Featured Estimates for Ancient Coin Auctions

Discussion in 'Ancient Coins' started by MSG 78, May 20, 2020.

  1. MSG 78

    MSG 78 Active Member

    As promised, I am opening a new thread to get your thoughts on auction estimates. At CNG we have always tried to estimate coins at what we think is "high wholesale". Over time this is a moving target as the market changes but generally that is what we try to do. The limiting factor on lower valued coins is there are some standard starting points that work with the bid increment system. For example: You will see estimates from CNG starting with: $75; 100; 150; 200; 300; 500... etc. If we think a coin has a wholesale value of $240 it will likely get a $200 estimate placed on it.

    All lots open at 60% of estimate. Theoretically, this means if you buy a coin at the opening bid you got a real bargain. If you buy at estimate, it is generally still cheap. Then the question becomes "what is the mark up to figure retail?" On low priced coins this might be 100%. This because the cost for a dealer to buy a coin, reticket it, photograph it, potentially post in on their coin shop website, and then package and ship it, is somewhat fixed. I am sure this cost varies by dealer but figure a 50% mark up on lower value coins just to break even on something they may need to hold on to for a while before it sells. Let's call that cost about $30 on low end coins. Thus a coin estimated at $75 or 100 might have a retail value from $100 to maybe $150 if the dealer works on small margins, The price would be higher if they worked on higher margins. The point being, a $75 estimate coin that hammers at near twice the estimate is not all that far from what many would consider a retail price.

    As the price goes up, the difference between wholesale and retail generally goes down. Fixed costs don't change a lot. So a coin with an estimate of $1,000 might realistically have a retail value between $1,200 and $1,500 depending on how the dealer figures their mark up.

    So the point is this: We think using a wholesale estimate encourages bidding and "gets the ball rolling". Many European dealers estimate at retail. Some may open bidding at 80% of estimate, others open at 60% of estimate. Some even estimate a retail and this is the opening bid. Experienced collectors have little trouble navigating these different approaches because they know in their mind what a coin is worth before they bid. It's the novices that can get confused. Bidding in a CNG auction, and then switching over to a foreign auction, the opening bid price can mean two completely different things.

    As I stated earlier, our goal has always been to encourage bidding and get the ball rolling. And if you hit on a coin near the opening (and yes it does happen) you have gotten a true bargain. We have people troll our auctions as soon as they go live and place over 100 bids. All of them are below estimate. The goal: getting the coin that slips through the cracks. They wouldn't do this if they didn't occasionally win a coin or two.

    So to close, we have talked often about where our estimates should be. Would you rather we keep doing what we are doing or would you rather we raise the estimate up to what we think is retail for every coin? The latter implying that coins will now open at a midlevel wholesale price rather than a very low wholesale price. I would love to get your input.

    Mike Gasvoda, Managing Director CNG LLC
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  3. Severus Alexander

    Severus Alexander Blame my mother. Supporter

    I care most about the low starts, which I like very much, and don't much care about the estimate - though I think newbies would prefer a more realistic estimate closer to retail. But that would mean starting at much less than 60% of the estimate (which would be fine).

    My 2c, from a bargain-hunting bidder. :D
    NicholasMaximus, ycon and Ryro like this.
  4. AussieCollector

    AussieCollector Moderator Moderator

    Hi @MSG 78

    As a CT member who has participated in CNG auctions on a number of occasions, I really appreciate you taking the time to engage us on discussion.

    From my perspective. it's great to understand how you go about estimating price. But, I'm not sure it's that helpful for collectors.

    So, for example, in yesterday's timed auction, I had my eye on a few owls (my cross-hairs focused on the more affordable offerings). I wasn't being picky, and any of them would have been fine (I'm not a picky collector). Many of these more affordable options were estimated at $300. However, none of them ended up being close to that, with the lowest going for $425.

    Now that's fine, it is what it is, but when we're seeing really consistent pricing over and above estimates, you have to start wondering about the value of the estimates.

    As above, perhaps "low retail" would be a more accurate measure.

