The DEMISE of the Auction Houses?

[alanu]

The rise in the number of auction houses continues, but at some point there will be an oversaturation and the marginal companies will be forced out of business.

I think Ebay is especially hurt by the economy, some to their own doing, and therefore people (high volume sellers, low volume sellers and collectors) are looking at other avenues to sell their cards.

[bbcard1]

Over the next few months, I am planning to consign with five different houses, relatively smaller stuff...Good items, not great items. Why so many? Four reasons...I have excess stuff because of a collection I am disposing of. I have a lot of items and spreading them out seems the best way to avoid firesaling them. I don't know much about auctions so I am trying to find the best fit for the items, and lastly, although I trust all the people I am working with and heaven forbid it would happen, but if I were to get burned by an auction house, either by cashflow problems or just underpromotion of my items I will have spread out my risk. It's a keep your eye on the ball thing...I hope to recover my friend's initial investment in the cards and I expect i will...which is saying something because while I am sure I will do handsomely on the T cards, maybe more or less break even on the 50s and 60s, I will lose big on the 70s, 80s and 90s.

[Delray Vintage]

I buy high quality cards and love the expansion of auction houses. While REA is the one I look forward to, I have found great acquisitions at several smaller ones. The fact that the frequency of auctions is increasing creates a more transparent market. This will smooth out trends in prices realized since even the rare items will be available more often. Also having an auction active almost every week is a lot of fun.

[novakjr]

In a bad economy the auction houses for the most part will be booming. Sure there's less bidders, BUT you only need two to run up a price. One of the local vintage guitar stores actually gave me some nice perspective into this a few years back, when I noticed a bunch of absolutely incredible vintage guitars and amps that he seemed to get all at once, after a long dry spell. He basically said, "The economy is bad enough that people are parting with things that they would never have parted with. And the market is now seeing things that most buyers would have never dreamed would hit the market."

[Delray Vintage]

As a follow up to my last post I will add that it will be very hard for all the new entrants to succeed. It is a high fixed cost business if catalogs are printed. The costs of auctioning low priced cards are almost as high as high priced cards given a printed page costs the same. If New companies can convince buyers to use web catalogs exclusively then these smaller companies can survive. I would only consign my high value cards to the most established houses given I want maximum assurances on financial stability. I think the newer houses will have to show they can survive to attract a consistent consigner base.

[Exhibitman]

Or estabish a niche specialty.

To date myself w/an expression IMO the success of a start-up is really all about the rolodex. If the wannabe auctioneer has good industry contacts and a strong base of collector contacts he will do just fine even w/o a printed catalog running an internet only auction. He won't be selling T206 Wagners but that's OK. Not everyone caters to wealthier collectors. There is a lot of money to be made supplying collectors w/three-figure budgets.

[Delray Vintage]

Exhibitman makes a good point that some new houses will cater to the under $1000 card buyer and succeed. The issue though is making $150 on those cards in commission and paying the fixed costs. I see a number of those auctions bringing in under $100k in sales. Tough to make a profit on those.

I guess as long as each of those houses can convince a few collectors to consign some Hof t-206 or CJ or a Ruth or two they can make enough to survive.

Good luck to all of those start ups as competition keeps a fluid and more accurately priced market. It also keeps those buyer commissions in check which at 20% are getting ridiculous.

[ls7plus]

I believe David is absolutely right on in commenting that the economy has caused many collectors to put quality items on the market that they otherwise would never have sold. It's been a great time to buy, in the last year or so, if you're able to be a buyer, since key cards that otherwise might not have seen the light of day for decades are coming out.

Larry

[sycks22]

I like what Paragon auctions is doing with no buyers premium / consignor fees. More money in the pocket of the seller.