The issue of reserves has always plagued auctioneering with several houses rarely allowing them and only on large-ticket items that promise a high return in commission. Reserves in online coin auctions differ from onsite ones or non-numismatic lots, like antiques, because of many factors, explored this week in a series of posts.
Typically with pricey items, such as furniture or cars, auctioneers from experience suggest or solicit an estimate of value before agreeing to a reserve. The coin business is much more complex, because the category is rife with fraud, self-slabbed coins, altered items, counterfeits of US currency, replicas that violate the Hobby Protection Act, and just plain ignorance of sellers who overpaid for items and now want a return on their “investments.”
Some auction houses accept these risks because they are committed to hosting regular coin auctions per month and require consignments. As a result, auctioneers in online sessions can pass on an item, open with a high-level bid, or post “Reserve Not Met” on lots. And then there is ghost-bidding allowed by transparency notices as auctioneers try to raise the level of bids to meet the reserve.
All of this is done, in one way or another, at the auction house’s expense–literally and figuratively.
However, a risk that some companies do not contemplate is the loss of return bidders. That can spark a vicious cycle in which fewer bidders register for an auction, stifling competition, so that sell-throughs are a thing of the past and consignor returns become commonplace.
We do not bid in a handful of Proxibid auctions because, in a word, the companies function as online coin ships with reserves set at retail levels or above and even at times engage in practices that we find upsetting, as we wrote about in this post about the manipulation of maximum bids.
Tomorrow we will delve into ramifications of losing customers to reserves. Then we will investigate a policy of one of our top houses, concluding with a post that solicits bidder and auctioneer opinions on whether reserve policies should be included in terms of service.
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.