And You Thought That Stamp Auction House Buyer Premiums Were High!

People have periodically lamented the high buyer premiums that stamp auction houses charge. In the last 2 weeks I've bid in an Aldrich auction (15% BP) and a Siegel auction (18% BP). Rumsey is at 15%, and if memory serves, Kelleher and Spink are now up to 20%.

Well, these don't have anything on firms outside the philatelic arena. I bid on a Holobird Americana auction this week with a BP of... 25%.

Now with the Marketplace Fairness Act state sales tax collection wither in effect or going into effect throughout the country and inevitably coming to all states (that have a sales tax), that could be a 30-35% add-on in fees/taxes.

Siegel started charging sales tax for my state about 6 years ago and I have thus been at a competitive disadvantage when bidding in their auctions ever since. Kelleher just announced that they will soon begin charging sales tax for my state as well. I, for one, will selfishly be happy to see the playing field somewhat leveled again by the more universal sales tax collection in the future.

Grosvernor is 25%. Kelleher offers a 2% discount on the 20% for prompt payment. At some point the increased loading of higher commissions, taxes and exorbitant shipping costs from some houses will cut into net lot prices.

Of course at the expense of the consignors. 25% is insane.

I never understood how people can put 20-25% into the pockets of auction houses for items that can be bought off dealers elsewhere at no such premiums. For exceptionally rare items that can't be found elsewhere, that is a different matter.

I suspect that, without the premia, many auction houses wouldn't survive. In a world with ebay, it's difficult for them to raise sellers' commissions. Are you really paying 20% above retail? Not ordinarily, because you should have factored the 20% into your calculation when bidding (against, among others, the dealers who will apply a mark-up when they re-sell).

'
Those of us who have lived with currencies other that the US Dollar are accustomed to currency conversion arithmetic as a part of daily life.

If you live in Auction World, you just have to keep both currencies in your head: there are Bidding Dollars, and there are Paying Dollars.

Not so hard once you get used to it.

Cheers,

/s/ ikeyPikey

SAN provides real-time currency conversion during live auctions which is always helpful.

But SAN's conversion rates can be woefully out of date. They were WAY off during the Aldrich auction. I don't think he has the rates linked to a live feed that automatically updates.

As Ikey mentioned in his post, the present exchange rate is $1 cdn to 75 cents US. So exchange rate, + 15-20% buyer's premium, + high shipping cost + possible import charges and you end up paying close to full catalog if not more.

Oftentimes there are no way I can compete.

Dan

Every time I see someone say Fee-bay my reaction is somewhere between a cringe and a chuckle. EBay/Paypal's 10% sellers fee and no buyers fee is cheap compared to an in/out cost of 45-50% at an auction house. There's no way around it.

I think the relationship between auction houses and ebay is complex and changing over time. When ebay was new I think auction houses thought it was a silly fad. A few year later I would see box lots with a lot of cheap stuff described as an "Ebayers Dream Lot". Now auction houses understand that ebay sellers represent a large part of their customer base. It is not unusual to sit in an auction room and see the 4 or 5 largest bidders are all ebay folks. I wonder if the auction houses wouldn't be in dire straits if it wasn't for ebay.

I buy 90% of my material from auction houses and I'm not competing with them. I take their large lots and break them down into smaller lots than the auctions want to sell. Occasionally I'll get a consignment that could have gone to an auction but that's just business and it's rare. Who knows what stamp collecting would look like without ebay.

Auction houses have always relied on dealer buyers. Dealers have propped up many sales in the past and kept material changing hands, thus fueling the stamp economy. It is interesting to observe that over time, these dealer buyers are becoming more and more ebay dealers. That certainly illustrates the changing economic model of the hobby.

I will echo what someone said earlier in this thread, and say that a part of me is 'happy' about the tax rollout, since I've been stuck paying Siegel that much extra ever since Charles Shreve went to work there (he's in TX). I'm used to it though. It doesn't change how much I spend, it just changes who gets what pieces of it.

For the tax I'm going to be paying to Siegel for this week, I could have bought another pretty nice item. But then -- maybe not, if there were no tax, bidders would adjust accordingly (bid inversely to the direction of the tax rate) -- once the playing field is leveled.

I hear you txstamp about the sales tax. In the Siegel auction (18% buyers fee) tomorrow, if a stamp hammers for $1,000 and the shipping cost is $25, I would pay $1304 for it whereas a bidder not paying sales tax would pay only $1205. (My state sales tax rate is 8.25% but the actual effective increase is around 10% since the sales tax is applied to the total of the hammer, the buyers fee, and the shipping.) This is a bummer and it really adds up over time but, like you, I have been sucking it up and buying anyway!

I have long been under the impression that back in the day (let's say 1930s to 1950s) most auction lots were purchased by dealers except for individual rare stamps. Is this essentially and incorrect or correct assumption?

And if correct, in what time frame did philatelic auctions become more oriented towards collector-bidders?

" I wonder if the auction houses wouldn't be in dire straits if it wasn't for ebay."
No, it would just be like the old days with more show and brick and mortar dealers, who would be the buyers.

They buy at auctions for several reasons.

1. Better material aggregated instead of having to acquire from disperse sources.
2. Ability to collude around long industry relationships
3. Cheaper
4. Knowledge and on-premise visits supercedes online bidders
5. Cornering rarities and price fixing after. They will outbid collectors to push valuation boundaries on highly desired pieces.
6. It's a social thing
7. It's scheduled and reliable and plannable
8. It's a two way street for acquiring and offloading/consigning.