    Just my 2 owls

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  5. MSG 78

    MSG 78 Active Member

    Funny thing is, the prices in the past couple months have been exceptionally high. Although I stand by the statement that, in your case, $300 was probably a fair wholesale level, everything is going for high prices right now. It's great as a seller, not so great as a buyer. No one knows if this is a blip on the radar or the "new norm". I truly hate to hear of our normal collector base getting frustrated. Yet I completely get it. I hope wherever we end up that everyone can be comfortable with it.
    vlaha, Stevearino, Restitutor and 2 others like this.
  6. scarborough

    scarborough Active Member

    I’ve been a buyer on CNG’s auctions since 93.

    I like your system as-is, since I think your opening level is a reasonable trade-off between

    O getting bidding started

    O making sure that consignment lots sell.

    If collectors want valuation they can quickly find results on the CNG, SixBid and CoinArchives sites.

    I see much of the discussion and confusion around the word “estimate.” I suggest perhaps instead use ‘minimum opening’ or similar wording,

    Thanks for asking.

    vlaha, Stevearino, Alegandron and 2 others like this.
  7. Nap

    Nap Well-Known Member

    There's a sweet spot between placing the opening bid at a reasonable level and one that is too extreme in either direction.
    If it's too high then there will inevitably be passed lots. I think too many passed lots makes an auction look bad, either that you don't have adequate marketing to the right clientele or that the prices are unrealistic. Plus if a lot doesn't sell it's bad for the consigner and the auctioneer.
    On the other hand, when bids are too low, the auction can take forever.
    One frustrating auction I watched had opening bids below an unannounced reserve. The opening bids were very close to retail. Most lots passed. I had to root for another bidder to bid against me so that I could bump up the price high enough to actually win the thing!
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  8. svessien

    svessien Senior Member Supporter

    The way you practice setting estimates and opening bids has always worked great, at least for me.

    The conservative grading and pricing of CNG has been an important guideline for the market, as I see it. To me, CNG has been more than just an auction house in that respect.

    I am not sure it would be wise to alter practices and perception of the coin market based on this latest rush. It may be temporary. If it’s more than just a hot period, I guess we all have to get used to a new price level.

    In any case, I agree with Severus Alexander: Low starting prices are great. One of the fun things about auctions is that the opportunity to make a bargain is present. I often follow auctions from start to finish because I enjoy looking for that opportunity, and learn a lot about coins and the present market along the way. I don’t follow auctions that start at or near retail, however. Where’s the excitement in that?

    I hope CNG will continue to be a conservative and guiding force in the coin market. I don’t see any reason to fix something that’s not broken.
    Last edited: May 20, 2020
  9. svessien

    svessien Senior Member Supporter

    This is not my experience. Some auctions have bid start 1£. By the time the live auction starts, pre-bids have raised starting price to a reasonable level on most lots.
    rrdenarius and Alegandron like this.
  10. AussieCollector

    AussieCollector Moderator Moderator

    So, basically, as a collector, we have to add $75 onto an estimate at a minimum, and up to 50% for coins below $1000.
  11. Agricantus

    Agricantus Allium aflatunense

    Please keep the formula for estimates as it is now. Lower opening bids generate more interest. It would also be ok to leave out the word estimate and call starting bid. It's up To the buyers to decide the value.

    Ultimately, there are other things that matter more to me than opening bid:
    Integrity of the business - I trust the (your) cataloguers and that, if something is occasionally wrong, it is not intentional
    Quality of images
    Wonderful database
    Willingness to hold coins
    No currency conversion fees & no import MOU craziness
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  12. Alegandron

    Alegandron "ΤΩΙ ΚΡΑΤΙΣΤΩΙ..." ΜΕΓΑΣ ΑΛΕΞΑΝΔΡΟΣ, June 323 BCE Supporter

    When I play the auction game, I really do not concern myself with the price listed by the auction. I see the coins I like, then research what kin coins had sold. I make up my mind how much I really want them, then bid hard accordingly. Either I am in the game to win, or I don’t bid. If I lose, I am frustrated for the moment, then realize I have capital to chase other Ancients that I like. NEXT!

