Heritage Auctions - My First Attempt - With Commentary

I can spend many hours just browsing through their current and previous auctions. They are certainly 100% reputable but there's one major issue at least for me. The "Buyer's Premium". Here is their quote:

BP - Buyer's Premium per Lot
A Buyer's Premium will be added to each successful bid. For this sale: 20% of the successful bid (minimum $29) per lot. Please see #2 in our Terms & Conditions.
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So if I win a bid for $80, it's really $109. So the total price is what I need to use for eBay/retail comps. Is this how dealers see it? I mean, you can say wow, I got a coin for $80 that I can sell in my store for $100...but it cost me $109! In a real case, would the coin be sold for retail at $120? This whole auction + buyer's premium is making me think that retail coin shops have very low profit margin.

I'm participating in the August 2nd-3rd auction and I'll post my results after that. I'm not giving away what I'm bidding on right now!

 

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Yes, at the end of the day whatever dollar amount coming out of your (or a dealer’s) bank account is the only amount that matters. It’ll total the amount with buyers premium before you confirm your bid, so that is helpful.

Be sure to use the app or their site to follow the live auction, always a fun adrenaline rush.

Lastly, be prepared to wait awhile before you receive anything you win. Heritage can take a couple weeks to ship your item depending on the auction and where it is held.

Best of luck and let us know how it goes!

 

Don't forget about sales tax if you live in a state where Heritage has a presence and shipping costs. That 20% premium soon becomes 30% or more.

 

And don't forget to account for shipping fees. That can add another chunk to your total.

 

I've become disappointed with them because of this. A recent purchase on 07/12 didn't get shipped until 07/21 and I finally received it on 07/25. Meanwhile I made a purchase on ebay 07/20 and received it on 07/23! Don't forget the "service & handling" charge on Heritage, which for me was $13.68. My $172 bid cost me $220.48 - an extra 28%. I factored that in of course, but for almost $50 in extra charges you'd think they could at least ship faster.

 

I believe there is a credit card fee as well. So, factor all of that in your bid.

 

Yes, 2.5%. You have the option of paying by echeck (I think that's fairly recent?). Great Collections, by contrast, gives you a 2.5% discount for paying by check or echeck, from 12.5% buyers fee to 10%, and their shipping/handling was $5.50 last time I bought there. I give kudos to HA for their extensive archive of coin images, which I've used extensively for research.

 

Recently at heritage I saw a barber coin, it was either a quarter or half dollar, with a current bid of $362,000 dollars. I guess if you can afford that much for one coin the extra fees are not much thought about. Way out of my league, but is entertaining once in awhile to look. I did see recently on ebay under shipwreck coins a group of coins and jewelry for $1,000,000 as the asking price. But, it also had a make offer. I do wonder sometimes if they appreciate the coins obtained as much as I do when I acquire something.

 

I pay at Heritage by echeck which saves 2.5% in both venues. HA has high S&H costs plus twice GC's BP. In both cases, you should temper your bids taking into account ALL costs. Note there is a slight difference in the CC savings because they use a different basis. Wont make much difference in most cases but could in the purchase of a very expensive coin.

And with HA, you must be mindful of the minimum BP of $29 when bidding on low cost coins. But HA is very transparent. For the latest and next bids, they show the price with BP.

 

HA is historically slow to ship, worse now than a few years ago. I noticed an additional one to two day delay with GC when I stopped paying by CC and started paying by echeck. Thats the additional clearing time needed for an echeck, even an electronic one. Perfectly legitimate once you understand how echecks work.

 

I stopped buying from Heritage years ago.........when you figure in the fee's, taxes, shipping and all the coin becomes way too overpriced.

 

GC's shipping costs vary. You can opt for any of several means - the options, prices and approximate shipping times are clearly menu displayed when you pay. BUT, the USPS option at $5.50 is only available for coins with a total cost (hammer + BP) of $500 or less. Above that, the least cost option is FedEx at about $14.

