Nothing kills competition quicker as high opening bids and/or reserves, turning a competitive coin auction into an online retail coin shop.
Some auctioneers post high opening bids and then, during the live session, lower them to reasonable wholesale levels. Good sales people who invest in Proxibid audiovisuals, they are using opening bids as a strategy to drive bidders to the live session and spark competition. We’re not discussing that here.
An auctioneer recently wrote Proxiblog about consignors placing high reserves on coins. “Say a consignor wants me to auction his coins and has a Morgan Dollar and says the least he will take is $35. I would hate to start it at $25, if that’s all that it brings. I’m finding here lately that people are thinking that their collections are worth more than what they are. One woman wanting to auction her collection has several $20 Gold (pieces) saying that she would take no less than $1700 each. Well, they might not bring that. I would hate to start bids at $1400 or $1500 and not make it to 1700.
“Any advice on this would be appreciated.”
Often consignors ask auctioneers to do the nearly impossible–offer zero selling fees and sell to others at retail prices. A competitive auction environment often does bring higher than retail prices on certain items. In many of top Proxibid auctions, competition is so keen that it actually is cheaper to purchase the same coin on Heritage or Teletrade, especially when one buyer is willing to pay top dollar because he collects Carson City Morgans or cherry-picks varieties.
A consignment with high reserves takes advantage of the auctioneers who pay for promotion and portal and credit card fees.
Here’s how to deal with consignors who demand retail prices:
1. Explain that the auction house is providing a service at a cost involving photography, set up, advertising, portal fees and credit card billings/hassles.
2. Note that a competitive environment often brings those high auction prices, but don’t promise to deliver them.
3. Show consignors what their coins are really worth either by citing the Grey Sheet or Blue Book.
4. Note that only PCGS and NGC bring those ask/bid prices. (ANACS and ICG bring about 10-12% lower bids with third- and bottom-tier holders often unreliable.)
5. If setting a reserve because the consignor demands it, charge a buy-back fee of 10% of the reserve price.
The last recommendation not only discourages high reserves but also prevents the consignor or consignor’s friends from driving up the bids during an auction, an illegal practice called “shilling.”
If your consignor balks at selling coins because of the above recommendations, direct them to this article that shows what traveling coin shows usually pay for coins.