the other hand, when we're specifically buying to make a profit, there's a whole different psychology and analysis around when it makes sense mathematically. And Howard identified in pretty solid detail for him how he analyzes that case.

I think I would posit a couple of other elements that come into play with this specific situation, to wit:

1) $90k is a lot to have tied up in a single item. At least for us mere mortals it is. While you're working to re-sell it, having this much tied up means that you have to pass on other opportunities, including opportunities to add to your personal collection. And this might represent a significant percentage of your liquid working capital, so having it tied up in a single item means that this could be your only play for a while until you can get it re-sold. And we haven't even gotten into factoring in the time value of money and the possibility of investing your cash in a productive asset that gives you a return while you're waiting.

2) Add to that the fact that you're risking so much on a single item. While 311 Mantles are arguably unique in that they only seem to go up, those are history's famous last words. If for some reason the demand for this specific piece drops, then you've risked an awful lot on just one bet. I would more specifically posit that in this case, the bottom of the market has been bid up a lot recently for low to mid grade items, such that there is added risk at this grade for this item that this price level might not be sustainable.

3) More generally, at this juncture in history, buying an item in the six figure range represents particular risks. We've seen prices in our little slice of the world over the last ~2 years rise, in many cases by 500% or more. While there has been a modest pullback from those highs recently for postwar items, it's anyone's guess how long the current elevated prices will last. They could last for another week, they could last for another decade. But if you invest this much into this one item with a plan to resell it, and the market drops off a cliff tomorrow, then your plan to make a profit has just evaporated, and you've probably lost a lot more than you ever really stood to gain. While this risk always exists to some extent, to my mind, it's heightened during periods where we've experienced such a dramatic, even breathtaking acceleration in prices.

4) There are very real and nonzero costs to sell. There are only so many people in this world who have $100k to spend on a single baseball card. While at times they seem like they're everywhere these days, competing against me to buy everything that I desperately need, quite honestly, I don't have that many of them on speed dial. I could certainly post it in Net54 free of charge, and maybe get some interest. Maybe! At the same time, most of the ballers on this board will take 10 seconds to identify my cost, and then not be real willing to go a lot higher. But if I have to turn around and take it to auction myself, then that means that I'll need someone who is willing to pay significantly more than I paid so as to cover my auction costs (whether it's 5%, 10%, 20%, or more, once we factor in everything). And if I want to not just break even, but actually make some money, then I'll need someone to pay a whole lot more to cover my original cost plus my selling costs plus a respectable profit. (Not to mention my taxes on my gain, which is probably taxable at ordinary rates if I haven't held for a full year.) (!!!) Maybe I'm just a nervous nellie, but that seems like a big risk to be taking.

Anyway, your question got me to thinking, which led me here. It was a good question to ask, because I think to some extent, there's a little bit of vulture in all of us, such that we're all always on the lookout for good bargains and opportunities to take advantage of market anomalies, particularly if it means that we can plow those profits back into buying for our own collection.

Say what now...?

Any answer the explains the practice as a requirement for a company to turn a profit is just obfuscating the fact that the practice is specific to auction houses. I don't have to pay a buyer's premium at the grocery store. The amount that buyers pay and that consignors receive and that the house nets doesn't change in the presence of a buyer's premium relative to what it would be without one unless some bidders are failing to properly calculate how much they're committing to paying when they place their bids. The real answer I guess is just a quirk of history. There's no reason to expect that if auctions were invented today that the practice of dividing the price between a bid and a premium is something that would occur to any business.

I got charged a commission once, early on, when I did not know the ins and outs of consignment. Never again in over 30 years.

There are a few AHs that persist in seeking a commission on top of the BP. Huggins & Scott, Hake's and Goldin all requested commissions from me when I tried to consign with them and would not back off. Nancy Reagan'ed that s**t: just said "no" and moved on to the next AH that gave me 100% of the hammer price.

This thing of ours is different than other hobbies, though. Entertainment AHs routinely demand commissions and don't back off them. I even had that experience with Heritage. I've sold with them for zero commission on sports stuff but have had commission demands for entertainment lots that I could not negotiate away. Frankly, I would rather eBay the items than hand an AH 30% or more of the sale price.

There must be a better example than that, the items are already at a set price and they're not selling them for someone else.

It's not an equivalent example, but I think the claim that it is specific to auction houses is generally true. When I buy a firearm consigned to my dealer by another private owner, I don't pay the dealer a buyers premium because it is a consignment item, as a equivalent example. I've never encountered a 10-20% premium for just doing business in any other sphere of commerce; though I am probably just not aware of something that does also, in fact, follow this practice too.