 

My previous GC purchase last September by echeck the coin shipped in 2 days. My HA purchase (above) the echeck cleared my bank on 7/15 and they didn't ship it for 6 more days. Just some additional data points. I'm sure Heritage knows it's a problem but they don't seem inclined to improve that aspect.

 

No dealer that wants to stay in business is going to pay more in total for a coin at auction than he thinks he can resell for a profit (loss leaders and other special circumstances notwithstanding). There is so much that goes into that calculation that it would be impossible to document here, if I even knew all that's considered. So, if the coin at auction looks like it's going to sell at a total cost that is more than the dealer thinks he can make a profit on, he just won't compete for it. It's really as simple as that.

This is one reason why, sometimes, the auction is a good place for the knowledgeable collector to buy. Ignore however you feel about buyer's premiums, shipping costs, CC fees and all that other stuff. Only pay attention to what your total cost would be for a particular bid and then do your research to see what you think that coin is worth TO YOU. You can often pick up coins for a price that is somewhere between what it's worth to a dealer and what that same dealer would sell it to you for.

As to dealer's profit margins, they are all over the place. There are vest-pocket dealers with extremely low overhead and expenses and there are dealers with very high overheads. The coins and customers they pursue are often a function of their expenses but it's always more complicated than that. But to be successful, a coin dealer must have a margin that is higher than your typical grocery store (2-3%) and less than Apple (20-35%).

I believe in the end, to a collector, it is immaterial what a dealer's business model looks like. Do you like the coin, the price, and the service? Then buy. If not, then walk. Don't try to second-guess the dealer, it's a waste of time.

 

Those fees are exactly why eBay does so well. I don't even bother to follow Heritage or any other BIG auction house due to those costs.

 

I don't sell coins at all, much less on eBay so I am ignorant of eBay costs and fees as a matter of personal knowledge. I will, however, relate this story from my local coin club meeting last Wednesday night:

A sophisticated collector put a coin into the local club auction at $150 starting bid. It was his newly-arrived US Mint colorized dollar still in the unopened shipping box. No bids. He told me they were selling on eBay for $200 so I asked then why would he be willing to sell for $150? He said his total of various eBay fees and other costs would total about $30 on a $200 sale so he figured if he could sell a coin he paid the Mint $95 for $150 and avoid the eBay hassle, it was worth it.

My point is that his relation of eBay fees and other costs were clearly non-trivial. So, maybe, when we buy on eBay we are paying fees that are simply opaque to us.

 

I agree. There is also the value of not doing the legwork to find the coin. I'm sure I can ask a LCS can you find me XYZ and it make take 6 months.

I plan on spending $150 total if needed. I will use the bank draft option, $5.50 shipping, and sadly Maryland is a <= $1,000 6% sales tax state. I understand that coins that sell for thousands, the buyers aren't much concerned about all this fee talk. Although I can't find it, there is probably a 15-30 day post-auction payment window. They email the invoice an you can mail a check. So I see no reason I couldn't do an e-check say 10 days after.

As for eBay, the seller pays the premium so it's reverse and I could say consumer facing vs vendor facing. All "real" auctions have a BP as well, so you can't really compare eBay.

I'm not sure on the likeliness of finding an underbid coin on HA vs eBay, but I'll just guess HA is easier. I feel like it will only be worth it if I buy a coin that falls under the radar (I have 4 possibilities). And I'll report back.

 

Anyone paying 6 or 7 figures for something has an appreciation of the coin. They wouldnt do it otherwise even if it is very little money to them. They could easily put that money elsewhere with a much greater return/expected return

 

Free shipping is never free. It does kind of go both ways though. As a seller you have extra fees selling anything online. As a buyer you avoid having to spend a lot of time going somewhere which does cost money in gas and other things, can get access to things something local wouldnt have etc.

There's pluses and minues to both routes whether buying or selling. If a seller can get 150 for a quick local sale as opposed to 200 on ebay risking a return or scam the 150 is usually the smarter course. That said often times you see dealers trying to sell for the online price or more knowing its harder for you to price check or because they bought it online in the first place

 

Maybe, maybe not. The 20% buyers fee on that $362,000 coin is still $72,400.