How do reserves work in the Legendary auction?

[paul]

I've sent an email to Legendary about this, but thought I'd ask here too in case they are slow in responding.

Some of the lot descriptions state that the card has an undisclosed reserve. Do any of you know if there's some sort of signal to let you know that your bid has met the reserve?

Does it matter how much the underbidder has bid in determining whether you've met the reserve? For example, let's say the reserve on a card is $5,000. You place a max bid of $6,000. The next highest bid is only $2,000. Do you get the card for $5,000? Or does your bid register only as $2,500, so you get nothing? (I know there's also the chance that you get the card for $6,000, but that's not what I'm trying to find out by this post).

One more question. Let's say I bid $2,500 but the reserve is $5,000. I don't bid any more than that because I'm the high bidder, but I'd be willing to go higher if there was competition. Will Legendary tell me at some point that I haven't met the reserve so I have an opportunity to raise my bid? Or do I go to bed thinking I won the card cheap, and it goes unsold?

Thanks in advance.

[barrysloate]

There are different ways to implement a reserve, so you really should wait to hear from them. But I was surprised to see that too, as it's something new. I'm guessing with the economy the way it is we will start seeing more protection of lots.

[paul]

For those who are curious, here is the answer I got:

Sorry for delay Paul.



The system will let you know when the reserve is met. We do not bid on behalf of the reserve.



At the end we will contact high bidders in cases where reserve is not met to see if you want to place a bid to meet the reserve. As a hint all reserves are at or below the low estimate.



Regards,

Doug



Doug Allen

President & CEO

[JeremyW]

I was curious about their reserve policy myself.

[Leon]

I don't mind reserves but I don't care for hidden ones....I like to know what I am shooting at.

[JeremyW]

Sometimes a hidden reserve makes me hesitate to shoot at all.

[paul]

Well, I was the high bidder on my card in the Legendary auction, but didn't meet the reserve. So I guess I now get to decide whether I want to pay more than the current market value for the card. I'm not sure when I'll be notified what the price is.

[Bicem]

I'm in the exact same boat Paul, let me know if you hear anything.

[HRBAKER]

I think if they called me and asked me if I wanted to raise my "bid" to X to meet or come close to the reserve that I would only be willing to pay the BP on the amount of my high bid.

[Bicem]

agreed - hidden reserves suck by the way.

[E93]

They could also call the consignors and see if they want to sell their cards for market value.
JimB

[Exhibitman]

I believe the consignors have already stated their positions by contracting for a reserve in the first place.

I'm fine with a reserve. I just bid what I want to bid and if it meets the reserve, great.

I do think that the snippy commentaries about sellers who use a reserve wanting more than "market" are misplaced, though. There is no overarching moral rule that a seller has to take whatever a card brings in an absolute auction, nor is there any fixed price market for cards. So long as the legal requirements for a reserve auction are followed an auctioneer is perfectly within its rights to offer lots subject to a reserve and the prior "market" price on cards is just whatever some seller was willing to accept for the card in the past under some circumtance. Different seller, different set of priorities and different circumstance. That's why it is so difficult and ultimately disingenuous to structure a price guide on theoretical prices for cards that haven't actually transacted; you just don't know...

[Matt]

Originally Posted by Exhibitman

I do think that the snippy commentaries about sellers who use a reserve wanting more than "market" are misplaced, though. There is no overarching moral rule that a seller has to take whatever a card brings in an absolute auction, nor is there any fixed price market for cards. So long as the legal requirements for a reserve auction are followed an auctioneer is perfectly within its rights to offer lots subject to a reserve and the prior "market" price on cards is just whatever some seller was willing to accept for the card in the past under some circumtance. Different seller, different set of priorities and different circumstance. That's why it is so difficult and ultimately disingenuous to structure a price guide on theoretical prices for cards that haven't actually transacted; you just don't know...

The point of the market comments is not to base the value on what similair cards have sold for in the past, but rather, what the market bore out for this exact card as it was offered in auction. The amount it hammered for is exactly what the current market will bear for the card - if two folks out there there were willing to pay any more, they would have bid higher. Hence, we know the value of the card in the current market.

[Bicem]

of course there's no moral rule about using reserves or not using them, just would be nice if they were at least somewhat realistic is all.

[barrysloate]

There are situations where sellers are only willing to part with something if they can get a crazy price for it, otherwise they would prefer to keep it. That works fine in a one on one transaction, but probably is not ideal for an auction.

[thekingofclout]

Originally Posted by Exhibitman

I believe the consignors have already stated their positions by contracting for a reserve in the first place.

I'm fine with a reserve. I just bid what I want to bid and if it meets the reserve, great.

I do think that the snippy commentaries about sellers who use a reserve wanting more than "market" are misplaced, though. There is no overarching moral rule that a seller has to take whatever a card brings in an absolute auction, nor is there any fixed price market for cards. So long as the legal requirements for a reserve auction are followed an auctioneer is perfectly within its rights to offer lots subject to a reserve and the prior "market" price on cards is just whatever some seller was willing to accept for the card in the past under some circumtance. Different seller, different set of priorities and different circumstance. That's why it is so difficult and ultimately disingenuous to structure a price guide on theoretical prices for cards that haven't actually transacted; you just don't know...

Exhibitman is dead, solid, perfect with this post.

[rman444]

Originally Posted by Matt

The point of the market comments is not to base the value on what similair cards have sold for in the past, but rather, what the market bore out for this exact card as it was offered in auction. The amount it hammered for is exactly what the current market will bear for the card - if two folks out there there were willing to pay any more, they would have bid higher. Hence, we know the value of the card in the current market.

unless one or more potential buyers didn't want to even bother bidding on an auction with a reserve.

