Understanding How People Buy Stamps

So I know you can buy stamps online, at auction, through a dealer etc.

What I am trying to understand is "professional" buyers, who buy for clients. How does this arrangement work?

Does the client mean you are paying a premium on top of a buyers premium if it's from an auction? How is this in one's interest to have another middle person. Seems only a good deal for the people taking rakes. How do you not blow way too much money?

Also, how do private sales get brokered? Like I often read this stamp was bought from that renowned collection privately. Are they listing sales in secret circles?

I want to know how people are getting wares outside of the auction circuit and avoiding the common internet dealers who are marking up beyond reasonable asks.

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Hiring an auction agent to buy one lot is going to either cost you money (if you are the successful bidder) or save you money (because they take you out at your specified top bid) (something that it is not always easy for the collector to do).

My understanding is that you leverage the auction agent's superior understanding of the history of the market & the state of the bidding when you give the auction agent 1) a list of lots and 2) a budget and 3) a minimum of guidance.

So armed, the agent can do their job, and get you a better overall outcome than you might have been able to achieve on your own.

Cheers,

/s/ ikeyPikey

It's simple. You are the buyer. You phone a dealer that specializes in private service to discriminating buyers. (I can think of several.) You explain your needs. "I want to source a Fine copy of US Scott 596 within the next two years." You pay a retainer or monthly fee to that dealer. The dealer calls or emails other dealers. "I have a client looking for a 596." They all know each other. They make suggestions or call their clients who might want to sell. A deal is brokered. The stamp is delivered. Your dealer gets a commission, less the fees you already paid. Other financial arrangements can exist. This has been done for decades by buyers from bankers to kings. You build the relationship with that dealer by starting with one difficult stamp, fulfilling all your obligations, and moving on to the next prize. Is this a secret circle? I would call it exclusive, rather than secret.

In the private sale arrangement I do fail to see how you can protect your negotiations, with everyone in the room having opposing interests, once a specimen has been found.

I liken this to buying a house, where the brokers want to close a deal, operating on commission. For buyers, I question how much leverage they have in getting a good price, as it seems like it would be secondary to acquiring. Why would someone who had a 596 do a deal in this manner unless the buyer was overpaying. Seems like an ego buy approach.

In the auction, I get how taking emotions out of the equation is good, but fail to see how the agent investment doesn't undermine your ability to get the stamp cheapest.

I imagine this isn't useful for stamps under 5k? And you probably need to bankroll a large endeavor not a onesy twosy buy?

ikey, that is generally not the way it typically works.
Typically you tell the agent which lots you want to bid on and how much for each lot (although you might ask for some guidance from the agent, you pick a bid before the auction and don't leave it to the agent's discretion) and possibly a total limit (budget).
There is typically no fee if you fail to win anything (although you could get dropped if this repeatedly happens). If you win you are charged a % (say 5%), with a minimum charge for the auction (say $25) and perhaps also a max (say $250).
Far safer than leaving a book bid with the auction house, cheaper than attending the auction, and keeps you away from emotional bidding online (and you don't have to worry that your internet connection goes down at the wrong time or deal with the lot selling at midnight west coast time when its 3 AM your time on the east coast).

A private treaty sale eliminates the auction house fee for the buyer and the seller which can total 40% between the two. You can also gain first access to an item before it is brought to market and you must compete for it in the open. Another plus is that you may acquire something that the owner is not ready to sell traditionally but when presented with an offer has time to contemplate the sale and feels more comfortable. You have first dibs in a manner of speaking. There is also the plus of obtaining something off of the radar. There are other reasons. Bill Gross acquired many items by private treaty. Is it for common material? Of course not. It does have its place though. Another tool in the box.

If a collector wants to put together a specialized collection, or even just a really complete collection of a particular area where there is tough to find material, and wants to complete this in a reasonable amount of time, he will need help. Waiting for everything one needs to show up at auction could take multiple lifetimes in some cases.

Many rarities and scarce items are locked away in collections. The right dealer/agent will know where some of these are, and may be able to negotiate "extraction" of them from a certain collection for the right price. None of this is for the bargain hunter, but it has enabled some great collections, such as Gross's, to be formed in one lifetime.

A few years ago I had a brief encounter with a "Buyer Agent".


I bought a 3 Box lot from Kelleher for $3000. Near the top of the 1st box I found a cheap plastic wallet with a hand written label "Hold for Walter" When I looked in it I was very surprised to find a nice Penny Black cover, I was even more surprised to also find a GB #2 cover with it. I had sold a few Penny Black covers and this one looked fine but I was suspicious of the #2 cover so I posted it on the board and asked for comments and if I needed a cert.


A few hours later I was contacted by an SCF member who politely asked if I wanted to sell it. I responded yes and within a couple hours a well known philatelist contacted me and asked for a price. I was a little surprised and knew I was way out of my league but I said $1000. He immediately responded that that was too high the stamp didn't quite have 4 margins how about $650. I immediately accepted and had a payment in minutes.


Compared to listing on ebay or selling through an auction house this was a much better choice, no commissions, no waiting just done.


Just to finish the story, the next layer in the box contained US Postage. I counted out $1500 in face. Needless to say this was a good deal altogether.

It is quite similar to going back to the same dealer again and again because of trust and having what you want/need, rather than just going for the cheapest price anywhere every time.

If your time is really valuable to (say) your business, your spare time would be better spent with someone with a lot of good contacts instead of you doing the hunting yourself. Plus, there's more time to spend on playing with stamps or writing up your exhibit. There have even been people who have hired others to purchase stamps, do the research and write them up.

Hybrasil,I totally get what you are saying. I am trying to figure out if everyone is essentially taking a "bath" on acquisitions of really decent materials. Given the realizations I see in auctions, I can't imagine people getting decent ROI. Forget about the joy, and collecting, and the other perks of the hobby. I'm talking building a collection over a period of time where you didn't "overpay" for each piece. I don't expect to get what I put in, but it's a tough nut...

I know you can buy collections and break them down. That's probably the easiest road to profit. But if you are curating a particular collection, I don't see how you can avoid paying, let's say north of 60% cat, and never seeing the difference again.

It gets frustrating at each turn. You find a stamp you want. The seller won't budge. You need your fix. You have a decent budget to work within. You pay out. If you wait, the stamp disappears from existence. I just spent nearly 700 on a 400 stamp that auctioned 2 years ago that cats at 1k. Am I alone? Am I a sap? It drives me crazy because I am out of avenues to buy things. That's why I was curious about treaty buys.

I pay retail to obtain decent stamps. With the buyer fee, taxes, shipping & handling and then the eventual seller fee, shipping & handling I am down 50%. Need a 100%+ return to break even. It's a hobby. ROI

Inflation

Certification fee. Then recert. again when selling.

Safety deposit box

Insurance

Subscription fee, snipe fee, agent fee.

Well at least we are recycling.

I done a few private deals over the years....... usually someone wants cash for a deceased collectors stuff with no receipt being asked for . There was a very famous collector who's collection went up for auction in New York City but it only realised $250,000 at auction . I heard he had a million dollar collection .

I don't think I was the only one standing in line to withdraw cash from the bank that day before I went to see his widow . As I understand it no stamp dealer in Chicago was interested in buying any new material for months after the day I withdrawn cash at the bank ......so private sales could be profitable if you don't have to declare it .