Auction strategies

Hello everyone! I thought I'd share my auction strategies and also offer an opportunity for others to share theirs. First, some disclaimers:

1. I am very new to coin collecting, so this is just my limited experience. I'm happy with my haul so far, though, but feel free to call me out on anything you feel is counter-intuitive.
2. I feel comfortable sharing my secrets right now because a) I've run out of money so I won't be bidding for awhile and b) If we all followed these same strategies, coin prices at auction would fall.

First, I organize my target coins into six priorities.
Priority 1 - These are the coins I desperately want. There's never more than 2-3 coins in this priority, but I'll set aside budget for them. If I don't have enough to cover my Pri 1 coins, I won't buy any others. When a coin comes up for auction, I may go significantly above market value depending on how likely I believe I'll see a similar copy at another auction. Note that at times I have no coins in this category, since it needs to be interesting enough for me to put my entire budget into obtaining one.
Priority 2 - I may pay 10% above market for these coins, since I'm aware prices are increasing.
Priority 3 - I'll go after one if I have the budget, but I'll stick to what I feel is the market price.
Priority 4 - I'll try for one if I think I can get it for a deal.
Priority 5 - I need to see it on sale for 50% of market to go for one. I typically only pick one up if there's no bid at auction or a fixed price vendor has one greatly reduced.
Priority 6 - Generally I just keep an eye on prices. As I pick up coins these will move up the stack. If I see an amazing deal I may buy one.

For auctions, there are two types. I'm sure there are official names, but I don't know them.
Sudden end - These have an end time (like Ebay). Whoever has the highest bid at time x wins.
Back-and-forth - When the bidding time ends, parties have 10 or so seconds to improve their offer. After each offer, another 10 seconds are added until there are no new bids.

My bidding strategies differ by the auction type. They're guided by the following psychological principles involving auction behavior. Again, I'm sure there are official words for these, but I don't know them.
The loser principle - No one wants to lose. Given a fierce contest between two parties, both will bid higher than their initial max because neither wants to lose.
The time principle - Given more time to think about a bid, a bidder will convince himself/herself to offer more. That max of $300 becomes "well, there are copies that sold for $400 and it's only an extra $50..."
The attachment principle - This is similar to the time principle, but is slightly different in that the more "connection" one has with a coin, the more someone will bid. For example, a bid that is temporarily winning provides a "connection". Now that the bidder is winning, he/she will fight more fiercely to protect that win.

My goals are therefore to a) win the coin and b) pay the least amount of money. To achieve this, I need to minimize the principles above (there is no escaping them completely). The following are my strategies.

Sudden end auctions - For these, I don't want to bid too soon. If I do, the time principle kicks in. I therefore formulate a high bid (depending on priority) in my head and watch the coin. If the price goes over my max, I move on. If it doesn't, with ~5 seconds to go, I put in a bid for the full max price. Granted, I'm not the only one who offers a last second bid, but many of those offer a lower price. Since I do this at the last second, those who also placed last second bids don't have the chance to counter, and I win. I also usually win at a lower price than my max.

Back-and-forth auctions - I do the exact opposite here. Since the most dangerous situation in my experience is to get into a bidding war at the end, I place an immediate bet when the auction starts accepting bids with my max price. Others bid on the coin, but they immediately lose so the attachment principle doesn't kick in. They move on to other coins. Of course, if someone else values the coin more than I, I lose - but I then use my own cognizance of the attachment principle to give up on the coin and move on. If I still have enough buffer at the end of the auction (admittedly, if this is a Pri 1 coin I will add some buffer the last day or hour), then most bidders give up after one or two raises.

Other techniques
The following are other strategies I use.

Overlooked coins - A day or two before the auction closes, I'll look for low bids on coins I wouldn't mind. A lot of bidders pay most attention to the top coins and few bother with the simpler ones. If I find one that has good value, I'll go one bid up from the minimum. Since many other bidders are also fine with one bid up, I'll win since I bid first. If someone outbids me, I don't care. They can have it.

The ugly sister - It seems many collectors during their lives buy one copy of a coin, then upgrade to a nicer one later on. Both coins go to auction and bidders pay the most attention to the better copy. However, often the "ugly sister" would be quite nice if not placed next to the better copy and can be had for a third of the price or less.

Positioning - This involves looking at the auction company's bidding increments. For example, one auction moves in 20 Euro increments up to 500 Euros, then moves at 50 Euro increments. Say my price is 460 Euros. If I place the earlier bid, that means someone can beat me with a 480 Euro bid. However, if I bid 500 Euros, then they need to go up to 550. I call this "positioning". By forcing the other party to pay 10% more than I to win the coin, I stand a better chance that they'll just give up. I'll pay most attention to this for Pri 1 coins.

The opening bid mistake - This is a mistake I've caught auction houses and bidders making. Say they have five copies of a coin - one far better than the others. The lower four they'll open at 100 Euros, but the best one they'll open at 500. Buyers balk at paying 500, so they flock to the 100 Euro copies. Bidding over those may become fierce, and suddenly they're at 500 each. Since they're all fighting desperately over their coins, they completely miss the much better copy that's now the same price. A simple bid of 550 can take that coin. I've seen this multiple times with common coins like owls, and in fact that's how I obtained my copy.

