Heritage Buyers Premium

[Leon]

Originally Posted by ullmandds

yes! this is what the AH's hope for. And honestly...I fall into this mentality more often than not if its an item I have to have. Sometimes I'm just stupid!!!!

We are collectors. Sometimes we are all stupid!

[raulus]

Originally Posted by Peter_Spaeth

Well, undoubtedly there is some of that, especially very late at night, but I still think for the most part they do understand how their bid will translate into a final price..

I don’t disagree with that concept.

I just think that the math isn’t the most important part of the calculus.

The most important part is the jonesing and coveting.

That and the realization that all of this restraint leads to losing just about every auction, because some other bidder is willing to be less restrained.

[Peter_Spaeth]

Originally Posted by raulus

I don’t disagree with that concept.

I just think that the math isn’t the most important part of the calculus.

The most important part is the jonesing and coveting.

That and the realization that all of this restraint leads to losing just about every auction, because some other bidder is willing to be less restrained.

There is a difference between knowing how much you will have to pay based on your bid, and how much you are willing to pay. The debates about BP usually are about the former; as people have claimed bidders do not take it into account.

[raulus]

Originally Posted by Peter_Spaeth

There is a difference between knowing how much you will have to pay based on your bid, and how much you are willing to pay. The debates about BP usually are about the former; as people have claimed bidders do not take it into account.

Is it possible that you’re both right?

I’m not a psychologist, but when it comes to exceeding the amount that we were willing to pay for an item, my experience is that we come up with rationalizations and ways to fool ourselves into thinking that we’re paying less than we really are. Even though we mathematically know that the BP is there, I think we sometimes choose to conveniently ignore it if it means that we can still feel good about our decision to keep bidding.

[Gorditadogg]

Originally Posted by Jewish-collector

Sometimes, Al, you just gotta say, WTF and bid more than everyone else. Attachment 646549

You're not helping!

Sent from my SM-S906U using Tapatalk

[parkplace33]

Originally Posted by Rhotchkiss

Frankly, I think its quite the opposite -- consignors have the power. There are many options for selling stuff - privately, a broker, ebay, social media, and many auction houses to choose from. Its the competition to get consignments that likely has driven Heritage's BP from 20% to 22%.

Once upon a time, auction houses charged the consignor a fee, say 10%, and charged a 20% buyers premium. Today, only an ass clown pays a consignor fee and almost all consignors of anything reasonably material get a portion of the Buyers premium. And, it has become a race to the bottom on how much BP an AH gives up-- what used to be -5% is now -7% and -8% is now -10%; if Heritage wont give me X% of the BP on a $100k item, I can go to one of a half dozen of equally reputable and successful AH's and get that X%.

Therefore, today, AHs are making a smaller percentage of the final all-in price than in then past. The saving grace, however, is that they are selling more stuff and the hammer prices on stuff sold is 2x-4x++ more than it was "back in the day". Thus, AH's are getting a smaller portion of a much larger pie, which portion ends up being more than the larger portion of their smaller, historical pie, but only because prices are much higher.

How will this affect things? I doubt it will have any affect. As a buyer, I wont let 2% impact my decision to buy something. As a consignor, I will now expect more of the BP than before. So if prices don't change and I get more of the BP, this change could actually help consignors who have the leverage to negotiate some of the BP.

It will only be time until higher bps come out. You say consignors hold the power, yet I think ahs hold more power these days. And they will want to make more money, so as long as bidders don’t mind, keep upping the bp.

Trust me, 25 percent isn’t that far in the future.

[parkplace33]

Originally Posted by raulus

Is it possible that you’re both right?

I’m not a psychologist, but when it comes to exceeding the amount that we were willing to pay for an item, my experience is that we come up with rationalizations and ways to fool ourselves into thinking that we’re paying less than we really are. Even though we mathematically know that the BP is there, I think we sometimes choose to conveniently ignore it if it means that we can still feel good about our decision to keep bidding.

Every time there is a new auction, there are a ton of posts in this board about it. Hell, the opening day of bidding is like a holiday around here.

I know guys say they incorporate the bp into bidding, but if you really want the item, that notion goes out the window.

[Mark17]

Originally Posted by parkplace33

Every time there is a new auction, there are a ton of posts in this board about it. Hell, the opening day of bidding is like a holiday around here.

I know guys say they incorporate the bp into bidding, but if you really want the item, that notion goes out the window.

Yes but this is true when we get outbid also. People I'm bidding against bump the final price I'll have to pay far more than the bp.

Heritage is one of the best at putting the actual cost (bid + bp) in parentheses to inform the bidder of what he's actually committing to spend. So, my conclusion is that with elevated buyers' premiums, the ah wins and the consigner loses, while the bidder is unaffected - the money the winning bidder pays just gets distributed differently between consignor and ah.