    Although I have stepped out of Auctions recently, @MSG 78 I love the folks on your Staff. Wonderful, helpful folks. Quality service, great offerings, solid research, and thank you for your website info.
    Last edited: May 21, 2020
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  13. Carausius

    Carausius Brother, can you spare a sestertius?

    As a long term collector, I typically ignore auction estimates because I either know the value of the coins that I want or I research comparable sales ahead of closing. So, I say let your current estimate/opening bid process continue, and let the market determine the value. Several years ago, I saw a memorable auction fail miserably when the auction house took the opposite approach and estimated at full retail. No one benefits from passed lots. Low opening bids certainly encourage bidders to enter the fray, because all bidders hope that they might get a bargain - otherwise they'd skip the anxiety and buy retail. As a consignor, I may not always get a "fair market" hammer price from a particular coin with a low estimate, but I think that balances-out over the course of an auction by eliminating passed-lots and possibly encouraging "froth" on other coins.

    However, I also see three possible, minimal-impact alternatives you could consider to eliminate newer collector confusion. Option 1: call them "wholesale estimates". Option 2: give a "range" estimate of high wholesale to low retail for each coin, but continue to base the opening bid on 60% high wholesale. Option 3: give a retail estimate, but continue to base the opening bidding on 60% high wholesale.
    Last edited: May 20, 2020
  14. Restitutor

    Restitutor Well-Known Member

    Hi Mike,

    I would also agree with other posters here in that the lower opening bid is a very nice feature and would not want to see that changed.

    Regarding estimates: As a very, very new coin collector who has not yet built up an impressive library of knowledge on coin valuations, estimates are very important for me. Estimates that are too low will at times scare me away from bidding. Estimates that are “too high”... I probably couldn’t afford the coin anyways :oops: In an example I mentioned in the other thread, a Titus coin going for $1,300 on a $300 estimate is an immediate no-go for me. Had the estimate been $1,000 or even $750, I may have considered placing a bid. Again though I emphasize that as a very new collector this may not be an issue for those with more experience.

    Even if this current market is temporary and things go back to more “normal” levels even in the next couple of months, I wouldn’t think it necessarily a bad thing to revise estimates in line with the current market... just my 2 cents!

    I appreciate you taking the time to talk with us!

    Orfew likes this.
  15. AussieCollector

    AussieCollector Moderator Moderator

    I like Options 1 and 2.
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  16. Orfew

    Orfew Draco dormiens nunquam titillandus Supporter

    @MSG 78

    Thanks for gathering opinions on this. I like the way it is currently structured. I think it strikes the best balance between the needs of buyers and those of sellers. While these needs are typically at odds with buyers wanting to spend less and sellers wanting the most possible for their coins, successful auctions will consider both sets of needs.

    I also want to say thanks for maintaining the research function. I cannot tell you how many times I have used this valuable resource. It is helpful for getting a sense of the prices for varying issues. However, perhaps even more valuable is its usefulness when researching general rarity.
    vlaha, rrdenarius, Volodya and 2 others like this.
  17. Al Kowsky

    Al Kowsky Supporter! Supporter

    MSG 78, I've been a long time enthusiast of CNG & have added many fine coins to my collection from your auctions & Coin Shop. Personally I'd like to see estimates that reflect a retail price that a dealer would use. I'm happy to see slabbed coins being offered by CNG & being identified as such, this wasn't so years ago :). I've noticed that Heritage has not used estimates on their auctions lately. I wonder what their strategy is :confused:?
    Last edited: May 21, 2020
  18. dougsmit

    dougsmit Member Supporter

    I have serious reservations with the idea that a start bid and and an estimate will always be 60/100 relationships. Which comes first and drives the other. If a consignor says "Sell the stuff" you can estimate a $200 coin at $100 to insure a bid; if they only want to sell for a high number you have to estimate high to spur a bid of more than the coin might bring in an unreserved sale. Perhaps CNG can refuse to list coins in this last category but I suspect a percentage of items are consigned as a group and you have to take the bad with the spectacular. We, in the field, see this regularly when we buy coins still in a recognizable holder that failed to sell in an auction and were wholesaled to dealers. My favorite of this group was the late Don Zauche who always had coins from certain auctions in flips from a sale but priced at a fraction of what the acsearch listing claimed. CNG may be immune from this. There are a couple relatively large sales that sell a much lower percentage at the sale due to high retail estimates of 'ho-hum' material. Do you remove unsold coins from you flips when they are returned to consignors?

