ebay finds that PWCC engaged in shill bidding?

[Snowman]

I changed my mind. I don't care if you know my name. It's Travis, but most people call me TJ. I just updated my profile with the cryptic version of my name so nobody thinks I'm some shill or something like that. I don't work in the sports card industry and never have. I'm just a random collector like most everyone else.

[Arazi4442]

Originally Posted by Snowman

I changed my mind. I don't care if you know my name. It's Travis, but most people call me TJ. I just updated my profile with the cryptic version of my name so nobody thinks I'm some shill or something like that. I don't work in the sports card industry and never have. I'm just a random collector like most everyone else.

So your name is TJ Troll?

[bnorth]

Originally Posted by Arazi4442

So your name is TJ Troll?

LOL, That is what I seen at first also. Here I thought his name started with a M.

[Snowman]

Originally Posted by Arazi4442

So your name is TJ Troll?

LOL. No. That's an 'a' and an 'i'... Trail, as in hiking trail.

[Arazi4442]

Originally Posted by Snowman

LOL. No. That's an 'a' and an 'i'... Trail, as in hiking trail.

What a shame, that would have been fantastic.

Welcome to the board!

[Johnny630]

Will they continue to run up cards on their own auction site ?

[hcv123]

I do not participate in, nor in any way support or condone shill bidding! I agree with Travis that while shilling is 100% wrong on every level it in and of itself doesn't have as large an impact on a given market - people's fear and greed have a much more significant impact.

From what I have read here I think people are getting confused between shill bidding and "fair market value" or the effect that shill bidding has on fair market value. I think it might be helpful to start by borrowing the following from Investopedia:

"In investing, fair value is a reference to the asset's price, as determined by a willing seller and buyer, and often established in the marketplace.

Fair value is a broad measure of an asset's worth and is not the same as market value, which refers to the price of an asset in the marketplace.

In accounting, fair value is a reference to the estimated worth of a company's assets and liabilities that are listed on a company's financial statement."

In my opinion, while there have been many excellent and accurate points made, the ultimate answer lies in consideration of all of them.

A fairly run auction is in a best case scenario a fair determinant of market value on that day, with all the participants in the auction that day Someone (inaccurately) stated once the high bidder has won an item in an auction the item is theoretically only worth what the second highest bidder was willing to pay. What is inaccurate about that is it assumes all willing buyers participated in the auction - and that variable theoretically can change day to day both with peoples knowledge of and participation in a given auction on a given day as well as different collectors decisions to add and remove cards from their want lists. It is just not simple. Do you know some auction houses (At least a couple of "biggies") per their rules (how many times have you read them?) have the right to bid on a consignor's behalf up to a "reserve" price. How is that different than "shilling"? It is disclosed as a term of the auction - does that make it okay?

If there is a private sale at a certain price level, similarly it is in a best case scenario a fair determinant of market value on that day, with all the participants in the market where it sold that day

The more sales there are, the more useful information exists to help as a guide for an interested buyer to have an idea of what a "fair market value" might be. But what about all the other variables - Is the example raw or graded? Who graded it? Although the card is theoretically "the same" - I don't think many would argue that there are different "fair market values" for raw vs graded cards as well as cards graded by different companies.

As highlighted in a previous post - auctions are NOT always the best place to get the highest price for your cards - I love buying certain items out of auctions for this very reason! It is also (SHAMELESS PLUG COMING) why part of my business is private consignment sales - it offers true price protection with integrity! If my consignor doesn't like an offer, it doesn't "sell to the highest bidder" - we wait for someone willing to pay more.

A factor that has been touched on, but not addressed directly (I think) is the inefficiency of the market - or the opportunity for arbitrage. Unlike the stock market which is a single destination for all potential buyers to meet all potential sellers, there is no such place for trading cards - The market is hugely fragmented - multiple small and large auction houses, shows, bulletin boards, Ebay, garage sales, etc. The way it exists currently - there is NO WAY anyone can make a claim that any single sale is a "fair market value"

So what is a collector to do? Know your market. As Travis stated the more current recorded sales there are of a specific card/grade/grader - the higher degree of confidence we can have of current "market value". The fewer the sales the less confidence we can have (lower OR higher) of the "market value".

