High reserves bring low hammers

Proxiblog has been noticing a troubling trend in several auctions involving opening bids set higher than retail prices. That not only discourages competition; it can cost you return bidders because, in effect, it erodes the auction experience–competitive bidding by seller vs. buyer.

Pause for a moment. Think about the possible outcomes if you are setting high opening bids to insure a reasonable profit. Aren’t you undermining the whole allure of an auction, the sense that lots can be had at wholesale prices? Isn’t that what drives bidders to a site? Sometimes the bidder wins. Sometimes, the seller does. The auctioneer’s job, from the distinct voice (onsite or online) to the hammer–bang!–is meant to spark competition so that bidders “go to war” and bids approach or surpass retail for items.

Auctions–especially coin auctions–should not be as static as an online shop with set prices. On Proxibid, this is worse than eBay‘s “Buy It Now” auctions! With the latter, as soon as you pay retail or more, you get the item. On Proxibid, the auctioneer is hoping that one bidder pays retail and then a bidding war starts.

Fat chance.

If your consignors are setting high reserves or opening bids, then charge them at least a 5% “buyback fee.” That’s only reasonable, as the auctioneer has set-up and technology costs. There’s another wrinkle in setting bids so high and passing on items. Proxibid, as yet, doesn’t charge “buyback fees” for items that fail to sell. The portal only gets a fee if an item sells. Thus, if more auctioneers persist in setting high reserves or opening bids, that, technically, can be construed as an abuse of the system.

Consider this from an eBay perspective, even though the mega-portal’s technology is programmed for a different purpose than Proxibid’s (i.e. replicating online the auction experience). If an item with a high “Buy It Now” or “Opening Bid” doesn’t sell, eBay still gets its set-up, picture posting/storing and advertising fees.

Proxibid doesn’t. Like anything else, auctioneers have to police themselves. Right now, Proxibid is absorbing the cost of passed lots.

Here are a few examples of exceptionally high opening bids:

The opening bid on this coin, a Morgan 1880-S MS65PL, was set at $500. The retail price, which can easily be checked online using NGC’s certification service, is $325.

Here is another auction’s inflated opening bid of $90 for a 1944-D MS66 RD Wheat cent. NGC sets retail at $30, according to the coin’s certification number.

You can check opening bids on slabbed PCGS coins at this link.

With one or two exceptions, we believe Proxibid auctioneers are not intentionally making these mistakes. Some may be following a consignor’s request. Others may just be guessing.

Consignors should follow your requests. Guesswork suggests poor legwork on the part of the auctioneer. Like a good pawn broker, an auctioneer should have an idea of what a lot is worth before listing a reserve or opening bid.

If you’re selling coins, you just have to know about them. That’s why we have archived previous numismatic posts in our “Articles” page.

The best auctioneers will attest that high reserves bring low hammer prices. It’s worse than that. Sometimes the hammer fails to fall!

Proxiblog is an independent entity with no connection to the auction portal Proxibid. Our intent is to uphold basic numismatic standards as established by the American Numismatic Association and the National Auctioneer Association and to ensure a pleasurable bidding experience not only on Proxibid but also on similar portals such as iCollector and AuctionZip.


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