If you’re reading this page, you are probably already curious about the auction process. You may have already bought or sold at auction, or this may be your first, tentative, steps in this area. By the time you’ve finished reading this article, we hope you will have a better understanding of the process and even be confident enough to give it a go.
So what is an auction? A fair enough question to ask. The dictionary’s definition is;
“A public sale in which goods or property are sold to the person who offers the most money.” This refers to what’s known as a “Classic” auction. There are other types such as Penny auctions and Dutch auctions but they are nowhere near as popular and don’t always provide the best result.
In a classic auction, an item, or lot as it’s known in the auction world, is put up for sale by a seller or auctioneer (someone who arranges and prepares auctions) usually with a starting price below its market value. Bidders like you, me or anyone else, can place bids until the auction finishes and the highest bidder wins. The finish time in a traditional auction, an auction house (where auctions are held), is determined when there are no more bids and the item is won by the highest bidder.
In online auctions there is usually a set finish time, 7.30pm for example. The bidding ends at that set time and the lot is won by the highest bidder at that time. Then the buyer pays for and collects the lot, or has it packed up and sent to them via post or courier, usually for an additional charge.
The last bid in an auction is referred to as the “Hammer Price”, the final price at which the auctioneer in a traditional auction house would bang down the Gavel (auctioneer's hammer) and end the sale of the lot. This term is still used in online auctions, even when there is no Gavel.
Auction Houses or Auction Websites usually charge a commission to the person selling the item, but many also charge a commission, or fee, to the buyer as well. It’s very important to remember auction and postage fees and make sure you allow for them to avoid nasty surprises. If you’re buying from abroad, also bear in mind that there may be customs charges. Bids are usually legally binding, so it’s important to be certain you want to bid first.
As a seller, again there is usually a legally binding contract to sell the item that was offered for auction, so make sure your lot is correct and you are willing to part with it.
Reserve Prices are an amount set by the seller that is the lowest they would accept for the item. If bidding doesn’t rise above that price, the item is not sold. Some auctions charge sellers for adding a reserve price, but most do not.
On to the exciting bit, why should you buy at auction? Auctions often contain one of a kind or hard to find items. The types of things you might not have seen before or sometimes ever again.
Some auctions are “No Reserve” auctions meaning that the lot could sell for very little, or even $1, so you could grab a bargain. The competition of bidding in an auction can be pretty exhilarating sometimes. Bidding in auctions is fun, it also brings together like minded people and becomes a community. As your journey as a collector continues, you meet people with similar, or very different, interests. I often alert other collectors to pieces I’ve seen.
Okay, so if some of these lots can sell for very little money, why should a seller bother? Well Auctions also provide a good gauge of the market value for these unique items. If you can’t buy it in a shop, how do you know it’s “worth”. A few times I’ve been in a bidding war against someone else, often with the hammer falling at far more than the expected price. When you have two people that both want something enough, the results can be spectacular. Selling at auction also provides excitement for your buyers and often keeps them coming back for more.
Some Auctions or Sites specialise in coins and/or banknotes, like Coins-Auctioned.com. This means when a potential buyer is looking for a specific thing, like a 1968 Sovereign, their searches are less likely to be full of things that aren’t of interest, like Daimler and Jaguar car parts (Daimler and Jaguar had a 1968 Sovereign model). Specialist sites also become a habit with repeat visitors coming to see the latest auctions.
How much do auctions cost? It depends whether you’re the buyer or seller. Below is a table of auction fees for the buyer and seller through some popular auction routes. These fees were correct as of 31st August 2023.
The above table is an unbiased example of information on fees that are readily available on the internet. Looking at this table it’s quite obvious that one site is cheaper for sellers than the other sites, but it is a non dedicated site, which is important.
So what does this equate to on a $100 item?
The above table is an example of the fees involved in buying a $100 dollar item through traditional auctions, auction sites and auction intermediaries. For buyers it’s quite obvious that there are 3 more economical ways to buy lots. One of these 3, Coins-Auctioned.com, is also a dedicated site for Coins and Banknotes, with the benefit of Verified Sellers and the Coin Sheriff program so finding what you need and making sure it’s correct, may be easier as well.
The reasons for buying in auctions can be many and varied. It could be that you have planned a purchase for many years, just waiting for the right piece to come up and fill that gap. It could be that you were just browsing and something caught your eye. It could be that you’ve decided to place a chance bid, looking for a bargain. It could be something for yourself or a gift. That special piece for a seasoned collector though to a coin lot for a beginner to start a collection. The important thing is that you enjoy the experience and get what you were expecting.
Planning where, how, how much and what you will bid on is important.
Is it a physical Auction House?
Is it an Online Auction?