There is no pricing ("market value") perfection. To some, the card matters more than the money, to others, the price they pay more than the card - neither approach is wrong! There is nothing wrong with Butch's approach - he bids what a card is worth to him (however he choose to determine that!)

Remember CPU? CCP? Beckett? SPort Americana guides? Standard catalog? Were they fair indicators of "current market value"? Sometimes - but more often not.

Overall just so well stated I wanted to repeat it:

Originally Posted by BobC

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 necessarily 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 kinds 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.

What you are missing is the potential inclusion of potential buyers who did not participate in that auction on that day as possible changes in market demand:

Originally Posted by egbeachley

Except that after that sale occurs, that buyer is no longer in the market and the “price” becomes what the next person will pay. And now we are back to the auction scenario of second highest bidder plus one increment

Franklin was wrong!! A penny saved is worth more than a penny earned. You will have to pay tax on a penny earned and it is therefore worth less than a penny whereas a saved penny is in post tax dollars and worth a full penny:

Originally Posted by drcy

As Benjamin Franklin said, "A penny saved is a penny earned."

SUPER question! Any tax professionals?:

Originally Posted by BeanTown

So for those PWCC customers who want to take their items out of the PWCC vault, will that create a taxable event?

Firstly I don't think your assumption is accurate. That said, as I think you stated in another post - how you determine your asking price for cards you sell - we do the best we can with the information we have and make individual choices of what makes sense or works for each of us:

Originally Posted by Peter_Spaeth

So let's assume PWCC prices have been widely inflated AND they have had a gravitational effect on other prices. The whole market is inflated. What's the appropriate response assuming you still want to try to win certain cards?

Perhaps a new term needs to start being used - "Auction price" rather than "market price" or "fair market value". I have sold comparable cards for more and for less than recent auction sales. A single auction (or other) sale is not a reasonable determinant of "fair market value". It was the highest price a specific auction participant was willing to pay for that card on that day - it is certainly a relevant piece of information in a market value conversation, but not market value in and of itself:

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.

[BobC]

Very eloquent post Howard, I think you drop the mic after that one.

I will respond to the one separate topic you asked about in regards to Beantown's original post and question of if someone deciding to take their items out of PWCC's vault is subject to a taxable event for doing so.

First off, he didn't stipulate what type of tax he was referring to. In this case I believe you have two possible choices, Income Tax or Sales Tax.

For Income Tax purposes, as long as the item isn't being removed from the vault to be sold and the owner is merely moving an item elsewhere and still retains ownership of it, there is no Income Tax event that has taken place......period.

Now as for Sales Tax, I'm going to say removal of an item from a vault is probably not a Sales Tax triggering event either. I'll explain why I only said probably and how someone could end up having a sales tax issue. First, remember there are two different ways an item you own could get into the vault.

1. You bought the item and actually took possesion of it at your home or elsewhere, and then you later on either shipped it off to or delivered it personally (think of vault submissions made at the National) to PWCC.

2. You bought the item (say off Ebay or from an AH) and had it shipped directly to PWCC in Oregon, or you bought the item from PWCC and just had them keep it in their Oregon vault for you. In either case you never personally received or took possession of the item before it went straight into the vault in Oregon.

In regards to scenario #1, I would assume you would have already paid whatever state sales tax was due on your purchase, depending on which state you live in and had it delivered to, or which state you were actually in when buying it in person. And in case you live in and had it delivered to you in a state with no sales tax, or personally bought it while in a state with no sales tax, there would have been no sales tax due in either of those instances. So if you took an item you first acquired under any of these circumstances and susequently sent it to the PWCC vault in Oregon, and then some indefinite time later on decided to take your item back out of the vault to take home with you, that subsequent removal of the item should not be a sales taxable event. You had already paid whatever sales tax was originally due at the time you bought the item, so moving it in and of the vault won't create a Sales Taxable event for the owner.

