Handling of Written Bids at Major Auction Houses

Dear ladies and gentlemen,

I want to place a written bid for a quite expensive item of this year's New York auctions. For the sake of discretion, I do not want to mention the name of the auction house.

Does anybody know how confidentially written bids are handled? I am thinking of written bids that are above the starting bid mentioned on the company's website. Do auction houses use written bids frequently as the new starting bids without any counterbidder?

I highly appreciate your cooperation.

Kind regards,

Fairy

 

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No, they do not jump the current high bid beyond the appropriate increment.

Examples:

You are interested in a coin which has an opening bid price of $2000 and there are currently no bidders. You submit a maximum bid of $4000. The current bidding status would be be changed to reflect one bidder (you), with bidding currently at $2000.

Another scenario: The same coin already has one mail bidder and shows current bidding at $2000. You submit your mail bid of $4000 and the new high bidder shows as $4000 to the original bidder, but with two bidders. This would indicate that the original bidder's maximum was at least $4000 and their bid was received prior to yours. If their maximum bid was more than $2000 but less than your bid of $4000, the new high bid would be one increment higher than the original bidder's maximum, with you as the new top bidder.

If at the time the auction goes live you are the top bidder, the bidding opens at your top bid and continues on from there, with the auction house executing new bids on your behalf, if needed, up to your maximum.

 

how are pre-auction bids handled on the floor?
is there a person representing highest written or online bid on the lot?

 

The auction house has a person at the auction managing the prior bids ("book bids"), plus someone managing incoming live online bids, plus agents handling phone bids.

Watching this unfold live is impressive .

 

TIF did a good job of describing the process.
I have had good luck sending my bids electronically. This way you have a quick confirmation of your bid. Mailing the bid requires that you wait for confirmation. If you can attend the auction or watch it on line, you can make bids real time.
Most of the big auctions have an internet option. You will be anonymous bidding on line.

 

Thats the way it works too . I use to go on proxibid and watch everyone on the internet bid before the auction date and when the auction started the internet bids were the starting bids .

If its some serious cash, I go to the auction house and bid with funds in hand, so when I win the item(s), they are coming with me on the way out .

Of course, after I pay ......

 

so curious as to what coin you are bidding on. tell us later ok.

 

While the process is well described you have to allow for the effect this process has on your competition. When you bid $4000 on a lot showing $2000 but whose previous high bidder had bid up to $3500, he will get notice that he has been outbid but not by how much. This could result in him bidding one or more times until he is in the lead making the lot show as something that has drawn a lot of interest possibly attracting other bidders that did not know they were interested until it appeared that there was something desirable about the lot. That makes many people believe it it better not to bid/show interest early in the process so you will expect many bids at the last minute if the sale is electronic or made by agents or buyers in person at the sale if it has a live bid session. All this makes it appear that there is something shady going on when in fact where is not. Being in the lead with a lot of space between the current bid and your maximum is not to be taken as a good sign. I am amazed at the low prices brought by some lots and the high action on others but all we can do is patronize only houses that we trust not to be playing games. If the fact that you asked this question here means you do not trust the venue, perhaps that alone should tell you something.

 

There are serious disadvantages to bid electronically or by phone in a floor auction. You'd almost always need to overbid, and even then all the initiatives are still given to floor bidders.
You can win lots with early submission, but it's hard. There are all kinds of signals bidders can send one another during a live event, online or phone bidders can't do that.

 

btw the only time I had won a higher value item in a floor event with an early bid submission, I put in 4.5X the estimate and it ended in over 3X. I think the only reason I got it was because it went way pass the floor bidder's cap...

 

Well, let us assume that I submit a written bid of $4000 while the opening bid is $2000. Who can guarantee that the auction house omits to place an additional bid of for instance $3999? That would be easy for them and would facilitate a hammer price of $4000, which I was willing to pay.

Does anybody know whether or not New York auction houses accept reserve prices of the consignors?

 

My experience with reputable auction houses is that they do not shill bid. My experience with disreputable auctioneers is that they do. That is why they are disreputable.

