Rich,
Here's where you and I disagree: You say that is how it is "supposed to
work". I say "that is how it has often been worked in the past, but not
how it is supposed to work". Even though you personally don't like
hidden reserves, you seem resigned to there always being hidden reserves
and the attendant questionable behind-the-scenes practices they can
cause. I'm not. Hidden reserves have all but vanished from Ebay, where
they used to be common. They have been replaced by the "or click Buy It
Now to purchase this items for $___x___". You don't use hidden reserves
on MPB. Bruce doesn't use hidden reserves on his auctions. In fact,
hardly anyone uses hidden reserves anymore except Heritage and the other
"big two". It's time they gave up the practice as well. It was never a
good one and we are now in the 21st century. Time for the relic of the
hidden reserve to go the way of the buggy whip.
I know it is common wisdom that if you try to open an auction for a
$25,000 poster with minimum starting bid of $25,000 that no one will bid
on it. I don't think that's as true as common wisdom would have us
believe. If someone wants the poster and thinks it is worth $25,000 and
willing to pay that much why wouldn't they bid that amount? And if there
is someone out there who also wants it, why wouldn't they outbid the
first person? After all, that is what finally happens anyway after the
reserve is reached (according to Heritage, since they say their House
Buyers never ever bid more than the reserve). So why keep playing this
game of "we're letting you think you can get it for less than $25,000,
but actually there's no way"?
But even if you do have hidden reserves, I fail to see how it is the
auction house's "fiduciary duty to the seller to bid up to something
just under the reserve." Where is that written into the law and ethical
standards we are all supposed to operate under? No, it is the auction
house's fiduciary duty to publicize and present and conduct the auction
in the best possible manner to attempt to get the best price on the
consignment *without* verging into shilling of any kind, or other
dishonesty such as over-grading and misleading descriptions. It is
"supposed" to be the duty of the genuine bidders to determine if the
reserve is reasonable or not. If the reserve is reasonable, it will be
reached without the help of the house shill. If not, you can try again
another day when there might be different bidders around. But the house
should not be pushing the price up behind the scenes just to get it near
the reserve so they can flush out the people who are willing to go that
higher and keep a consigner happy and log a nice commission on the sale.
When an auction house does that, they are basically engaging in a
variation on the "bait and switch" pricing technique which has been
outlawed in this country. In bait and switch, a store advertises a
product for $2.00 but when the consumer gets up to the checkout counter
they are told, "No, that was a mistake. The real price is $10.00" or
"We're out of those $2.00 items, but we have one just like it for
$10.00". For an auction house to publicly advertise the starting bid is
$2.00 when there is no chance of anyone ever buying the item for $2.00
because it actually has a hidden reserve of $10.00 is no different, not
really. I can't see it being an auction house's fiduciary responsibility
to engage in a variation of bait and switch just because that's the way
it's been done for thousands of years. Just because something has always
been done in the past does not mean a bad practice should continue. It
used to be legal to keep human beings as slaves until less than 150
years ago as well.
Please Note: I have no problem with stated reserves. They serve a valid
purpose. There's no reason someone should not be able to say "I won't
sell this poster at all if I can't get at least $5,000 for it". That's
fine. But state it publicly in the auction description. Better yet, just
make the reserve the minimum starting bid.
-- JR
Richard Halegua Comic Art wrote:
At 02:57 AM 9/16/2009, Neil Jaworski wrote:
I agree with all James Richard's comments on this issue.
Those who feel that Heritage have an obligation to get the "fair
market price" for their consignors (and, by a happy coincidence, for
themselves) should reflect upon how these practices might have pumped
up these "fair market prices" in the first place.
Indeed, if this N.P Gresham device has been used as widely as some
people are suggesting, what extra padding is in the hobby as a whole?
Those MOPOers who claim that this is all just a playful bit of
showmanship (wedded to a fiduciary duty to poor sellers who are too
nervous to set a realistic and honest reserve) should enrol in their
nearest high school ethics class.
Neil
I said this:
*This is how it's supposed to work:
the reserve is $400, but the item starts at $200. It is Heritage's
fiduciary duty to the seller to bid up to something just under the
reserve. So Heritage might bid $390 to get the $400 bid from a buyer.
When the $390 bid is the top bid, Heritage does state "still available
at HA.com" indicating that the $390 bid did not win the item, that it
fell below reserve.
as long as that's what's going on, it doesn't seem that anything
nefarious is happening.
Here is where it would step in negative territory:
If Heritage were to continue bidding in order to drive up a price past
the reserve, without the intention of buying it themselves, that would
be a bad thing. I haven't seen or read anything that indicates this is
so. Though to be fair, I have had friends tell me anecdotally that
they feel this is the case, but they have not given me any examples to
prove that claim.
Also, Heritage does indeed sell material they own in all fields from
posters to coins to comics and this may be a sticking point to some,
however as long as they treat Heritage-owned merchandise just as any
other consignor, they do not drive up prices beyond a reserve and they
do not raise the reserve after introduction of the auction, well, they
would not be doing anything wrong
*so please don't mis-characterize what I said
If N.P. Gresham is acting improperly, that is a bad thing, but I might
need more information before I can come to that conclusion and
determine that Heritage was or was not acting improperly
concerning whether or not a consignor has a realistic perception is
immaterial to the debate because it has nothing to do with any of the
allegations against Heritage.
Rich
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