Now in the case of scenario #2, the item you acquired was sent straight to your vault account in Oregon. And since Oregon has no state sales tax, you shouldn't have been charged or paid any sales tax on that item's purchase. Remember, when you purchase something online or remotely, the state sales tax is charged based on where the item is actually shipped to and supposedly going to be used, stored or kept. So if you originally had the acquired item shipped to Oregon and the vault, no sales tax was due, and technically you should be able to later on take that item out of your vault and go wherever you want with it without triggering a Sales Taxable event.

Here's the "but" though. Remember that sales tax is charged based on where an item is delivered and then supposedly stored, kept or used. So as long as someone has their acquisitions initially sent to, and subsequently kept in the vault in Oregon, they are fine and have no sales tax issues. But what if you have someone who opened a vault account specificallty to cheat the state they live in out of sales tax that rightfully was due them. This could fairly easily be done by having everything you acquire sent to the Oregon vault first, and then after some period of time always keep having everything sent to your home. This would be a blatant abuse of the rules as it was clearly never the intention to store, keep or use the items in Oregon. If the state the abuser lived in ever found out what they were doing, I think they could easily go after them and win.

The thing is though, each state has their own unique sales and use tax law so what one state might say or do, another may not. Also, how would a state even find out about such an abuser? They don't really have the staff and resources to investigate things like this, and even if they did, they may still pass on doing anything if they feel the potential claim isn't worth the time and expense to pursue the case. Also I gave you the clearly easy, slam dunk example of an intentional sales tax scofflaw. What about someone that leaves some things in the vault for say a couple years before deciding to take some, not all, items out and have them sent to his home. Or to be very relevant, because of all the issues going on right now, say someone decides to get all their things out of the PWCC vault for very real concerns and other valid business/investment reasons. They clearly did not do that to get around paying sales tax, but how would a particular state they lived in view that and could they decide to possibly go after them for it, if they ever even could find out about it to begin with?

To my knowledge, no state has a specific time frame threshhold in its sales and use tax laws definitively stating that if you had left an item for at least some minimum, specific period of time in a vault like PWCC's before taking it out to bring home with you, that you would automatically be exempt from that item possibly being looked at for sales tax due your home state. If ever questioned on something like that, I'd try and show the sales tax auditors the activity and purpose of item movements in and out of the vault to hopefully demonstrate there was no purposeful intent to evade paying sales taxes, and then cross my fingers they accept the argument.

How a particular state would ever find out about such vault movements to begin with is beyond me. So if I was advising someone that was not blatantly using the vault to just cheat and get around paying sales taxes, I'd tell them to go ahead and move their items out of the vault, and retain all pertinent documents and records of vault movements and activity from when they originally opened their account in case they ever had to present it as evidence to prove the point that they did not use the vault to cheat on sales taxes. Of course the best advice is to consult your own tax adviser and possibly have them look into the sales and use tax laws for the specific state you are in, and also review the specific item movements and activity in your vault account to see if their are any additional issues or questions that may stick out.

There is one sure fire way to make sure you'd have no sales tax issues if you did decide to remove your scenario #2 items from PWCC's vault. And this is no plug or endorsement, but if you simply have everything transferred over to Goldin's vault, they also are in a state with no sales tax either I believe. Just a thought. Good luck.

[Frankish]

Also, well said Howard. For the most part collectible and fine arts are incredibly inefficient markets. The relatively low volumes of money and subjectivity of underlying assets has largely kept professional money away. Although in the last couple of years I have seen (relatively) small financial fish dipping into the card collecting market. Larger fish have been nibbling at the infrastructure, but not in way (so far) that makes the market much more efficient.

Originally Posted by hcv123

It is also (SHAMELESS PLUG COMING) why part of my business is private consignment sales - it offers true price protection with integrity! If my consignor doesn't like an offer, it doesn't "sell to the highest bidder" - we wait for someone willing to pay more.

Also, a very happy consignor here. In fact, now that the PWCC vault no longer offers the value proposition I bought into, I'll probably be sending Howard a lot more cards....