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Kipster

Auction House Fees

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Evening all,

Just browsing through some upcoming auctions and having a look at some interesting coins. However, I've just been looking at the buyers fees for a particular auction, and it's 24% PLUS VAT, making it nearly 30%! That sounds exorbitant to me, seeing as they also seem to be charging a consignors fee of 15% as well. I know London Coins charges around 17% and Baldwins was 20% + VAT, so what's the average BP these days? Around 20% plus vat?

Cheers

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48 minutes ago, Kipster said:

Evening all,

Just browsing through some upcoming auctions and having a look at some interesting coins. However, I've just been looking at the buyers fees for a particular auction, and it's 24% PLUS VAT, making it nearly 30%! That sounds exorbitant to me, seeing as they also seem to be charging a consignors fee of 15% as well. I know London Coins charges around 17% and Baldwins was 20% + VAT, so what's the average BP these days? Around 20% plus vat?

Cheers

You're probably referring to Noonans, whose buyer premium is very high.

The Ian Sawden collection from 12.10.21, also attracted import duty of about 5%, which brought the overall buyer's premium to the giddy heights of 33.8%, inclusive of VAT.

But yes, the average is about 20%, I'd agree. LCA is pretty good at 17%. 

  

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“Buyers’ premium” is really just another form of “Sellers’ fee”, because generally buyers care only about how big a pie they need to exchange for a coin - not a jot how the pie is sliced between the auction house, seller and tax man. 
 

It is possible larger or smaller buyers’ premium could have a psychological effect in a particular instance - but in the long run and over buyers broadly, bigger fees just means lower bids and vice versa. 
 

Indirectly, because larger buyers fees reduce net proceeds to sellers, it may constrain supply - which will in turn bid up prices, so self correct - but not necessarily so if the auction house merits its cut by better matching supply and demand; and not if other auction houses do better for less. 

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I think 20% is the medium price of auction houses, though some maybe lower n some higher.  I used to set a gross sum intend to bid before auction.  If an auction charge a higher premium, then the bid will be lower.  If the premium is lower, then the bid can be higher.

 

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I believe that buyers do factor in buyer's premium when considering a coin. I know in my case, I've really got to want a coin offered by Noonans before considering a bid on it. Simply because their premium is so steep. On a really expensive coin that can make the end result much higher than with other auction houses.

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Croydon Coins used to be the only cheap auction charging just 5% buyer's premium. But they didn't have photos for most of their coins then and so it wasn't great for postal bidders. It has since changed hands but the name is still retained. Now it is "21% plus VAT". They even added "Unlike some other auction houses which state 28.8%." on their website.

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Thanks for confirming that.

I think that a near 30% add-on is excessive and as you say, I'd *really* want the coin to justify parting with that kind of excess. All seems a bit much really.

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Yeah, I just set a maximum I want to go to and adjust for fees. Last purchase at Noonans, with the 5% supplement (because the seller was in the US), the additions came to just over 1/3 of my bid. I paid within my budget, but it meant less for the seller.

As a collector, I just look at the overall price I have to pay. But I imagine it makes it difficult for dealers who will need to add their cut, unless they have the resources to hold onto stuff for a few years, to compete.

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1 hour ago, 1949threepence said:

I believe that buyers do factor in buyer's premium when considering a coin. I know in my case, I've really got to want a coin offered by Noonans before considering a bid on it. Simply because their premium is so steep. On a really expensive coin that can make the end result much higher than with other auction houses.

Me too. I adjust my bids in light of the total hammer and BP. That is why BP is really a seller’s fee - not a buyer’s fee. If buyers bid the same no matter the premium it would effectively be a fee on buyers - but that is not the case. 

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14 minutes ago, TomGoodheart said:



As a collector, I just look at the overall price I have to pay. But I imagine it makes it difficult for dealers who will need to add their cut, unless they have the resources to hold onto stuff for a few years, to compete.

I don’t believe BP makes a jot of difference for dealers (when buying) because I don’t think BP affects the overall price. Buyers adjust their bids to factor in the BP - so the overall price stays the same. BP only affects dealers who then on-sell through an auction - because they effectively pay it at that time (as a seller) to receive their net proceeds.

Edited by Menger

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48 minutes ago, TomGoodheart said:

As a collector, I just look at the overall price I have to pay.

This. If I have £500 to spend then I don't suddenly have £600 because the BP has gone up. 

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Well, naturally one would adjust bid to the premium BUT there is a tendency at least when on-line bidding at premium auction to forget just a little bit. Also, ahead of time I just don't engage in the auction at all on some and especially if there is a starting bid that appears to high. 

I suppose this has been studied, but I wonder if a coin goes for an increment or two less if auction houses don't occasionally take a loss when premiums are raised.

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10 hours ago, VickySilver said:

 

I suppose this has been studied, but I wonder if a coin goes for an increment or two less if auction houses don't occasionally take a loss when premiums are raised.

It cannot be studied empirically because human preferences vary one person to the next and don’t stay still even for any one person.  The amount I will bid is different from you and may change minute to minute - even for identical coins. Logically, however, we can deduce that if someone values a coin more than a given sum of money and less than a incrementally greater sum of money (at a point in time) their bid will (counter factually) go up and down inversely with BP.  Presenting only the hammer price in an auction (rather than the total with BP, as Heritage does) cannot change this logic but may cause people to make “mistakes” and bid a sum of money that they value more than the coin.  I have done that many times - but I would suggest that it may not be a case of forgetting the BP; rather, in the split second of the bid, I valued the coin more than the money.  It was after the hammer fell that I reappraised, my preferences changed - and my hunger switched to regret. The excitement of auctions are designed to exploit this human foible. It is a price we pay for the game - and possibly worth the adrenaline in my view.  

Edited by Menger

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That's why I decide how much I think something is worth to me in advance, decide my maximum bid and once placed in advance, I leave it be.

The only exception to this is the last auction I took part in, where I'd set my budget but wanted several items. I had some 'left over' from my first successful bid so used the live online bidding to go for a subsequent lot. Despite being tempted to go rather over my budget I was the underbidder. A salutary lesson for me!

I do feel there's scope for auction houses to do a 'roll over' scheme, where if you don't spend all of your first bid, the remainder is bid against another item.
But my getting carried away last time is I guess precisely why they don't!

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