[Matt]

Reasonable point. My only counter is that with rare items, I'd have to think most, if not all, bidders would bid hoping their bid is enough to top the reserve because they want to own the item. No doubt, on eBay people usually shy away from bidding in a reserve auction, but that's usually in scenarios where they know they'll have an option of finding another one.

Think of it this way - if a card you needed for your collection that hasn't come up in two years was in the auction, but had a reserve, would you really not bid?

[HRBAKER]

Isn't it really a "fixed price or better" sale masquerading as an auction?

[calvindog]

This is a great advancement for Mastro. Unknown reserves are much better than bidding people up to the reserve price they wanted. Assuming they are telling the truth this time.

[paul]

Have any of you been notified yet about the reserve price of any lots you bid on?

[Bicem]

nope

[HRBAKER]

They're waiting for the absentee ballots.

[paul]

I've still not been notified of the reserve price. I even sent an email and got no response. I guess my card is not available for the reserve price, which seems odd.

Have any of you been contacted?

[Exhibitman]

Originally Posted by Matt

The point of the market comments is not to base the value on what similair cards have sold for in the past, but rather, what the market bore out for this exact card as it was offered in auction. The amount it hammered for is exactly what the current market will bear for the card - if two folks out there there were willing to pay any more, they would have bid higher. Hence, we know the value of the card in the current market.

I disagree. The hammer price in an auction is a reflection of what the bidders in that particular auction were willing to bid at that time. There are many reasons why prices differ across auctions that have nothing to do with the items themselves:

--By the time the last of the major auctions ends in the spring it is not unusual for me to be tapped out financially for a few months. I will not bid on a card in a later auction if I don't have the cash to pay for it (extreme rarities excepted, of course).

--There are some auctioneers I do not trust and will not patronize. I know others feel the same way.

--With thousands of pages of catalogs (Heritage and REA alone totaled over 1300 pages this spring) I will inevitably miss some things that I would like to have bid on.

--The better an auction from a material perspective the more likely it is that I will run out of money during that auction and will have to pass on some items that I'd have otherwise bid on. Happened to me several times in recent auctions.

--Differences in lot closing rules affect outcomes. For example, Heritage closes lots individually. I won several lots in a HA auction last year and could not take a flyer on some other lots that I'd have otherwise bid on.

--Differences in costs and vig. I factor in the vig and the auctioneer's characteristic shipping behavior. A 10% BP is going to draw a correspondingly higher bid than a 20% BP, and an auctioneer who is known for gouging on shipping will draw a slightly smaller bid from me. Same with sales tax--it all has to factor into the bidding equation. With some auctions I have to add 30%-35% to the actual hammer price to figure my real cost. Those numbers are reflected but not accounted for in the supposed "market" price established by the auction.

--Shilling. Some auctioneers have a rep for shilling and that makes some bidders cautious or reluctant to bid at all.

I'm sure there are other issues that are not intrinsic to the cards themselves that affect the outcomes in a specific auction but I can't think of them right now. My point is that the card 'market' is far less 'perfect' than even the stock market and I think it is a mistake to read too much into one auction result taken out of context.

[Matt]

Originally Posted by Exhibitman

I disagree....

I'm sure there are other issues that are not intrinsic to the cards themselves that affect the outcomes in a specific auction but I can't think of them right now. My point is that the card 'market' is far less 'perfect' than even the stock market and I think it is a mistake to read too much into one auction result taken out of context.

You've made a point about a single price being taken out of context and responded to my statement out of context. I agree with everything you just wrote; it just isn't in response to my post.

The point above is that the seller chose his auction house, and this is the most two people were going to pay at this time, at this auction house. For the market the seller chose, this is the market value. No doubt the seller might get more for it some other way.

Edited to add - I actually disagree with one point you made above - if you or other bidders are tapped out from other purchases and therefore don't have the cash to bid on an item, then that is part of current market value for the item; it might bring more 2 months from now when you recoup, but right now, that's market.

[calvindog]

Originally Posted by Exhibitman

I disagree. The hammer price in an auction is a reflection of what the bidders in that particular auction were willing to bid at that time.

What if the hammer price reflects the maximum of what the top bidder was willing to bid instead of just ahead of what the second bidder's top bid was? Then you get legendary prices.

[paul]

I got a response to my second email. The reserve was the low estimate, plus buyer's fee.

[Bicem]

Originally Posted by paul

I got a response to my second email. The reserve was the low estimate, plus buyer's fee.

on all lots that had a reserve?

[Matthew H]

Why not just start the auction at the fixed price and see if one or more people still want it (Rather than than trying to pretend the minimum bid is something else)

[Exhibitman]

Matt: Your initial post discussed the card as auctioned but then expanded the discussion to a generalized discussion by labeling the auction result as:

"what the current market will bear for the card - if two folks out there there were willing to pay any more, they would have bid higher."

and then concluding:

"Hence, we know the value of the card in the current market."

I took issue with the two quoted statements because they conflated two definitions of market--the initial part of the post used "market" as a shorthand for a particular exchange for buying and selling an item but then shifted (as quoted above) to using it as shorthand for the aggregate demand for a particular product or commodity. My point was that it is not accurate to label a single auction result as "the value of the card in the current market" because of the factors that make a specific auctioneer such an imperfect measure of a market. If you meant to limit your definition of "market" to "the most two people were going to pay at this time, at this auction house" I don't disagree with you. However, I don't think that limited definition of market can stand as a basis for making a broader conclusion about the overall market price of a card.

[paul]

Jeff, just on mine. I don't know about the others.

[Matt]

Originally Posted by Exhibitman

However, I don't think that limited definition of market can stand as a basis for making a broader conclusion about the overall market price of a card.

Agreed.