Auction Houses - Showing Estimates

[Hankphenom]

I've never understood the purpose for either the auction house, consignors, or buyers in the practice of volunteering estimates of any kind. I have had this explained to me by several auction house honchos, something about "guidance for the buyers," but I've never thought it made much sense. Are you trying to establish a floor for the items, or a ceiling? And why is it the auction houses business either way? I just don't see an upside for anybody. And the estimates are so wildly wrong for so many items in any given auction, you'd think that would have eliminated the practice long ago. I'd love to hear some reasons why this is helpful, and to whom.
Hank Thomas

[ullmandds]

My impression is that most auction houses list a lower than expected estimate so that when the realized price blows away the estimates...they can boast that their auctions beat their estimates by such and such a %.

[murphusa]

Some list it as part of their service to offer the seller an advance based on a percentage of the estimate. I think REA does this.

[Hankphenom]

Originally Posted by ullmandds

My impression is that most auction houses list a lower than expected estimate so that when the realized price blows away the estimates...they can boast that their auctions beat their estimates by such and such a %.

That does seem to be the case more often than not, but how does that make them look good when they're the ones making the inaccurate estimates in the first place? And how does that make buyers feel, now that they have paid more than the "experts" predicted the item would go for? How can that not have at least some depressing effect on the bidding when it's close to or past the high end of the estimate and bidders are trying to decide whether they should go another bid or not? I'm still struggling to understand the benefits of this common practice.

[drc]

I rarely pay attention to estimates, which may suggest that consigners should be overly concerned how estimates effect bidders. At best, they're like someone quoting Beckett book price in an eBay auction. Even if hi Becket is helpful to know, you don't actually use that as your bidding marker.

Some estimates are goofy and some are dubious, so it's hard to take them too seriously.

The subject of estimates versus realized prices would make for an interesting article.

[Leon]

Originally Posted by Hankphenom

That does seem to be the case more often than not, but how does that make them look good when they're the ones making the inaccurate estimates in the first place? And how does that make buyers feel, now that they have paid more than the "experts" predicted the item would go for? How can that not have at least some depressing effect on the bidding when it's close to or past the high end of the estimate and bidders are trying to decide whether they should go another bid or not? I'm still struggling to understand the benefits of this common practice.

Most seasoned collectors will pay what they will based on experience and how badly they want the item. I pay very little attention to estimates. I have seen item estimates that were $500-$800 go for 15k, and not as bad the other way, but still quite far off. I think it does allow the auctioneers to say they beat the estimates. As a practice we don't do that in our auctions but I understand the philosophy. Kind of like the "best offers" being discussed on the other thread, just not that big of a deal.

[Hankphenom]

Originally Posted by Leon

Most seasoned collectors will pay what they will based on experience and how badly they want the item. I pay very little attention to estimates. I have seen item estimates that were $500-$800 go for 15k, and not as bad the other way, but still quite far off. I think it does allow the auctioneers to say they beat the estimates. As a practice we don't do that in our auctions but I understand the philosophy. Kind of like the "best offers" being discussed on the other thread, just not that big of a deal.

So the only purpose of estimates is so the auction houses can brag that the item beat the estimate they came up with?

[Leon]

Originally Posted by Hankphenom

So the only purpose of estimates is so the auction houses can brag that the item beat the estimate they came up with?

Hi Hank
It's called "marketing" and yes, I think that is part of the reason, not all of the reason. Estimates can be a guide for less experienced folks, I guess, though they are often way off.

[barrysloate]

Estimates could be a useful tool, but most of them do not reflect the actual value of the piece in question. Typically, the estimate is low, so that the auction house can far surpass it.

But for an auction house that allows reserves, the estimate may offer a clue with regard to that reserve. Maybe a lot with a $4000-6000 estimate can't sell for less than a $4000 bid. Not sure about this, but it might have some merit.