Stamp auctions 101: how to bid and win
By Janet Klug
I remember my very first stamp auction. I saw a set of stamps from one of those obscure little islands in the South Pacific that I so dearly love. The set was not expensive, but it was fairly scarce.
I had never seen it in a dealer's stock at a stamp show, so I decided to place a bid. I had no idea what I was doing.
|Figure 1. Cover of the catalog for a Cherrystone public auction of stamps held Jan. 19-20, 2005. An auction's terms of sale are usually found near the front or back of the catalog. Click on image to enlarge.|
|Figure 2. Cover of the catalog for a Michael Rogers mail-bid sale that closed Dec. 31, 2004. There is no floor in a mail sale. Click on image to enlarge.|
Lacking a buddy who could talk me through the process of bidding, I stumbled upon the best procedure to follow.
If you do not know anything about auction bidding, here is the first and best piece of advice I can give you: Read the terms of sale.
The terms of sale are generally found near the front or back of the auction catalog. The cover of the catalog for a Cherrystone philatelic auction held Jan. 19-20, 2005, is shown in Figure 1.
The auction terms of sale contain all the pertinent information you will need to know about the date the auction closes, acceptable methods of payment, how much time you will be allowed to settle your account, the buyer's fee, the return policy, the extension policy, the raises over next highest bids, the amount of taxes, costs you will incur for postage and insurance, and other terms that might be unique to the particular auction firm.
All of this information is very important for you to know because once you have submitted a bid, you have legally agreed to abide by the terms and conditions of the sale. Let's look at some of the standard terms of sale.
The one that is most likely to affect the price you pay is the schedule of raises over the second highest bid. Most auction houses have a standard scale that escalates as the bidding goes higher.
Suppose, for example, I am willing to pay up to $300 for a particular lot. I look at the auction firm's schedule of raises and find that bids less than $100 move up at $5 increments as bidding progresses. From $100 to $200, the bidding moves at $10 per increment. At $200, the bidding moves $20 per increment.
How does this work? If I am participating in person at the auction, I will have a card or paddle with my bidder number. I get this by registering in advance of the start of the bidding.
My lot opens at $150, and there are some bidders on the floor, and some who have submitted mail bids. At $150, the bidding advances at $10 increments, so as paddles are raised, the auctioneer recognizes bids of $150, $160, $170, and so on up to $200, where the bidding then goes up in $20 increments.
I am actively bidding through all of these raises as more and more bidders fall away, until I am left holding the paddle at $220. Hooray! I got it. So is $220 the price that I pay for the lot? No.
Why? Because the auction's terms of sale state that a 15 percent buyer's fee will be added to the purchase price.
Fifteen percent of $220 is $33, which will be added to the hammer price (the amount of the winning bid). I will be billed $253 plus any applicable taxes as well as postage, insurance and packing fees if I expect my lot to be mailed to me.
If you failed to read the terms of sale before winning a lot at auction, you might be unpleasantly surprised by that buyer's fee. In my example, the lot that I purchased contains stamps that I know have been forged. I decide after my purchase that I probably should have some of the stamps expertized.
Before I just pack it up and send it to the American Philatelic Expertizing Service (the expertizing arm of the American Philatelic Society), the Philatelic Foundation or Professional Stamp Experts, I had better reread both the auction's return policy and its policy for an extension (a hold on transfer of ownership, pending expertization).
Some auction houses will stipulate which expertizing service to use to submit purchases for expertization. If you submit to an unapproved service, then you have violated the terms of sale and the onus is on you.
Who pays for the expertizing? Read the auction terms of sale to find out.
What happens if the certificate comes back stating that the stamp is not genuine or has been repaired, regummed, or that it is otherwise not as described by the auction house? You will need to know what the return policy is and how long that policy is extended, if you send a stamp for expertizing. In general, lots containing many stamps are not returnable.
Most misunderstandings between auction firms and buyers are about lots that have been sent for expertizing, so know your rights before you bid and then follow the rules as set out by the seller.
Do you know how long you have to pay for any lots on which you were the successful bidder? The terms of sale will clearly state this.