If it’s not local to you, what are the options and costs of getting it posted/shipped?
If it’s an international item, are there any issues with getting it out of/into the country?
If it’s a physical auction, are you going to bid in person or leave a commission bid (where the auctioneer bids for you to an agreed amount)?
How are you going to bid or pay?
If it’s a physical auction, are you going to bid in person or leave a commission bid (where the auctioneer bids for you to an agreed amount)?
Is it a timed auction, where the bidding stops at a specific time? Is the time convenient to you? i.e. Does it finish when you’re able to bid, are awake, not at work?
Make sure you know the payment options before bidding. Some Auction Houses don’t accept card payments over certain amounts and will only accept bank transfers.
Do you have a budget?
Can you stick to your budget?
Is your budget realistic? Can you afford it? Are you likely to win the lot for your budget?
Make sure you know the additional costs such as commissions, surcharges and postage before bidding.
Is it legal to buy in your country? Some antiquities are protected.
Do you know exactly what it is? Is there enough detail in the images and description? If not, don’t be afraid to ask for more information or images.
Always read descriptions carefully.
Always look at pictures carefully.
One very important thing to remember when buying through a traditional auction house, especially for higher value lots, is that once the hammer falls and the lot becomes yours, many will no longer insure the piece, so it’s important to collect it or arrange delivery as soon as possible.
If approached in the right way, bidding in auctions can be good fun and a pleasant experience. Good luck on your first or next bid!
To make sure things go smoothly in an auction, it’s just as important to prepare and follow a few rules. Some of these are very similar to buying at an auction.
Do you know what the item is?
Is it a well documented piece from a collection? Or a coin dug up from the ground?
Are you able to Identify it?
Do you have an expectation of what you would like to sell it for?
Is your expectation realistic?
Are you going to use a Traditional Auction House? If so, they will take many of the responsibilities above such as identification and estimating its hammer price, particularly if they are specialists.
Are you going to use a general online auction? If so, how will your piece stand out?
Are you going to use a specialist online auction?
Are you going to set a Reserve Price? This is the minimum amount the lot would be sold for e.g. If you set a reserve price of $100, a bid of $90 won’t be successful, but bids of $100 or more will.
If your item will be with a physical Auction House, will they insure it whilst there, as some don’t.
If you’re selling online, chances are that you will need to produce the description and pictures. It’s important to know what you have and be able to take good pictures, maybe even video, in order to get the best price for what you have.
Are there any restrictions on posting or exporting the item? It’s important to know this before proceeding.
If selling online, it’s very important to make sure the item you have for auction doesn’t breach any of the terms and conditions of the site.
If using a Traditional Auction House, will they collect the item? Do you need to get it to them? If they are local, this shouldn’t be much of an issue.
If it’s an online auction, such as Coins-Auctioned.com, the item will stay with you until it’s sold.
When the item is sold, how does it get to the buyer? An auction house may be able to arrange delivery for a fee charged to the seller. But remember that some of the fees can be much higher than postal or courier fees and buyers often factor this in, bidding a little less.
If the time is sold through an online Auction company, it’s usual for the seller to arrange delivery, again typically charged to the buyer, but usually at a more reasonable cost. It’s important to get adequate insurance or compensation on parcels sent through the post or with couriers.
Again, it’s important to check there are no restrictions on sending or receiving this item if it goes to another country.
A traditional auction house will market a piece primarily to their existing clientele, but more important pieces may be advertised more enthusiastically.
If you are selling the piece on your own, don’t be afraid to market it yourself by using posts on social media with links to the item. This process can start before an auction goes live, from the discovery of the item or when the decision is made to sell it. This could follow the process of deciding where to sell, getting any authentication or grading through to the auction going live. Don’t be afraid of giving it a go.
On the day of the auction, or when the auction goes live is usually when all potential buyers can see the lot, both description and pictures, and possibly in person in all its glory.
From here bidders can decide if they want the item, and how much they want the item. The “how much” usually translates as what they will bid up to.
The bidder may leave a “commission” or “book” bid (for a physical Auction House) or an “auto” bid (the online equivalent) where the auctioneer or auction system will bid on their behalf until their maximum bid wins or is out bid and another bidder.
For an “in Person” bidder at an auction house, they will need to physically be there and bid by raising a hand or indicating with a paddle (see the picture below). The stories of people accidentally placing large bids by scratching their nose are greatly exaggerated. Auctioneers are professionals and can usually tell the difference between a purposeful bid and someone absentmindedly scratching their ear.
For an online auction the process is similar, bidders enter the amount they want to bid and hit “enter”, or sometimes there is a “plus one” button that automatically enters the next highest bid.
Bidding increments are the steps that bids may go up. As amounts get larger, so do the bidding increments.
