Auctions can sometimes make sense for buying and selling items that have collector value. However, for bullion items they make absolutely no sense at all. The typical commission at auction is 20% from the seller and 20% from the buyer. Even though regular customers or very large consignors may get much better rates, you simply can’t give up such a large percentage from your bottom line. A smaller auction company will almost never inform you of this since the primary goal is to get your consignment, bullion or otherwise. Despite what local and regional auction companies may say about their exposure via the internet, they pale in comparison with regard to reach when compared to the big boys. Heritage Auctions for example, has between 1.5 and 1.8 million registered bidders!
Another issue with smaller companies can be in the way they market a sale. They commonly use the words “estate sale” but in many cases 90% of the material may have come from just one or two consignors who are actually dealers seeking an outlet for material they’ve had trouble moving. The other 10% might be legitimate estate items. Among the 90% “potential traps” exist in abundance because items often have problems that hold back the value. As a general rule, the more hype you see surrounding an “estate” sale the more cautious I would be in bidding. When you sell at these smaller auctions it’s a crap shoot. You might do really well on a few items, but usually the prices will lag overall – even for better material, when compared to what a large auction house might get or compared to what a knowledgeable dealer such as Pegasus Coin & Jewelry would be willing to pay to buy the material outright.
Platforms such as eBay can be very useful for both buying and selling. Pegasus typically has 800 items listed for sale on eBay. However here too, it isn’t an easy peasy way to sell. Expect to pay 15% or more all said and done and then if you don’t offer free shipping someone else will and your sales will drop dramatically – so add in shipping expense as well. Then remember that buyers can be demanding, wanting additional pictures, questions answered promptly, additional discounts, etc. and they can return the item at your expense leaving you in a lurch. If you don’t offer free returns eBay penalizes you by charging you higher rates. And unless if you’re reasonably established on eBay good luck because most buyers want to see a feedback score of say 1000 or more and a 99.9% rating to feel warm and fuzzy. Pegasus has over a 10,000 score and a we do have a 99.9% eBay rating.
A word of caution on pricing, remember that anyone can ask whatever price they want for an item. That doesn’t make the item worth anywhere near their asking price. Auction items may have very high reserve bids placed or “Buy it Now” prices that are in the stratosphere. On a daily basis we get calls from people saying “how could my coin only be worth just $25 when I saw it on Etsy, or eBay, or Google for $5000”. There are tens of thousands of sellers just looking to hook one big, uneducated fish for a “score” – and make their month. The most common area of abuse is mint errors where I’ve seen sellers literally make stuff up to sell a common coin as a “rare error” – and since it’s much harder to obtain pricing information on errors, it’s much easier to overcharge.
Large Auction Houses can make very good sense for collections containing the best of the best material. You can negotiate rates on big collections, or for a negotiated fee you can have a reputable dealer such as Pegasus do the negotiating for you and act on your behalf in facilitating your consignment in the way of screening and transportation of the goods. A “big collection” might generally be considered $100,000 or more.
Lastly, you will of course eventually get paid, but because these companies have so many auctions, scheduling is always an issue. For example, don’t expect to sell quickly. Typically, you’re looking at between 120 and 180 days to get paid from the time you turn over your material to the auction company. Some will give cash advances but expect a stack of legal paperwork and being charged interest on the money in most cases. And even with the big boys, you’re still hoping that the sale will be well attended with both floor and internet bidders, and in particular with the buyers that want your items, but there is no absolute guarantee of that.
So, there you have it. Auction, or outright sale? Ultimately you need to decide what suits YOU best.