Art, Real Estate, Cars, Horses, Handbags, Watches, Coins etc... Just a few of the auctions where you will pay a buyers premium and usually a sellers premium as well. 25% on each side is the norm. Sports auctions are usually much lower bp's and little to no sellers premium.

Ebay is a better example. Inside The Park Collectibles is another.

Not true. I have never received any BP kickback when I consigned and I believe many here could say the same. Unless your total consignment is for very large $$ or you have headliner material that will make the AH's front page you are not getting any of the 20% tossed back, much less up to half.

Again, I remain puzzled by any grousing over the BP as being deceptive. It's there in the rules for all to see, and if you get fooled once, don't go back. In fact, since so many here are intent on calling out what they see as shady or deceptive practices and avow they will not participate with such sellers, do so now. I would love nothing more than to see dozens or more competitors drop off the bidding list in nearly all major and minor auctions in solidarity against these "scammers".

For some reason this conversation always goes down an unintended rabbit hole. The OP never mentioned it being deceptive.

I'd love to see the conversation stay on point for once and explain why Hunt can survive on 17.5,% while Heritage needs 20% (I guess they haven't figured out how to capitalize on economies of scale?) and Huggins 23%? Maybe if it didn't feel so arbitrary, people wouldn't bring this up so much.

And it would be refreshing for once (and a real differentiator for that AH), if an auction house made an effort to cut down on shipping costs. There's absolutely no incentive to because they just pass on 100% of the cost to the buyer so what do they care (and who knows...likely more than 100% of the cost).

I don't think I've ever won an auction that I couldn't have shipped for about 50% of what AHs charge me.

For sure! AHs could easily show you an estimate of your total cost at the time of placing a bid. But why do that when you can hide the BP and inflated shipping costs?

Same reason Audi is a different price than Toyota or Milwaukee is a different price than Dewalt, or Hershey's is a different price than Ghirardelli. Different products, different costs, different management, different businesses. Seems quite simple to me.

Duplicate post

Baseball cards are luxury items. After 2 people bid up a painting 10 times the high estimate, the auctioneer said, "Nice things cost money."

Just an FYI that for 90+% of our bidders that H&S charges a 20% BP. The extra 3% are for those very few bidders who insist on using Credit Cards.

My AH charges reasonable shipping. I try to charge as close as possible to actual cost, that includes box or bubble mailer and a small percentage for private insurance. Often I figure too low for some bulkier winnings, or ones that just miss first class and have to go priority. Perhaps you are not bidding in the right auctions.

Maybe it's just me but it seems like that's what he was insinuating in his post.

It's not just you. I also didn't see the OP raise any question as to why one AH charged a higher BP than another, so it seems it is that question which strays from the original point. As for that question, I am not certain why an AH would have to explain why it charges a particular BP, and I do not see where they are limited to a % that they need to "survive".

Something I think is telling when people post about their talks with AHs regarding consignments is how they describe those consignments. Almost always on 54, that reference is in dollars.

"I had a $75,000 consignment ... "

I think intelligent consignors realize it's not just about estimated value but also the specifics of the item. A single $75K card is not that same as a 660-card partially graded set or a collection of 100 vintage photos valued at $75K.

I think many people disregard the time, money and effort that go in to selling sets and lots of memorabilia as "the cost of doing business" and that the AH should just absorb those extra costs. It's probably a reason many of those people have never successfully run a business.

Much easier and satisfying to describe the AHs as greedy pigs.

Call me crazy, but it kind of seems like we're quibbling over semantics, and maybe intent. Not that semantics and intent aren't important!

But the bottom line is that the juice is there, it's a quirk of history and somewhat unique to the auction business, and if you want to go there, you can assert with some confidence that there's arguably some beneficial psychological and marketplace aspects to the practice that conveys a nonzero benefit to the auction house, and helps to further perpetuate the practice.

And I suppose some want to ascribe insalubrious, even malicious intent behind those assertions. But to my mind, those assertions are really not intended to be anything more than a benign recognition that the auction houses are savvy operators, who are operating within standard business practices for their industry. And bully for them!

I believe the old saying is, "If you can't beat 'em, join 'em!" I'm sure if any of us were to open our own AH to get a piece of this sweet, sweet action, we would probably choose to use the same format...

This is not a strong argument. Auction houses produce no product. They're simply a venue.

Which AH do you own? And please don't say none because that would be embarrassing.

It's called a service industry. Yes, you could pick up food and cook it, or you could go to dinner which is more expensive, or pay even more money to have it delivered.

Hotel advertises $149.99 per night. No one expects the bill not to be $237.54 or whatever.

Gone are the days of me hawking my own junk on eBay and doing all the legwork, and still getting $84 for a $100 sale, and grousing around about shipping and on and on.