    What is a coin worth? CNG lists this 'bit off center' Diocletian as selling at $460 + fees on a $100 estimate ($60 start). I hate to think what it would have brought if more of the legend had been a 'bit' closer to the flan.
    I bought it for $175 from 'highrating_lowprice', an eBay seller (usually ridiculed on Coin Talk) not known for either. I doubt he was taking a loss. There is quite a bit of variation in expected prices but the current system of estimates hardly has a grasp on reality. I would prefer starting bids alone but, if you really must give estimates, make them based on your experience rather than a formula. $60 would have been a bargain; $460? There is no sense to auctions; there was none before the current situation that brought you to post on Coin Talk. I doubt there is a way of improving the estimate process that would be better than admitting defeat and giving start bids alone.
  19. MSG 78

    MSG 78 Active Member

    I believe Heritage and Stacks have both taken estimates out of their printed auction catalogs. I am not sure why. But the estimates are still on their web pages. (Unless something has changed very recently.)
  20. MSG 78

    MSG 78 Active Member

    There are a couple comments here. A number of dealers have gone to "starting price". I personally don't like it. I look through sales, find coins I like, and then look at the opening bid and often feel the first bid would be strong retail. It's a form of setting a reserve for each lot. As an auctioneer, the excitement of watching the bidding go up on a coin is lost by using this method, at least if the "starting price" is set too high. And, to me at least, part of the auction experience is the fun of the auction itself. I can go on Vcoins and buy at retail. Sometimes I still do that. But it's a completely different type of buying experience from bidding in an auction.

    As for your comment, at least I think this was your intention, about coins being found much cheaper, you give an example of a coin that is off center with missing legends. These coins should be cheaper than a perfectly centered and struck example. A coin commonly found well centered might not get much of a premium. But a coin usually found off center, or on a short flan, can garner much higher bids when it is found perfectly centered with full details. Syracuse tetradrachms come to mind. When found perfectly centered with full details, these are often worth at least double the price they otherwise might bring.

    I often see coins shared on FaceBook that were bought cheap and the poster is quite proud of the deal they got. I never comment on these coins. But many were bought cheap because they have problems, centering, smoothing, tooling, scratches, etc. It's the old adage "you get what you pay for". The fun thing about auctions is there is always the off chance you can get "more than what you paid for". Lately that's been hard to do. But it still happens.
  21. Roerbakmix

    Roerbakmix Well-Known Member

    Just to add some data, I've imported the CNG auction 112 (09-2019) for no particular reason, except that one of my coins was auctioned in it:

    Here we see the relation between the estimated price (x-axis) and the realized price (y-axis). The dotted line would mean that the coin was sold at the estimated price (n=856 coins):
    So, eyeballing this graph, most coins are in the 0-5000 hammered price, and the relation between the estimated price and hammered price seems fairly linear.

    Zoomed in at the 0-5000 price range...
    ... it becomes clear however that coins in this price range usually hammer higher than the estimate, with only a few hammering at or lower than the estimate.

    When looking at the relation between the estimate and the ratio hammer prize / estimated price, we see this again: most coins at the lower end result in a higher hammered price
    - indeed, the ratio between the hammered prize and the estimated price in the 0-5000 estimate range is 1.67 (95% CI 1.62 - 1.71); for the 5000 to max estimate range, this is 1.24 (95% CI 1.16-1.32), an obvious difference (though the 5000 cut-off is of course arbitrarily chosen).

    (unfortunately, for my coin, within the 0-5000 price range at an estimate of 2000$ yielded 1900$; a ratio of 0.95 :()
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