I'm a bit curious the reason why price estimates in auctions are often quite low compared to the actual hammer price. i noticed this coin's estimate was astonishingly different from the actual hammer price. i usually see stuff go for like twice the estimate but 10x is surprising to me
Times have changed and especially so with coin auctions. Many pre auction estimates are closer to what a previous auction of the same coin went for. But there are plenty of people with deep pockets and those that buy for tax shelter purposes, that end up sending final hammer to the sky and beyond it seems. Plus, it's always good PR to estimate low and hammer down in the stratosphere.
1. Low estimate 2. Bidder 1 thinks they found a sleeper, places bid, starts imagining the coin as theirs 3. Bidder(s) 2, (3, 4, etc) think the same 4. Bidding war ensues. It's worked out extremely well for many auction houses in the past. Recent example was my thread on a lot from Rapp that had ~$12k worth of coins on a $3k estimate, and it ended up hammering for $17k, I can only imagine as the result of an emotional bidding war.
Somebody is out of touch with the market, and/or the pieces have not been price pointed in a very long time, so darts were thrown and guesses were destroyed up or down. It happens constantly.
The low estimate is very close to melt (bullion) value. Low-balling estimates encourages bidding. It's a common practice nowadays. I'd also say the winner substantially overpaid. [edited]
I think it is a product of two things: It makes sense for an auction house to lowball an estimate in a strong market. As mentioned above it encourages bidding. Also as I understand it auction houses will sometimes front a certain amount of the value of a coin to the consigner ahead of the sale and this amount is based on the estimate. Lowball estimates work on average in a strong market where there are plenty of bidders but it would NOT work quite so well in a down market. There has been an incredible amount of irrational exuberance in a staggering number of markets over the last 2+ years: stocks, used cars, real estate, crypto... and collectibles. It’s amazing how many times I have seen a coin I was looking at in an auction turn up for sale again and again at other venues. A certain segment of coin auction participants seem to have settled into the mindset that coin prices can only go up. These bidders will continue to “pay whatever” until they get bit by reality if/when the market turns. Anyway, that is my best guess as to how you can have both lowball estimates and eye watering hammers at the same time. Here is a coin to keep my post legal.
