Auction-Bidding Tips from Two Experts – Part 2

Despite the advantages of going to a sale, occasions will arise when you simply can't attend but nonetheless are interested in bidding on certain items. That's where you'll find mail bidding useful.

Well before the date of a sale, most coin auction firms publish and distribute the catalog for the sale, listing and describing the items to be sold along with illustrations of the more important lots and, perhaps, estimates of what the coins will fetch. Copies of the catalog are sent to prospective bidders, including regular customers who have bought coins from the dealer in the past and those intending to bid by mail submit their bid sheets to the dealer.

When time and geography permit, would-be bidders visit the dealer's premises prior to the date of the sale in order to examine the coins. This holds true for those who are bidding by mail as well as for those who intend to do their bidding from the floor. Even after seeing the coins for themselves, many serious bidders still sound out the dealer for guidelines on the prices they may bring. And, of course, these guidelines are even more important for those who must enter bids without having looked at the coins.

"We will not reveal the bids already received, but we do give a range," Bowers said. "Suppose, for example, that someone calls up and says, 'I'd like that AU 1794 large cent and I have no idea what to bid.' I might say, 'Well, a bid in the $7,000 to $10,000 range would be my idea of a reasonable price for that coin.'

"If we already had a mail bid of $10,000, I might say, 'Well, that piece is probably going to bring somewhere in the low five-figure range.' I wouldn't, however, disclose the previous bid, because if I did that the caller might simply say, 'OK, I'll bid $10,005' -- and that wouldn't be fair to the person who bid $10,000. Nor would it be fair to the consignor.

"The auctioneer has to work both sides of the street," Bowers said. "You have to be fair to your consignor, because he's the person who feeds you. Besides, the more you get for a coin, the higher a commission you make. At the same time, you have to be fair to the bidders, because a bidder will come back time after time if he feels you have given good value and treated him fairly.

"I would not want someone to pay $50,000 in our auction for a coin that was worth only $20,000. On the other hand, I wouldn't be particularly pleased if he paid $20,000 and it was worth $50,000. The idea is to have a coin bring in the range of what it is worth."

Assuming the consignor has not set a minimum price, the opening bid for any particular lot is generally determined by taking the second-highest mail bid and advancing it by one bidding increment. Suppose, for example, that the two highest mail bids are $2,000 and $1,000, respectively. Bidding would then open at $1,050 -- the second-highest bid plus the 5-percent increment by which bids are normally advanced. If there were no advances on the floor, the highest mail bidder -- the one who offered $2,000 -- would then get the coin for $1,050. If there were action on the floor, a designated representative of the auction firm would enter counter-bids on behalf of the mail bidder at each bidding level up to and including $2,000 -- and, if bidding stopped at any of those levels, the coin would go for that amount.

If two or more mail bidders offer the same amount, and theirs is the highest pre-sale bid, that is the figure at which bidding opens -- and the mail bidder of record is the one who submitted his offer first. Thus, while delaying your bid will give you more time to size up the current market, it also could result in the loss of a coveted lot to an earlier sheet.

Some dealers urge mail bidders to "bid liberally," noting that their bids will be reduced, as noted previously, to a single increment over the next-highest offer. Clearly, however, there's no guarantee that you'll get the coin for less than your actual bid. You may -- but, then again, if floor action is hot or another mail bid is equally liberal, you may have to pay the full shot. The obvious solution, then, is not to bid more than you'd actually want to pay.

Editor's Note: Part 1 of this series can be found in our library.