Recently I purchased from a Heritage online auction a 1923 Peace Dollar, MS64, for $26 and two 1921 Morgan Dollars, MS63, for $30 and $24, respectively.
That may seem like a bargain. The retail value of those three NGC and PCGS graded silver dollars is about $140, or a savings of $60.
However, these “hammer” prices do not include buyer fees. Like many online auctions, Heritage charges a 15% buyer’s fee. Add that to the hammer price and you have the “realized” price, or $12 on an $80 purchase—still a bargain for those silver dollars, or $50 off the retail price.
But recently Heritage set the minimum buyer’s fee at $14; so I ended up paying $42 in fees for a whopping 52.5% buyer’s premium. With shipping, my total cost was $129.
In other words, the discount on these coins ended up being $11.
That same week I also bid $80 for silver dollars in a Proxibid auction, winning three mint-state Morgan dollars (1882-S, 1886 rainbow reverse, 1887) and paying a 15% buyer’s fee of $12 with a shipping cost of $8, for a total $100.
These were “raw” coins in flips rather than in holders from top third-party graders, as required by Heritage. In my case, each Proxibid coin was a better investment and would grade MS63 (with a toning premium) or MS64. But I would have to pay an additional $40 to put them in holders; so again, the discount on them was negligible.
Because of the cost of technology, fees are a fact of life in online numismatics. I recommend paying no more than a 15% buyer’s fee, even in auctions portals like Proxibid or icollector. (Occasionally, if I trust the dealer, I’ll pay as high as 18% in a Proxibid auction, taking into account that the dealer is also paying the portal for its services.)
But at issue is Heritage’s $14 minimum buyer’s fee. I interviewed Greg Rohan, president of the Dallas-based company’s auction galleries, about the change from a $9 to $14 minimum fee and how that might affect bidders without a lot of cash.
“Our buyers tell us they want us to offer coins under $100,” he said. In the past, sellers would set reserves or minimum prices on those coins. That practice has been discontinued.
“By the time we image the coin both obverse and reverse, $14 is about break-even,” Rohan noted.
Expert digital photography is a must in online auctions. Proxibid auctions often use blurred photos for their coins. Even high-end auction houses occasionally unintentionally misrepresent coins, trying to showcase rainbow toning or some other positive feature. I have never experienced that on Heritage, and I have purchased coins from this company for many years.
Rohan also noted that buyers can place a $1 minimum bid on coins without reserves. “We are completely transparent about our buyer’s premiums at every stage of the bidding process, because we don’t want anyone to pay more than they think a lot is worth,” he said.
I can attest that this is true. In past Heritage auctions I have bid between $1-20 on a dozen or more coins priced $100 or below or between $25-100 on coins priced $200 or below.
I actually have won and taken many such coins to area dealers and resold them for a profit.
Nonetheless, as with those three silver dollars for $129, sometimes fees get the best of me. But I have no remorse paying them to Heritage.
I recommend the company’s online auctions because of the quality of coins, the utility of its Web site, and the transparency of its data so that bidders know wholesale and retail rates along with population reports from the top two third-party graders.
Fees also underwrite all the data that anyone who registers can access on the Heritage site, including its archives of 1.1 million coins and their realized prices over the years. In fact, when I resell coins to my local dealer, he checks Heritage’s archives rather than his Coin Dealer Newsletter.
Now that’s a testament to transparency!
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If the offers get lower or drop off due to this change, Heritage and others will figure it out. There comes a limit for small buyers. At the same time, they charge the seller a cost to sell the coin. I have heard some sellers lament that after all was said and done they realized very little. So guess who is the real winner here? They charge everyone a fee and get greedy. Some of the low end coins, don’t even reach the buyer’s fee to start with, and with todays technology, imaging can’t cost what it use to be in the days of 35mm film cameras and with the internet they reach a great audience for very little. Due to this, some small auctions do not get the owner melt, imagine how bad that might feel. Meanwhile, the seller gets his share. With that happening, some good coins will see the melting pots before the auction house. Shame to lose any coin, there has to be a better way!
This is really an insightful analysis of the situation. Thank you.