Can you pay by credit card or make time payments? Once again, the terms of sale should cover the acceptable methods of payment.
If you have any questions that are not covered by the terms of sale, contact the auction firm before you bid.
Public auctions are subject to fairly stringent local, state and federal laws and regulations. It is illegal, for example, to rig an auction by using phony bids to drive up the price, or to establish a consortium of bidders who refrain from bidding against one another. If these practices are discovered, bidders could find themselves charged with restraint of trade.
Do not assume that all auction firms have the same terms of sale. They do not.
Do not rely on your memory of the terms of sale from one auction to the next because the terms might change, or you may confuse one auction with another.
It takes only a few minutes to read or reread the terms and conditions of sale. Make a point of reading them before you place any bids.
Mail-bid sales are generally not true auctions and are not necessarily subject to the same terms and conditions as public auctions. It is just as important for you to read the terms of sale for mail-bid sales than it is for true auctions.
The terms and conditions are generally found near the front or back of the mail-bid sale catalog.
The cover of the catalog for a Michael Rogers Inc. mail-bid sale that closed Dec. 31, 2004, is shown in Figure 2.
A big difference between mail-bid sales and public auctions is often a lack of incremental bidding in the mail sale. In such cases, the person who has placed the highest bid will often pay that price, whether it was $1 more than the second highest bidder or $100 more.
Mail bid sales can be great places to buy, but be sure you know what you are agreeing to before you sign on.
Many thousands of collectors are now participating in the online transactions offered by eBay and other online sites. Ebay provides a marketplace for sellers to offer their material to what has very quickly become a global village. It uses many methods to sell. The most common method is by auction. Generally, the seller will list a lot for a seven- or 10-day period. At the end of the period, the lot will be sold to the highest bidder at an increment above the second highest bidder.
If there is only one bid, the lot is sold at the starting price established by the seller, as long as the bid met the seller's minimum.
The problem with all of this is that each seller establishes his own terms of sale in addition to the rules and practices followed by eBay.
You will have to read every single listing to find out what the seller's policies are for returning lots that are not as described, the cost of packing and shipping, how lots that will be expertized will be handled, methods of payment and other pertinent information.
You might be doing business with sellers in Asia, Africa, Europe or elsewhere. How will you get payment to them in their currency if they don't accept eBay's easy-to-use PayPal system or some other forms of electronic payment?
Ebay also offers sellers the opportunity to list lots as "Buy It Now" items. In this method, if you don't want to wait, you can buy the lot immediately for the price the seller has established. To do this, you need to be the first one to bid. Otherwise you take your chances and place a bid in hope that you will get the lot at a lower price.
A bid at less than the "Buy It Now" price generally terminates that option for the item being offered.
Some sellers have established an eBay electronic store where they list net-price offerings. There is no bidding involved. If you want the item at the advertised price, you buy it, just as you would a retail item in a brick-and-mortar establishment.
The various selling methods available on eBay are fully explained on the firm's web site at www.ebay.com.
The bottom line for any buyer is to make certain that he knows what he is agreeing to do before he commits to doing it.
The final question that most first-time bidders have is, "How much should I bid?"
It is a tough question. You must decide how much you are willing to pay before you participate.
Attending the auction in person is a lot of fun, but it can be dangerous, if you are the kind of person who gets caught up in the heat of the action. Do your homework before you participate in any auction. Know the prices that similar items generally sell for. You must establish beforehand how much you are able and willing to pay.
If you have a lot of experience in stamps and have never seen an item that you desire, you must determine how essential the item is to your enjoyment.
Live bidding against others who want the same things you want can lead to overbidding.
Set an upper limit of how high you will go, and then stick to it. Write those limits on the pages of the auction catalog, so you aren't tempted to keep bumping up your bids.
It is important to remember that you are shopping for items for your collection. You are not engaging in a competition. Never think of auction bidding as a sport that you have to win. In auction bidding, the real winner is the collector who gets the best material for the best price, not necessarily the highest bidder.
Bidding in auctions is a fun way to add new material to your collection.
Don't be afraid to try it, but do be aware of the conditions of the sale before you enter the fray. Read those terms.