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.

[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.

[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

[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.

[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.

[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.

[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.

[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

[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

[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.

[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