Auction houses absolutely produce a product. The auction house's product is the service they provide. If the auction house is simply a venue, then you would be doing all the work. Even if they are just a venue, like ebay, than the product they provide is the place for you to sell.

Service is not a product. And what's the difference in service from Hunt to Heritage to Huggins to REA to LOTG to Lelands to etc to etc to etc?

Service might not be a product like McDonalds French fries but it is tangible and valuable. The difference between auction houses is the same difference between the service you get at a greasy spoon vs fine dining. And I love greasy spoons but there is a marked difference.

I guess the 40-60 hours/week my team researches, writes and edits descriptions is not a product. It’s all just created in a vacuum!

This topic comes up a lot, and Peter pops-up and explains it, and the thread goes on for 200 replies.

It's pretty simple. Card "A" has a book value of $80. It's not a rare card. I sell a Card "A" on ebay and it sells for $80. I get $65. I sell with an auction...bidders go only to $65 b/c that means they pay $80 and I get $65.

Yes, I can ask $80 as a bin on here or at a show or facebook or whatever, and people will counter offer $65. I sell for $65.

Non-sequitur. Then again, not surprising.

Are you really serious???

Have you ever in your life owned or operated an actual business to really see and understand how ALL businesses, whether they produce an actual product, or just provide services, have any number of differing and varying costs involved? AHs can have different numbers of employees, in different numbers of locations and offices, in different states with different levels of taxes, and owners with different needs/wants as far as how much they need to make. They can provide different levels of advertising with significantly different costs, and even the size and volume of lots, and how frequently they hold auctions, can dramatically effect how much they need to charge as commissions and fees to stay in business.

Every single business, including AHs, have what are known as fixed costs, that they know they have to pay whether they hold one single auction, or sell one single item, or not. And those fixed costs are going to vary from business to business, and AH to AH. And then there are the variable costs that are incurred, based on what they have to spend to actually run an auction and sell items. And those obviously are going to vary from one AH to another. So, thinking and ever suggesting that all AHs should somehow be charging the exact same commissions and fees as every other one is absurd and ludicrous.

And go back to what I posted in post #88 of this thread and read my scenarios of what can happen if one AH splits their fees of say 15% and 25% between a seller's commission and a buyer's premium, while another AH that say only charges a seller's commission of 29%, sells the exact same item for the same gross amount. Even though both AHs are charging different commission/fee percentages, in my scenarios both AHs end up with basically the exact same profit. So just because the commission/fee percentages between AHs aren't exactly the same doesn't necessarily mean one AH is making more or less money than another anyway.

This thread should have never gotten into a double digit numbers of posts. The OPs question was pretty quickly answered. The way various people are misinterpreting and going in weird directions with this is ridiculous. Here are the cosmic truths surrounding this entire issue.

AHs have to charge someone, sellers and/or buyers, commissions/fees so they can make money they need to stay in business.

AHs have all different and varying costs and needs as to how much they have to make, which can affect the commission and fee percentages they end up having to charge, to stay in business.

AHs need consignments so they have items to auction and sell to make money to stay in business.

AHs will often charge bidders Buyer's Premiums, so they can lower prospective Seller's Commissions so more people will consign items to them as opposed to other AHs, so they can stay in business.

AHs do not charge Buyer's Premiums to be deceptive to bidders. They generally do however not add the BP onto the bids during an auction so people bidding can see exactly what they'll end up paying, until after the auction ends. Because some bidders may/do forget and end up bidding more than they may have otherwise had they seen the BP added onto their bids during an auction. And virtually all the AHs do this as a marketing technique, trick, whatever you want to call it, so they can hopefully make more money for their consignor/customers, and also make a little more money for themselves, to then still stay in business.

AHs have to stay competitive and pretty much do what all the other AHs are also doing, to stay in business.

Wow, this is a dumb thread.

This post was the dumbest post in this dumb thread, in a sneakily dumb smart way.

Brian

www.brockelmanauctions.com

appreciate the free advertising

If anyone is looking for the Cliff's Notes of this 160 post thread, Bob was kind enough to provide.

Unfortunately though Bob, the Buyers Premium is charged to the buyer and I still don't know how the service to the buyer is different at 17.5% auction house than it is at a 23% auction house.

I do not understand all of the confusion.

Both buyers and sellers should be looking at the hammer price plus the buyer’s premium, which is the final realized price.

The buyer obviously has to pay that price, plus possible shipping and sales tax.

The seller will end up getting a percentage of that final realized price depending on the the deal that he has negotiated with the auction house, namely if he is paying a seller’s fee and whether he is getting any of the buyer’s premium.