Bidding increments from $1 to $20 may be in $1 increments e.g. $1,2,3,4 and so on until $20.
From $20 to $50 may be $2 increments e.g. $20, 22, 24, 26 etc.
From $50 to $100 may be $5 increments e.g. $50, 55, 60, etc.
$100 to $200 could be $10 increments and so on.
Very large amounts could have $100,000 increments e.g. $2.2 million, $2.3 million etc.
I’m sure we would all love a piece selling for those amounts.
What determines the final hammer price can be any one of the possible reasons below, or even a combination of any of them.
Intrinsic value. If a piece is made of a material that has an intrinsic value such as precious metals, it’s not usual for a piece to sell for less than the market price of that material. As an example, a 1 Kilo coin made from fine (pure) gold, is unlikely to sell for less than the gold price ($62,000 USD at the time of writing).
Supply and demand. If 1,000 people want something, but there’s only 100 available, it will push the price up as bidders compete. A good example of this is the UK 2009 “Kew Gardens” 50 pence. Its value when released was 50 pence as a circulating coin. The amount of them minted was only 210,000 (a “normal” mintage is above 3,000,000) and every UK decimal coin collector wanted one, the price went up to around $200 a piece.
Rarity. Very similar to supply and demand. If a coin is rare, rare from a particular mint or year, or rare in a better condition this can push the price up exponentially. Imagine if an uncirculated, pristine, Gold Aureus of Julius Caesar came to auction. It’s a rare and valuable coin as it is, most have been dug up by archaeologists or metal detectorists and add to this the softness of the metal and the amount of wear it would get, a pristine example could be a one of a kind find.
Marketing. It’s a simple thing, but often overlooked. If you have the most important piece of its type for sale, but nobody knows about it, it won’t get the best price. It’s important for potential interested buyers to know it’s available. Marketing hype can also drive bidding up on relatively ordinary lots. This is often the case when tabloid newspapers report on amazing results for ordinary coins in international online auctions.
The economic situation. When markets are in turmoil and the economic outlook isn't great, investors have traditionally shifted to holding physical assets such as precious metals, and many coins are made from precious metals. In recent years investors have looked for alternatives and collectibles are on the shopping list. Some of the rarest examples of Coins and Stamps auctioned in the past few years have been bought by institutions. In the past this meant museums and national collections, but this now includes investment groups. This is great for the seller, but puts many fine examples out of the reach of most collectors.
Trends. Trends don’t usually play a part in the fortunes of true collectibles, but have become an important part of modern auctions. e.g. When a new movie in the James Bond or Star Wars series comes out, it heightens interest and increases prices or anything related to the franchise. This can work the other way when there is adverse publicity, for instance when a country or regime is behaving badly, demand for association with that country or regime drops, so do the prices.
When the sale day, or the final day of an online listing, comes to an end, what happens next?
From the buyers point of view;
If attending an auction in person, it may be possible to pay, and take away, your newly acquired lot.
If you haven’t been able to attend an Auction in person and left a commission bid, it’s likely the Auction House will issue you with an invoice to pay. Once paid, it’s time to arrange collection or delivery of the item.
If bidding through an online auction, or auction platform, you will get a notification to pay. Again, once paid it’s time to arrange delivery. With most online auctions, its assumed that items will have to be posted or delivered by courier and usually the costs of this are on the listing beforehand so you know exactly what to expect.
Once all this is done, it’s time to sit back, relax and wait for your new piece to arrive. When the day comes that it arrives, check it over to make sure it’s as described and correct. If there are any discrepancies, contact the seller, or the auction, as soon as possible. Most issues can be remedied quite quickly. With online auctions it’s always important to give feedback or reviews if there is the opportunity. It helps to let other potential buyers know what to expect.
The final point is to start looking through auction catalogues or the pages on an online auction and see what your next exciting purchase might be! Happy Hunting!
From the sellers point of view;
If selling through a Traditional Auction House, it’s simply a case of waiting until they get in touch to let you know they’ve been paid and the lot was collected or sent successfully. From here they will arrange your payment, minus commissions.
If selling in an online auction, send the payment request if needed, many are automatic now.
When the payment has been received, carefully pack and post the item to its new home, making sure customs information is correctly filled out if sending internationally. Be sure to arrange postal insurance to protect yourself and the buyer against the lot becoming lost or damaged.
When the item has been delivered, make sure the buyer is happy and leave any feedback or reviews as needed by the website.
Then it’s your turn to take some time to work out what you might spend the money on. A holiday? Home improvements? Or another piece for your collection?
If you want to have a go at buying or selling in auction, give it a go. It can be both exciting and rewarding, whichever route you choose. All we can say is good luck and enjoy it!
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