Anyways, those are my strategies. I'm anxious to hear yours!

 

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That’s a thoughtful quantifying of a lot of the emotional elements going into auctions.

 

I call your strategy for "Back-and-forth auctions" the progressive loser. If you bid your max very early, you give the opportunity to others to test your bid, you allow dishonest auctioneers and consignors to shill bid and you also draw attention to the lot you are interested in. But in any case all your strategies will fail if the chilionaire's advisor decides she must win a coin for her employer. Or a dealer has a divine relevation that they can resell at 10 times the estimate.

 

My system is similar though not as well organized. However in most auctions I normally focus on only a few coins. When I decide I am interested in a coin I try looking up the coin on search engines such as AC Search. What I am looking for is
1. If the coin has shown up previously. This gives me an idea of how well or poorly the coin has performed in the past. Also more pictures means I may find more problems or vice versa another reason to like the coin. Also to see if the pedigree information is accurate.
2. Where does this coin sit within the pantheon of all others like it. As an example if the coin is an EF well centered coin the rest being poorly centered VF's I can assume that this coin will probably do extremely well. However if it is a VF in a crowd of EF not so much and ....well do I really want it?
3. How well does this type of coin perform in the current auction environment.

I should mention that I will occasionally go after a coin that I have not researched. This usually happens during an auction and is usually the result of being out bid on other coins or..... hey this coin is nice maybe I should bid on it. I will try to do what I can to find out about this coin while I am waiting for the lot to come up but normally I do not have a great deal of time. This usually happens more with European auctions as .... well I really should be in bed.
Irrespective of the research or lack there of, I will try to establish a price in my head that I am unwilling to go beyond. I set for myself a limit. On an e auction (fixed time ending) I will throw in my bid fairly close to the closing and see what happens. On an live auction I will bid up to my maximum. I may go up one or very rarely two increments past it, but only if I think I might have a chance of getting the coin.
It never bothers me too much if I don't get the coin. Nor does it bother me that a dealer may buy it for inventory. Often what I am willing to spend on any one coin can be determined as much by what other coins are currently being offered.
Coin I got in an auction last year.
T Cloelius Ar Denarius 129 BC Obv Helmeted head of Roma right Rv.Victory driving biga pulled by rearing horses right. Crawford 260/1 RBW 1055 This coin illustrated 3.73 grms 18 mm Photo by W. Hansen I had looked at the auction cat and decided on another coin but had placed this one as alternate choice. If memory serves I was an underbidder on every coin I was interested in prior to getting this one. I have often said that I only get about 5% of all the coins I bid on. and this auction was no different. Life is not fair get over it.

 

One of the things that worked in my favor in a recent auction was a string of very similar gold coins of a particular ruler. In the first few examples the bidding went to nosebleed levels, however since the presentation was sequential with 30 second intervals between hammer prices after maybe five coins of the same ruler the prices started becoming more reasonable.

My theory is that the eager buyers used up all their powder bidding on the several of the early examples, and got fatigued by the time the six and seventh example was shown. So on the sixth example I noticed that the price with 10 seconds left was only 3x the opening minimum, so I pulled the trigger with 3 seconds left and ended up winning the gold piece for four times the opening minimum bid, which these days is almost a bargain.

I may try this approach in the future but on the other hand it might have been a somewhat unique situation that will not be replicated in the future.

 

Oh, I will never forget the dealer who "won" this

 

The only strategy out there that's guaranteed to win is an unlimited bank account. I've lost a number of Pri 1 coins because even after I raised it to a level I was uncomfortable with, someone (or multiple people) drove it even further. That's life. So far I've been pretty lucky at eventually getting the coins I want.

I have noticed that there are some auctions where bidders are savier about prices than others. I call them "Wall Street" auctions because I imagine the buyers to be investment bankers who want to "invest" in something, have deep pockets, and no clue that these same coins are available for a fraction of the price elsewhere. Even in those "Wall Street" auctions, though, bargains can be had. Most of those sorts fight over the best coins in the lot and focus mainly on the most famous coins - not the rarer types that require more research.

I've also noticed that some coins that are viciously contested in US auctions are more muted in European auctions, and vice versa.

In terms of unscrupulous auction houses, so far every one I've dealt with has been a pleasant experience. I stick to the main ones where I can find numerous positive reviews online. I have more luck in some than others, and some take a long time to ship, but I've been pleased with all the coins I've received and the prices I've paid for them.

 

I find it takes a lot of research and time to scroll as many auctions as possible for hidden treasures. My fav. way of getting desirable pieces is by looking into the more obscure auctions. CNG/ Heritage/ Roma/ Kunker all attract the collectors with deep pockets/ however Golden Lion/ Lansky/ Savoca/ Solidus/ MPO (Heritage Europe) sometimes have rarities that
you can win at bargain bids. Also, with so many auctions on sixbid/ set a bid limit/ there are tons of coins coming up in next auction cycle.
Also look into grading/ a CNG/ Elsen/ Kunker/ Lansky/ EF-CH ancient coin/ will be a TPG MS 5/5 5/5 and go for BIG $$$$. Just look at the GEM 5/5 5/5 Leo I Solidus Heritage/ hammer 20K. A Kunker "stempelglanz" would be even nicer and a fraction of the cost.

