On the up!
March 2007, Volume 45 No. 3
It was with a certain amount of surprise that we received two press releases in the MEDAL NEWS office recently. The first announced that Spink were to raise their buyer’s premium (the amount paid on top of the hammer price by the buyer) by 5 per cent to 20 per cent on the first £2,000 (remaining at 15 per cent on the balance) and the second, a week or so later, announced that Bonhams were to follow suit, also raising the premium to 20 per cent on all lots up to £250,000—so essentially all medal lots and most coin ones too. Bonhams’ premium had been 20 per cent on most sales for some time but the coin and medal department, formally Glendinings, had always been exempt from this and had been charging 15 per cent, that exemption has now been removed.
In a nutshell this means that any buyer at Spink (up to £2,000) or at Bonhams now has to add and extra one fifth to the hammer price, plus VAT on that fifth, before they can walk away with their purchase. Under the old pricing structure the “extra” on a £2,000 lot would have been £352.50, it is now £470—that’s quite a jump. At the time of going to press the other big London auction houses have all said that they have no immediate plans to increase their premiums to match their rivals but that they will “watch the situation closely”.
Just why these changes have been made aren’t entirely clear, the trend was started by Sotheby’s and Christies (neither big players in coins and medals any more) and Spink and Bonhams are simply following suit—but in the competitive world of medals, with other huge players—notably DNW and Morton & Eden—happy to leave things as they are it is perhaps a risky strategy. When you also factor in presence of the internet auctions the strategy looks even shakier.
In recent years the phenomenon of internet auctions has had an undoubted effect on the way auction houses and dealers do business. eBay and the more medal-centric sites like Speedbid, Poppy and JM-Medals have all seen a huge rise in the number of lots consigned but, up until now, these have generally been “lower” end items, trios, pairs, singles, the odd TFWM and efficiency group and occasionally some “less significant” gallantry. That might now change, particularly if the other major auction houses follow suit and raise their premiums as well. And we mustn’t forget the “provincial” houses, all of whom have been coming on in leaps and bounds in recent years. The likes of Thomson, Roddick & Medcalf, Warwick & Warwick, Wallis & Wallis, Brock, Lockdales and of course Bosleys have all been attracting some excellent lots recently and have enjoyed some splendid results—there are no signs that they intend to change their premiums from the “standard” 15 per cent so will they now maybe attract even more business off certain London rivals?
There are those who have been playing down these latest rises, simply stating that most people when buying at auction have a budget in mind, a budget that includes premium, VAT etc., and as such they will just factor these rises into that and bid less for the lot at hammer to take into account the raised cost at the end. Indeed as collectors and buyers we may well not notice an immediate effect, after all if you were prepared to pay £1,500 for a particular group then in the past you would have bid to approximately £1,250 knowing that the extras would have pushed you to budget, now you’ll simply bid to £1,200, factoring in the increase in buyers premium, thus not actually paying more at all. That’s true but what happens when you come to sell? Won’t you go to the auction house that looks like it will give you the best possible return? Of course you will—and won’t that be an auction house that achieves the best hammer price not the best price including premium?
Of course this strategy may well pay off—as the Spink press release states “the market for collectables at the moment is extremely strong and Spink is confident that the market will continue to thrive under current conditions” and as they point out this rise will allow them to continue with investing in new technology and “additional high quality services they provide for all clients”. Their recent “Spink Live” platform, that allows buyers to bid from virtually anywhere in the world, has been a great success and if they are to continue providing such services they need to be paid for—will the other major players see the investment being made and want to follow suit? Will the advances and new business that new investment allows for offset any losses that may be incurred in the short term? As with anything only time will tell—it wasn’t too long ago that a buyer’s premium was introduced in the first place, back then it was said that it would only be a matter of time before it was scrapped, that the market couldn’t sustain it etc. As we know that hasn’t happened and far from the market being unable to sustain it sales at auction have increased beyond anyone’s expectations. What will happen this time remains to be seen—watch this space!
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