You might think no one would know, but they do, experienced floor auction bidders soon spot any duckshoving going on and they talk among themselves. No one is going to go out of their way to directly help a competitor, but I'd tip off someone buying stuff I was not interested in. Word soon gets around. The usual bidders adjust their behaviour, either by avoiding the auction house or avoiding commission bids, or even using other dealers to bid for them if they cannot attend.

It is also easy after a while to spot unsold lots even if they appear to sell. Clues are no mention of a bidder number, or one bidder number used for all unsold. To spot the latter, pick a couple or three well overestimated items and see if they sell to the same number. There is your unsold number.

You can also spot the amateurs. They are the ones bidding when all the pros know the reserve (usually 10% below lower estimate) is too high to bother with.
The item may start at half the lower estimate but the few amateur hopefuls will drop out as the actioneer runs them up toward the reserve. The pros won't bid, which may lose them the odd item if there is no reserve or a very low one, but that's just the way it goes occasionally.

I'd place a bid and forget about it till the hammer comes down.

 

Clarification/correction of my earlier scenario with an existing single-bidder lot showing $2000:

Bidder #2 submits a mail bid (or website bid, or email bid, or whatever form of pre-bid) of $4000.

• If upon processing the high bidder is still bidder #1, and the current bid displayed is $4000, then bidder #1 coincidentally submitted a maximum bid of exactly $4000 and due to earlier submission, is the current high bidder
• If upon processing bidder #2 is the high bidder at $4000, then bidder #1's maximum bid was one increment lower than $4000, or an off-increment between one-lower and $4000
• If bidder #1's maximum was two or more increments less than $4000, bidder #2 will be the new high bidder at one increment higher than bidder #1's max, or the next regular increment if bidder #1's max was off-increment.
• If bidder #1's maximum was higher than $4000, even if by only one dollar (for auction houses who accept off-increment bids), bidder #1 will remain the high bidder at no more than one bidding increment higher than $4000.

@Fairy, as for your question about honesty and integrity of the auction houses, I cannot say but echo Doug's comment. I have more confidence in some auction houses, less in others. CNG, for instance, has my trust and respect.

 

I've won many coins by bidding ahead of time in an auction. With all of the auctioneers in NY, I don't think you will have any problems with unethical behavior.

I would suggest, however, that you bid live online if possible. Not giving the auctioneer a bid ahead of time eliminates any possibility that they might share that bid with a competitor to you and it allows you to keep the element of surprise which is important in any competitive engagement. Plus, it's a heck of a lot more fun to place your bids live.

 

welcome Fairy ... nice avatar

Good luck in your auction adventure (hopefully the dudes that are running it are ethical) ... not much you can do about it, eh?

Please keep us posted on your results

Cheers

 

Welcome and good luck.

 

I stopped putting a max bid on auctions a long time ago. I either bid live on-line or attend the auction. I do not submit max bids and hope the auction house is ethical. When I used to do that, I always won at my max bid, regardless of the auction house. I now avoid that strategy since it inherently opens up the door to fraud by the auction house. Why tempt, if it can be avoided?

 

I think the basics have been covered pretty well here. But as to strategy and tactics, where, when and how to bid: In all my years I have never gotten emotional about it. I simply submit the maximum I am willing to pay and walk away (or if in person hold the paddle until I am out). Sometimes empty handed, sometimes with the goods. Sometimes at my high bid, sometimes I was the only bidder and got a bargain. Just put in your bid and dont worry about it.

 

Dear ladies and gentlemen,

As far as I understand the posting of "4to2centBC", there is definitely the risk that a written bid considerably higher than the starting bid "inherently opens up the door to fraud by the auction house".

Unfortunately, it is impossible for me to bid live online and I have to pass the opportunity.

 

There are other options. You can have a dealer (or other person attending the live auction) execute the bid when your lot is on the block. You can arrange to bid live by phone-- just call the auction house to arrange this. Phone bidding is generally available by pre-arrangement for lots exceeding a certain threshold (typically ~$2K, from what I've seen).