Well, It's Not Working

I thought my auction bidding philosophy was sound.

1) Determine a coin's value from catalogs, auctions or sale results.
2) Subtract from that figure an amount approximately equal to buyer's fee and S&H.
3) Bid that amount.

The problem is that I'm not winning anything that way.
Either it's wrong or I need to be more patient.

I can sort of understand with coins valued under $500.
One bidding increment won't add that much to the bottom line.
But with coins in the $5000 area one increment plus the associated fees is not a trivial amount.

If this continues I'll stop bidding in auctions and depend on coin shows to get what I want.

I'm trying to determine if I need to adjust my thinking.
Any suggestions?

 

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Your strategy is fine, but it’s possible that other factors are at play. It could be:
1. An eye appealing/attractively toned coin; at that point guides and prior sales can be blown out the window if two people really like it and are willing to go all in on the coin.

2. There still are bidders that forget about the extra fees and bid as if they aren’t there.

3. The coins don’t come on the market often, so the prior sales and guides aren’t accurate.

4. The market is shifting upwards on the coins you are chasing.

It may just require more patience on your part to wait out certain coins, especially those that come up for auction often. If it is something more rare, then you might want to consider changing strategy.

 

Auctions have not been good for me as well. I'm looking at shows and well known dealers, more and more.

 

There's always somebody else who is willing to pay more than the next bidder to have the coin, and maybe they aren't a dealer so they just want to have it in their collection.

There were a few coins I remember bidding on that had book values of $30-40 but paid close to $60 for them. For example if a particular year or origin of the coin holds a personal value for me, then I'll probably bid higher than it's actual value.

Some look down on this method but I'd occasionally try sniping out other bidders in the last 3 seconds. It has worked for me on several occasions.

 

That's the rub....HOW patient are you willing to be ?

You are in effect bidding at BELOW FMV by subtracting S&H and other expenses. When you add in Ebay listing fees...time value of money....S&H...and Heritage or other auction houses Buyers Premium....I think the chances of getting something at or close to FMV is very low for a current auction.

Maybe if you keep doing it long enough and you catch an auction where there are fewer bidders, you get lucky. But it's going to have to be something on an illiqiud, less-traded item where you don't have lots of bidders/buyers (i.e., Saint-Gaudens $20 Gold Coins).

But the same lack of bidding that may eventually turn in your favor can also work against you....just like in baseball free agency, it only takes One Dumb Buyer to move the price up high.

I have bid and won stuff on Ebay for $100 that a few weeks later sold for $30. OTOH, I have bid low on stuff and said I'll wait for the price to come to me and months (even years !) later, I'm still waiting.

It all depends on how much the item costs (paying a preium on lower-priced stuff is less painful in absolute terms) and how long you are willing to wait.

If a $1 Silver Certificate has a FMV of $30 and I can only get it for $60, I may say screw it and just bid and put it in my curio cabinet ASAP. OTOH, I'm not paying 100% over FMV for a gold coin costing 4 or 5-figures.

 

Honestly, it depends on what you're bidding on.

If you're bidding on widgets that come up dozens of times a year, that strategy is fine (you'll loose a few, but you'll eventually win).

If you're bidding on something rare that comes up every dozen years, you have to throw strategy to the wind and bid like the devil.

 

On $5,000 coins, what are the fees?

Never been there before...

 

Same as on under $5000 coins. The fees (usually) don't change based on the bid amount, and depending on the auction house usually range from 15-20%. So, if you bid $5000, you'd wind up paying $6000 after fees.

 

People tend to get caught up when bidding at an auction. Then the I'm not going to let that guy out bid me syndrome sets in. Others may just plain want it more andvthey are willing to pay above and beyond to get it.

 

My bidding philosophy is:

1) I will not win this auction, so
2) might as well just put in a lowball bid and let it go
3) and look the final bid price when another guy wins it
4) unless everyone else forgets about this one and I get lucky and win it.

In a hundred auctions, I probably win three...

I have only really competitively bid when I wanted monster-key coins that almost NEVER come up for my collection. In that case, I just snipe at the end with the amount I'm comfortable paying.

In any case, I never get bidding fever and I don't buy and sell coins for a living, or even to supplement my income, so my bidding behavior will differ from those who do.

 

Ebay takes 10% of final value of listings. You also have the choice whether to charge shipping or not. On an item worth $5000 you may want to spend more on S/H, maybe 60-80 dollars (if you want to insure/register it). Paypal also takes about 3% of a total transaction. So this adds up to 13% not including cost to ship an item. So you could be looking at an additional 15+ percent on a realized price of a coin.

 

For me it's all about supply and demand. If there's a coin I have to have for my collection I do not mind over bidding.

 

Yeah not all coins go by the book for me. I remember bidding on an AU 1908 Prussia 5 Mark a while back, worth about $45 but I paid 85 or 90. I have distant family history actually from that area, and the house I currently live in was built in 1908. There ya have it, a coin can easily have lots of personal value.

 

I'm not talking about eBay.
I'm talking about Heritage where the buyer's fee is 20%.
That's why I bid 80% of the calculated value.

 

I was thinking... in the Heritage archives, they show the price realized plus the buyers premium. Therefore, someone researching sees the coin sold for $6000. They don't ever realize that the actual bid was only $5000. Thus, the next bidder comes along and bids $6k because that's what they see the price history has.

This scheme is actually worse than I thought!

 

Ah, I completely misunderstood.

 

I haven't bid on something for a long, long time. Ater Heritage, up'ed it's percentage and started adding tax, buying from then became cost prohibitive. I was paying for something more than it's worth......trusted dealers with my want list are the way I go now......also, coin shows where you can haggle a bit.....

 

I don't think it's a scheme, it's paying for the ease and liquidity that the Internet (Ebay, HA, etc.) provide. Instead of having to pay buyer's and finder's fees....travel all around your area or worse, nationally....and wait months or years to find a special bill/coin, you can find it with a few keystrokes.

And if HA costs you $6,000 all-inclusive, then it's doubtful that the FMV or cost will be the $5,000 excluding all the fees and charges. Maybe you can shave SOME of the premium if the seller is in at a lower cost and has some flexibility, but I think in the aggregate, for most items, the cost to buy will be closer to $6,000 than $5,000.

You might get it closer to $5,000 or split the difference with a LCS, but again, you won't be able to get all the stuff you want as easily and as quickly as you can via auctions, the Internet, etc.

The only exception/caveat might be a very liquid, commodity item like an American Eagle Gold coin, Silver Coins, etc. I doubt anybody will buy one via HA or Ebay and pay a big premium for a raw coin or even the usual 6-7% that slabbed 70's and 69's command for modern stuff.

That's why the Internet (Ebay, HA) works best on less-liquid, less-traded, harder-to-find stuff: you can slip a markup and other costs between the Bid and Ask prices more easily than you can for a commodity product where the bid-ask spread is narrow.

I have never even checked HA to see what they charge for raw bullion gold coins; might be worth a look. I'm sure the premiums on slabbed 70's and 69's is reasonable relative to Ebay and coin shows and LCS's. Because the HA buyers tend to be pretty savvy relative to the general population that frequents Ebay and I am sure if the price of gold bullion is $1,500 an ounce...and an American Gold Eagle at your LCS costs $1,550....and even a slabbed 69 or 70 costs $1,650 or $1,700, respectively...that very few will be willing to pay $1,800-plus for raw bullion on HA.

 

Yup, if you can wait, working with PEOPLE takes time and you might not find EXACTLY what you want, but you will get it closer to the Bid price without much of a markup.