[Exhibitman]

Since the commission and the buyer’s premium both are paid to the auctioneer from the proceeds of the sale, they are functionally the same, so why have BP? Why not just take the 22% from the overall gross proceeds? If you’ve read my columns for a while you know my answer: it is a jazz hands misdirect. Labeling it a “buyer’s premium” tends to suggest that it is not a "commission" and that the buyer pays the “buyer’s premium”. That’s a bullshit framing, but a significant percentage of the public falls for it.

[calvindog]

Originally Posted by Exhibitman

Since the commission and the buyer’s premium both are paid to the auctioneer from the proceeds of the sale, they are functionally the same, so why have BP? Why not just take the 22% from the overall gross proceeds? If you’ve read my columns for a while you know my answer: it is a jazz hands misdirect. Labeling it a “buyer’s premium” tends to suggest that it is not a "commission" and that the buyer pays the “buyer’s premium”. That’s a bullshit framing, but a significant percentage of the public falls for it.

I agree. Similarly, why do auction houses only permit bidders to bid on items they put a bid on prior to extended bidding? How does this help either the consignor or bidder?

[raulus]

Originally Posted by calvindog

I agree. Similarly, why do auction houses only permit bidders to bid on items they put a bid on prior to extended bidding? How does this help either the consignor or bidder?

It seems like this policy forces people to at least put in placeholder bids before extended bidding. You may or may not really like that dynamic, but it seems like overall it has the potential to push stuff up a bit in the early going, rather than wait until extended bidding for the action to start.

And in terms of who benefits, it sure seems like the eventual winner benefits from having less competition. My odds of winning have to be better going against just 5 or 10 bidders rather than having to face the entire field.

My guess is that these days, most of us adjust our behavior to take this feature into account, and so anyone who is potentially a serious bidder is going to be in the hunt during extended bidding by virtue of having previously made a placeholder bid, and the odds of someone waking up during extended bidding and realizing they really wanted to bid on something new are probably relatively low.

[Gorditadogg]

Originally Posted by Exhibitman

Since the commission and the buyer’s premium both are paid to the auctioneer from the proceeds of the sale, they are functionally the same, so why have BP? Why not just take the 22% from the overall gross proceeds? If you’ve read my columns for a while you know my answer: it is a jazz hands misdirect. Labeling it a “buyer’s premium” tends to suggest that it is not a "commission" and that the buyer pays the “buyer’s premium”. That’s a bullshit framing, but a significant percentage of the public falls for it.

via GIPHY

[Aquarian Sports Cards]

Pretty sure I've posted it before but it was Sotheby's and Christie's that started BP in the art world for exactly the reason Adam posits. Basically it let them tell consignors "Hey we're charging you less" even though we know the reality. Unfortunately once an entire industry adopts a practice it's hard to fight that. If I went to my clients and said we don't charge BP but we charge a higher commission I don't think I could talk fast enough to make that work.

[jayshum]

Originally Posted by Exhibitman

Since the commission and the buyer’s premium both are paid to the auctioneer from the proceeds of the sale, they are functionally the same, so why have BP? Why not just take the 22% from the overall gross proceeds? If you’ve read my columns for a while you know my answer: it is a jazz hands misdirect. Labeling it a “buyer’s premium” tends to suggest that it is not a "commission" and that the buyer pays the “buyer’s premium”. That’s a bullshit framing, but a significant percentage of the public falls for it.

Originally Posted by Aquarian Sports Cards

Pretty sure I've posted it before but it was Sotheby's and Christie's that started BP in the art world for exactly the reason Adam posits. Basically it let them tell consignors "Hey we're charging you less" even though we know the reality. Unfortunately once an entire industry adopts a practice it's hard to fight that. If I went to my clients and said we don't charge BP but we charge a higher commission I don't think I could talk fast enough to make that work.

Kevin Savage Auctions has no buyers premium added onto final bids. I have never looked into consigning with them so I don't know what their consignment fees are, but they have to be getting paid by someone to stay in business.

[sb1]

Originally Posted by jayshum

Kevin Savage Auctions has no buyers premium added onto final bids. I have never looked into consigning with them so I don't know what their consignment fees are, but they have to be getting paid by someone to stay in business.

Most or all of the material that they offer is owned by them...

[Aquarian Sports Cards]

Originally Posted by jayshum

Kevin Savage Auctions has no buyers premium added onto final bids. I have never looked into consigning with them so I don't know what their consignment fees are, but they have to be getting paid by someone to stay in business.

Kevin Savage is largely not a consignment model. They are the owners of the vast majority of the cards they sell. Nothing wrong with that, but it's not an apples to apples comparison.

EDIT. Should have read Scott's reply before I posted.

[jayshum]

Originally Posted by sb1

Most or all of the material that they offer is owned by them...

Originally Posted by Aquarian Sports Cards

Kevin Savage is largely not a consignment model. They are the owners of the vast majority of the cards they sell. Nothing wrong with that, but it's not an apples to apples comparison.

EDIT. Should have read Scott's reply before I posted.

Good to know. I was not aware of that.