BLUESHEET: A NEW RATE STRUCTURE FOR COIN AUCTIONS?

CDN Publishing · Jul 12, 2017


The final tally for Stack’s Bowers Baltimore U.S. coin auction sessions was more than $5.3 million, with the top spot going to a PCGS certified AU58 1881 double eagle,





The final tally for Stack’s Bowers Baltimore U.S. coin auction sessions was more than $5.3 million, with the top spot going to a PCGS certified AU58 1881 double eagle, a famous low-mintage date. The realized price for this rarity was $88,125, which reminded us that, earlier this week, Stack’s Bowers made the announcement that they will be standardizing their auction buyer’s premium to 20%. This raise will go into effect following the conclusion of their sale at the World’s Fair of Money in early August.

Previously, Stacks had various buyer’s premiums depending on the format of their sale. At the time of this writing the other numismatic auction houses, including Heritage, haven’t made any announcements regarding changes to their buyer’s premium. Less than a decade ago, virtually all buyer’s premiums at numismatic houses were at 15%, which then became standardized at 17.5% a handful of years ago. Remarkably this fee is low in comparison to many other collectible auctions. At Christie’s Art Department, the buyer’s premium is 25% on the first $100,000, then 20% up to $2,000,000 then 12% on any amount beyond $2,000,000. For a work of art that sells for $1,000,000 hammer the buyer’s premium that must be paid is $205,000. This is more than a 17.5% or 20% flat buyer’s fee. Large sellers of collectible cars, timepieces, and wine auctions have buyer’s premiums in the 22% to 25% range. It is interesting that no coin auction firm currently uses a variable buyer’s premium based on the hammer price of the lot. From our perspective, most coin buyers are not interested in complicated calculations when trying to purchase coins at auctions.

The primary difference between other collectibles and rare coins, however, is volume. An average art evening sale has 80 to 100 lots, while coin auctions regularly contain thousands of lots. Therefore, coin auction firms are collecting on significantly more lots than most other collectible categories. This is countered by the average lot value, which is significantly lower for coins than art but on par with such areas as sports memorabilia and wine. There is no question that the cost of doing business has increased and all companies—auction firms included—will adjust their margins to manage these costs. Having said that, buyers and consigners have a right to demand a high level of services, primarily in the form of online resources.

Online auction companies such as Great Collections (GC) and David Lawrence Rare Coins (DLRC) offer consumers a different, online only, bidding model. GC charges only 10% buyer’s premium ($5 minimum) while DLRC has no buyer’s premium at all. Of course, neither has the expense of printed catalogs or live bidding venues.

The biggest outlier, of course, is eBay. At their founding, eBay was touted as an auction site, and while much of their marketing lately is that of an e-commerce site (such as Amazon), a huge number of items are sold via auction. There is no buyer’s premium for standard listings on eBay, with the sellers responsible for paying the transaction fees. If buyer’s premium continue to increase, will it drive more buyers to zero premium auction sites such as eBay?

Comments (4)

  • WM H RICHARDS

    I agree that Heritage has excellent photographic equipment, but I believe that advantage is tempered by the 17.5% premium that is charged, as well as sales tax. I have found that Great Collections has acceptable photographic equipment, a 10% premium fee, and does not charge sales tax if you are located out-of-state. I have been extremely pleased with the coins I have purchased. Heritage offers excellent coins although I feel Great Collections also offers them. For this reasons, I often find myself preferring the Great Collections coins.

    Monday, July 17, 2017 1:07 PM EST
  • Ernest Kelly

    Ebay has been the new wave of numismatic auction and retail for sometime,a foregone conclusion - run a search on the number of TPG items and the result is is staggering. One can sit down over Sunday morning coffee and find a super deal. There are many quality numismatic items on eBay and super deals. I dispute that a 25 Pct markup over bid is excessive, this is more of a mid range markup - the industry norm based on analysis I have performed is around 35-40 pct vs bid key, CAC, and better date material may command more. I dispute the bashing of EBay sellers - my take is many can't compete with us. I have successfully operated there since 1998 and with its power search tools one can search easily. At my last count there were more than 263 k graded coin and currency items on eBay - PCGS, NGC, ANACS, ICG. The increase in buyers fees, like gravity will drive more buyers and especially sellers to eBay and Great Collections. One only has to do the math to see the compelling synergy. While I set up at shows, I have an online eBay store many of my purchases are from eBay or Great Collections. I have no interest in auction venues charging a 20 pct sellers fee and prefer the online / realtime non buyer fees of eBay or purchases from GC. Ebay is both a retail and auction venue online / realtime 24 / 7. There are many major Numismatic firms with quality material on eBay. They hardly have overpriced / problem pieces lol.

    Sunday, July 16, 2017 10:14 AM EST
  • roy herbst

    I bid according to the final price I will pay so I will just offer 2.5% less then I would have for the coin

    Saturday, July 15, 2017 10:46 AM EST
  • BOB ROSEN

    Not unless eBay sellers start offering graded coins other than mostly problem coins (e.g., genuine, cleaned, whizzed, uncertified, etc.) with a No or Low Reserve Auction, instead of at overpriced (>25% over CDN Greysheet) Buy It Now listings. Also, a firm like Heritage has the best photographic equipment available, and very few eBay listings contain photos of coins that show any useful detail or luster, so bidders are practically buying sight unseen coins.

    Wednesday, July 12, 2017 4:43 PM EST

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