Auctions-Realized Price Disclosure

Question: When an auction house publishes the realized prices for the lots sold, should those prices include or not include the buyer's premium? I am not sure what the convention is and am curious. I also assume its a universal convention, at least in the US.

Good question. I look forward to an answer.

Kirk (it took me two years to figure out what NET meant :-)

I believe the figures shown are hammer prices, net of premium and taxes

Actually, I'm asking for a reason. (of course I would.)

I bid on a lot in an auction last week. I believed I had won and over the weekend, I saw the schedule of realized prices, and the price shown for my lot was higher than my bid. When I queried the auction house, they told me that the realized price included the buyer's premium. OK. I knew there would be a buyers premium.

But, I am not sure that it is right to show a realized price with the buyers premium. I am also not sure it is wrong. I could "argue' it either way and was curious what the common practice is.

-Larry

Most auction houses I know publish their prices realized list with the hammer price, not including buyer's premium.

If everyone had historically published their list to include buyer's premium, then I wouldn't have anything additional to comment.

However, when an oddball auction house begins to publish their list to include buyer's premium, I would say that's a gimmick to try to get people to increase their future bids. What's next? Including the seller's premium as well? Shipping and handling? Sales tax?

When that oddball auction house accepts your bid as to include the buyer's premium, then it would make sense to publish the prices realized list with the buyer's premium. You can't accept apples and then publish picture of oranges.

My opinion.

Well, that was my first reaction. If I am bidding on a lot BEFORE BP, then publish your realized prices on that same basis. It also seemed to me that this is a means to push up prices in the market place. Stuck me as being a little odd, though I can understand it. Ultimately, it was the price I paid.

Now, this wasn't an "oddball auction house" but a fairly (very?) prominent player, who is carried on the internet by Stampauctionnetwork and about which the Swedish Tiger site labels as having a "good reputation". I checked the details in the website, just to be sure I as not mistaken, and the prices on the details behind the price schedule are all asterixed with the notation that the realized price "includes BP". So, they are making a disclosure, but only if you dig deeper into the website.

Not sure I approve.

If this is one of those houses whose advertisements claim "Estimate $x...realized through our auction $2x...sell with us" then I would be troubled if their 2x ad numbers include the buyer's premium. Not only are they puffing up the market, but they would be enticing sellers with artificially-high numbers that they didn't really deliver.

Hopefully the editors at Scott pay enough attention to the auction reports to know the difference in reporting methodology.

C.

I personally include several of the large auction houses in my "oddball auction house" list. Some of them are always trying gimmicks to up their bottom line (I assume that's why they do it). They will advertise their "best" consignments in full page ads. However, if you look their actual auction listings, there are numerous stamps with major defects that are described as 'beautiful example' or 'rare opportunity', and then they provide an estimate that is within 10% of catalog or even above catalog. Of course they don't sell even close to the estimate except to the occasional naive bidder. It's all sales play to make the quality material seem more valuable. I don't understand why they insist on playing that game. Many already take the equivalent of 25%-30% cut in the hammer price (10-15% seller AND buyer premium). Most of those winning the truly prized items already know the material very well. Why do these little moronic and unnecessary sales gimmicks when you have a good clientele and a good selection of quality material in your auction?

Anyone who has followed the major auction houses and stamp investment groups over the past 2 decades knows they are not free from major transgressions in ethics; this includes criminal indictments and convictions. Bottom line -- it's more important to know the stamp than to just rely on a "reputation".

The auctions I participate in, the lots are accurately described and the estimates reasonably reflect the quality and content of the lot. When they start deviating from this basic principle, I drop them and take my business elsewhere.

Just my thoughts.

Come on Kim - tell us what you really think!

I think part of the reason the auction houses have resorted to the gimmicks and sleight of hand is the stiff competition they are receiving from the on-line sites that don't (directly, at least) charge a buyer's premium.

That's what happens when you have an open market and unfettered competition in the marketplace.

I agree, Greg! The major auction houses are starting to "understand" the internet. That's why they are flocking to the internet auction hosting sites. Of course, when they do that, the host takes a cut of the action. One of my favorite auctions signed up for SAN 2 years ago. However, I've dropped my purchases from them by over 75%. Simple reason. Their buyer's premium went up to 15% and now I get more competition. Good for them, but bad for me. My business is headed elsewhere.

It's good of them to think internet (I wish Amos would think more "internet"). But as a customer, I have to think -- what more am I getting for that extra 5%?