This AV Tremissis/ Honorius in "stempelglanz" from Hungarian auction/ cost me 950 euros This AV Triens
"Unique" from Theudebert II King of Austrasia was 3K from Heritage/ Europe. Imagine what these would have fetched in a CNG event......

 

Pray tell!

 

I bid the highest amount I'm willing to pay at the latest possible time. If I lose the regrets are minimal because I gave it my best shot.

 

Auction tip: Avoid any altered states of mind prior to bidding.

Lately, my auction strategy requires only very early morning sales, heavy pre-bidding espresso, logging into remote timezones and with bank account close in hand. Any auction after 8:00 am, my inhibitions become uncontrollability looser, and I will more easily lose control of the situation, often bidding 10 to 20 times the estimate, especially when feeling sad or frustrated about other problems.

Bottom line, stay away from any site in which an expensive mistake can't be undone.

There will always be another coin and another auction.

 

STRATEGY:

- Read every one else’s strategies.
- deploy countermeasures.
- Bid to win.

 

Once again Brian you have read my mind. Then first is exactly what I was thinking as I read the OP.

 

Related tip: Attend in person when possible. There is often a free buffet. The Prospero Collection auction at the Waldorf Astoria in 2011 was a particularly tasty event.

 

My main strategy with live e-auctions is to avoid getting caught up in the bidding process. It is very easy to become so focused on the moment that all rational thought and perspective goes out the window.

I do some homework, researching comp prices both at auction and on retail listings. Also, I try to find something that is interesting and, in a relative sense, not "hot", although that is becoming increasingly difficult.

I don't mine losing. I guess as I get older, Ego, never in very high supply for me, has receded over the horizon in later life. Besides, losing, in the Ying/Yang view, serves a very useful purpose. If we didn't have the concept of losing, how would we know about winning?

Tongue and cheek aside, I've come to a strategy of bidding my maximum on most coins fairly early on and letting the chips fall where they will. Only on very special occasions I will engage in live bidding.

I think the most satisfying feeling one can have out of any auction is a fair deal on a coin that appeals to me on historical and artistic levels. I guess that I why I am increasingly buying coins through retail sites, such as MA Shops, Vcoins, Forum, etc.

Really, the only auction house I have been active in the past few years is Roma Numismatics, but the strengthening British pound has put a damper on that activity.

 

Final Strategy: Can I live with another 'winners curse' coin?

While the winners curse is subjective and a debatable wrath, I notice the curse is a phenomenon that occurs at all price levels, both common value coin sales and high end coin auctions. I believe all bidders generally have the same value in mind for a particular coin, but our states of mind become naturally altered with certain superlative signals, i.e. "not seen for 30+ years" "lovely old oak cabinet patina" "pedigreed to previous century" "magnificent in hand" "once owned by Royalty" "not found in archives" "of great historical interest" or "perhaps finest known" etc, etc. While these statements might to truthful and relevant, the clever enhancement works to optimize our evaluations and will definitely tend us toward overestimating, overbidding and overpaying.

 

I can say that I have not had "winners curse" very often. Normally I set a price that I am willing to pay and then execute. If I win great if not.... Okay move on the the next one. The closest I have ever come lately is with this gal
Metapontion Ar Nomos Yes my famous "Calendar Girl" Miss February in the CNG calendar for 2018 330-290 BC Obv Bust of Demeter facing three quarters to the right. Rv. Ear of barley Johnston Class C 2.2 HGC 1064 This coin illustrated 7.92 grms 21 mm Photo by W. Hansen I was at the auction in New York. This was my second time at a Triton auction and I was pretty excited to be there. As I had arrived late the previous day, Tuesday morning was a bit of a scramble to vie coins before the auction commenced. Luckily I had a big cup of cherry Coke. So after looking over coins I went up to the auction and waited to bid. This coin lot 317 came up. The auctioneer asked for bids my hand went up he acknowledged the bid and then ….. crickets. No other bids. I thought what the hell. Did I pay too much? Is there something I do not know? For a while I have had those questions but it was more of a Was my research faulty? I have always loved the coin and am happy to have it in my little collection. A few weeks ago Valentinian sent me this the back cover of a 1995 Celator Looks like she is now a (Back) Cover girl as well

 

I think this coin very much slipped through the cracks and you didn't overpay in my eyes.

 

My "strategy", if you even want to call it that, is to find the coin(s) I want, research to get a maximum price I'm willing to pay for it (them), place a maximum bid whenever I make the price decision, and then ignore it. If I get outbid, oh, well. I'll find another sometime ... or not. Win some, lose some. I do better finding what I want with reputable dealers anyway, so I'm bidding at auction a lot less than I used to.

 

My hypothesis is that the former owner of this coin received information that a batch of new coins of these dies would hit the market, thus rendering his coin not rare anymore. So the coin was dumped, but IMHO it turned out to be a bad decision of the previous owner and his advisor.