By Peter Mosiondz, Jr. for CoinWeek ….
In our previous installments of Collecting 101 we discussed many ways of obtaining those needed coins. Now we come to yet another method, this one being my personal favorite.
If you’ve never bid in a public auction or mail bid auction sale, you’re missing a treat. In effect, you are buying coins at your price, the price YOU want to pay. We’re not implying that you’ll be able to obtain every coin you want at the price you bid, but when you are awarded certain auction lots, they will be at your bid price and oftentimes even lower. This two-part segment in our series will attempt to get you ready to participate in these exciting venues.
An auction sale may or may not be a public event. If it is a public sale, then you’ll have live bidding competition from “the floor”, or those in attendance, those bidding by phone or live internet and by previously-received mail and e-mail bid sheets. The pace can get hectic and it is very easy to get caught up in the excitement. If you happen to attend a public auction, my advice is to “stick to your guns”; that is, to establish in advance the maximum price you wish to pay for a particular coin and then sticking to that decision. Don’t get caught up in the flow of things – it could cost you a great deal of money.
Many public auction firms will allow phone or e-mail bidding right up to a couple of hours before the sale is scheduled to begin. Some firms allow phone and/or live internet bidding during the sale. This makes it relatively easy for the non-attending bidder to participate from the comfort of an easy chair at home.
This part of our discussion will focus on public mail auctions. Next time we’ll talk about mail bid sales. First though an explanation of the differences between these two modes of sale is in order.
The primary difference between public auctions and a mail bid sale is the manner in which your bids are treated. In a mail bid sale the coin is awarded to the highest bidder at exactly the price he or she bid for the coin. I know there are some mail bid “auction” firms that claim to award coins at one advance over the second highest bid but I reserve my judgment on some of these.
In a public sale lots are awarded to the highest bidder at one advance over the second highest bid received. Let’s cite an example. If you do not attend the sale but phone or send in a bid of $100 for a coin in a public auction sale, you will obtain that coin for $80 if the floor bidding stops at $75 or if the highest bid received prior to the sale other than your bid was $75. This represents one advance over the second-highest bid.
Secondary differences between the two are that in a public sale opening bids are given out usually up to an hour before the sale begins. Next, a public auction firm prints a list of the price each lot realized in the sale. This is called a “prices realized list”. You will not obtain such a list in a mail bid event.
Staying with the public sales for the remainder of this article, let’s take a look at some of the things a potential bidder must be aware of at all times.
First, placing a bid is legally binding. You may cancel the bid prior to the sale but you can not have a change of heart during or after the sale. This applies to your bids in aggregate as well. Suppose you bid on 10 coins and the total of your bids amounts to $2,000. You are awarded each and every lot but realize that you do not have the funds to pay for them. You are obligated to fulfill your end of the contract. As we said, placing of bids constitutes a legally binding contract. In a situation such as this perhaps the bidder did not expect to be awarded every item. Maybe he or she thought they’d be lucky to obtain half of the lots and $1,000 was available for this purpose. The advice here is to always bid within your budget. Tally up all your bids and make doubly certain that the funds will be available for all of the lots. Auction firms will either need to be paid in advance of shipping or, if credit has been established, payment is expected to be received within a week upon your receipt of the awarded lots.
Once you receive the auction catalog in the mail or decide to view it online, make sure that you read and fully understand all of the terms and conditions of sale. These may take up several pages in the catalog. Read them! If in doubt on any portion of the terms or you need clarification, call the auction firm and ask. They are a friendly bunch of people but they must have these standards to protect themselves and their consignors.
The terms of sale will contain the auctioneer’s commission, or “buyer’s fee”. This must play an important role in your decision making process as to how much to bid. For example, if you want to spend no more than $100 for the coin you want and the buyer’s fee is 15%, bid $85. That way if you are successful you will pay $97.75 ($85.00 plus the $12.75 buyer’s fee) for the coin, exclusive of shipping charges.
This leads to another matter: shipping and handling expenses. One firm that I routinely deal with imposes a minimum shipping and handling fee of $18 as all their lots are sent via Express Mail®. Needless to say I do not place just a single bid or two on lower priced items with this firm. If I were to obtain one or two items they would be at an overall price in excess of my budget for each coin. Take these extraneous charges into consideration when contemplating your bids.
Another nice thing about public auctions is that you can phone up to an hour or two before the sale and obtain “opening” bids. What this means is that if you ask for the opening bid on lot #100 and are told that it is opening at $150, this does not imply that all you have to do is bid $160 and have high expectations of receiving the lot. What this means is that either the $150 is the only bid entered for that lot in which case your $160 would stand a good chance, or that the $150 represents one advance over the second-highest bid received up to that point. The firm could have two bids on file, one at $140 and the other at some higher amount, say $200.
Don’t ever ask, “How much do I have to bid to get this lot?” First, you will not be told that information. It is strictly confidential. Secondly, you will not endear yourself to this firm.
It is sound advice to establish credit with the auction company well in advance of the sale. This will not obtain terms of “net 30” for example but it will allow you to receive the lots prior to paying for them. In this way you will be able to return a lot if it was not as described for example. One word of caution: if you examined the lot prior to the sale and eventually “win” the lot, you will not have a return privilege as the sale will be considered final. This will be found in the terms and conditions of sale. And, if you are known as a habitual “returner”, then you’ll quickly find yourself removed from the auction firm’s mailing and customer list.
A final tip, whether in a public sale or mail event: always double-check your bid sheet for accuracy. Again, you are legally responsible for the bids you place. You can not say that “I didn’t mean to bid on that lot”.
Sure, there are many things to be aware of and understand when participating in public auctions, but trust me, they’re a great deal of fun.
Next up will be the mail bid sales.
Until next time, stay well and enjoy your hobby.