The upcoming official auctions held at the American Numismatic
Association World’s Fair of Money in Denver the first week of August
will represent the end of an era as the sales mark the final year of a
17.5 percent buyer’s premium for the convention’s official
auctioneers: Stack’s Bowers Galleries and Heritage Auctions.
On June 30 Stack’s Bowers announced that, effective Aug. 14 with its
Hong Kong Showcase Auction, it would be standardizing its buyer’s fee
to 20 percent across all auction formats including live and online
sales. The firm’s president, Brian Kendrella said in a statement, “Our
new buyer’s premium remains one of the lowest of all major
collectibles and now provides our clients simplicity and uniformity
when participating in our auctions regardless of the auction location,
format or bid source.”
There was a time when the Morgan dollar was
actually a half dollar:
Another column in the July 31 issue of Coin World explains how
collectors can create their own archival-quality holders for
oversized paper money.
Heritage confirmed with Coin World that it would also
introduce a 20 percent buyer’s fee for all U.S. and World coin
auctions after Aug. 14.
Auctioneers dealing in similar areas often move together when
announcing rates. In September 2016 Christie’s announced that it would
be raising buyer’s fees and Sotheby’s quickly followed a month later.
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Many collectors can remember a time when there was no buyer’s fee;
the concept was popularized by Christie’s and Sotheby’s only in the
mid-1970s. In the 1990s the “BP” started to creep up to 15 percent and
the 2000s saw a new staggered approach that’s used today by many fine
art auctioneers to charge buyers more for lower-value lots where the
profit margin is thinner.
For example, Sotheby’s New York charges a buyer 25 percent on the
first $250,000 bid, 20 percent on the amount in excess of $250,000 up
to and including $3 million, and then 12.5 percent on the portion of
the hammer price in excess of $3 million.
Along with the buyer’s fee, sellers at auction are charged a
commission. Auction house presale estimates usually do not include
buyer’s fees, while reported prices realized typically do include the
buyer’s premium, as that amount — the hammer price plus the buyer’s
premium — represents the sum that a buyer pays for an object.
A higher buyer’s fee means that lower seller’s fees can be offered
to entice sellers to consign. For this year’s ANA auctions, both
houses were offering seller’s rates of “hammer plus” for choice
consignments, meaning that the seller would get the hammer price, plus
an agreed upon percentage above that bid.
When the buyer’s premium increases, bidders lower their bids to
account for the raised BP, while seller’s expect lower fees. The net
result has little impact on the final prices realized (at least in the
short term) and could benefit the hobby overall. As Sotheby’s
explained in supporting its recent increase, the bump in buyer’s
premium helps auctioneers offset profit margin pressure while allowing
them to invest in improving the customer experience. Time will tell.