Quote:
Originally Posted by Aquarian Sports Cards
Market price at auction needs two people to determine it accurately, and they need to be working in good faith. If one person is willing to pay $100 and the next highest is willing to pay $50, the market price is one bid past $50, not $100.
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As you said, your definition is market price at "auction". I always heard the FMV of something was what a willing buyer would agree to pay an unrelated willing seller for something in an open, arms length transaction. So if the party looking to buy a particular card is willing to pay $100 for it, but because they are seeking to buy it through an auction and end up getting it for less than their max bid, it doesn't mean they couldn't have run across that same card with a dealer at some show and gladly paid the $100 he was asking for it, right? So if that is the case then what is the correct market value of that card, at least at that point in time? It sure isn't just one increment over $50.
Plus, when dealing with an auction you are limited by who decides to participate. There is no guarantee that all potentially interested parties are participating or even aware of a particular auction, or a specific card in it. Of course the same goes for card shows and individual dealers selling a card outright, they don't have all potential buyers necessarilly aware of and looking to buy a card they have for sale either. And the thing about an auction is that you normally don't know the maximum amount someone who ends up winning an item for is actually willing to pay for it, which to me would be it's true market value. We really only know what the second highest bidder attending/participating in that particular auction was willing to pay.
You may be biased in that you operate an auction house and possibly tell potential consignors that an auction is the best way for them to get the highest possible market value for their items they look to sell, but is it always? I've heard of people saying items they put up for auction didn't go for what they thought they would and were sometimes disappointed in what an item ended up selling for, and I would suspect that has happened in your auctions as well. At best, auction and Ebay results are good indicators of where the "market" is approximately on cards, but to truly know what someone is really willing to pay for an item you need to know the max amount they would have gone for that item. That would be a more true "market"value. But still, think about how many times here just on Net54 you've seen someone post how after the fact they heard about something they didn't know was being auctioned, or how they were in an auction, but because there were so many items they were going after they couldn't afford to go more on some items they wished they could have. Those kind of things affect final hammer prices negatively, but is that hammer price on such items truly an indicator of accurate "market" prices then?
I've always felt that most people acquiring items through auctions are doing so because they expect to get things for less than what they perceive market value to be. Why else would you always hear of so many people talking about being run up in their max bids? They are ticked because they fully expected to pay less, and they have every right to be if somehow their max bid amount became known and was used solely to run up what they paid. Granted, there are marquee and uber rare items, like the recent PSA3 Wagner sale, where no one has any idea where the market truly is. So they consign it to auction to hopefully get the top price, and it sells for a record $6.6M. But what if instead of an auction the consignor instead put it up for sale at say $7.5M, and the same person who won it for $6.6M happily pays the $7.5M for it because he/she thinks it is really worth $10M. So in that case your "auction" value is way below what a more true FMV should be.
And maybe a more measurable indicator that auctions aren't always perceived as the best way to get maximum market value for a card is Ebay itself. When Ebay started out it was primarily an auction platform, but if you looked at pre-war vintage card sales over most recent years, the number of actual auctions is usually around 1,000-2,000 at any point in time. Meanwhile the total number of pre-war vintage cards being listed was more like 40,000-50,000. At least it used to be before Ebay changed the search filters and you could look up pre-war baseball as a specific category. Point is, the vast majority of sellers did not feel auctions would get them the max market value. And yes I know there are certain dealers well known for their pages and pages of supposedly overpriced BIN listings, but that doesn't change the fact that if they felt they would get a comparable/higher max price by putting their items up for true auctions instead that that is what they would be doing.
There is no perfect indicator of a card's FMV, and it most definitely fluctuates over time, especially during this current pandemic period we're going through. But at least to me, it isn't as simple or accurate to say a card's FMV is what it just sold for in the most recent auction.