VALUE REVIEW™
Published by Semler Appraisals & Estate Liquidations
A Professional Service for the Valuation of Personal Property
Fall, 2003 Vol. 5, No. 2
Should
you “Do it eBay”?
What
is now the largest online trading forum in the world took shape
over Labor Day weekend in 1995. Pierre Omidyar envisioned that
an auction-based marketplace would be a great use of the
Internet and launched Auction Web from his living room in San
Jose, California. He
incorporated the following year, then changed the name to eBay
in 1998. Today, the
eBay community includes tens of millions of registered members
from around the world. eBay’s mission is to provide a global trading platform
where practically anyone can trade practically anything. On any given day, there are more than 16 million items listed
on eBay across 27,000 categories. The value of goods sold on
eBay last year exceeded $14.87 billion. So what does this mean
to you? And what
does it have to do with appraising?
In
the world of collectibles, what may have once been thought rare
before eBay could now be considered commonplace.
Let’s imagine that you have an odd-shaped,
artist-signed widget. You
think it’s one of a kind because you’ve never seen another
one like it. But a
quick search of the available widgets on eBay shows another
three identical ones … this week alone!
The
laws of supply and demand drive Internet auctions. The greater the availability of a product, the lower it sends
the price. A buyer is going to wait for a widget he can afford
and pass on those that exceed his budget if he knows another
will be listed in a few days (or in a few minutes).
But those items that are truly scarce can command top
dollar.
Traditional
auctions tend to be local events.
What sells well in one part of the country may not be
appreciated elsewhere. For
example, Harding Black, a Texas studio potter, has a large
following in Texas. Collectors
in New England have most likely never heard of him.
If a traditional auction is held in the Northeast, the
hammer price of the Black pottery would in all probability be
less than if the auction were held in Austin.
But online auctions have a leveling effect on
regionalism. Regardless
of where sellers are located, potential buyers from anywhere in
the world can bid if they have Internet access.
A Texan on an overseas business trip can follow the
bidding progress and join in. A transplanted Dallasite can bid from South America.
And foreigners who once attended school at UT can track
the pottery, bid, and buy.
Regional fluctuations in price are removed when bidders
have global access. This
is the major reason why many traditional auctioneers are
auctioning simultaneously with eBay Live or with the National
Auctioneers Association’s NAA Live. A combination of local bidders and Internet bidders drives
hammer prices up. Sellers
net more, the auctioneers’ commissions are increased, and
buyers tend to pay more due to increased demand.
If
you are tempted to try a do-it-yourself appraisal by researching
values on eBay, here are a few things to keep in mind.
·
The seller has
the option of a one-day, three-day, seven-day, or ten-day
auction. The longer
the auction, the more exposure it gets.
Theoretically, the more exposure, the more bidders.
The selling price of a widget that sells in a one-day
auction may not be an accurate representation as compared to the
selling price of a widget in a ten-day auction.
·
Check only the
“completed” auctions. The
current price of an item still for sale is meaningless.
Those that have ended reveal more significant
information.
·
The ending time
of an online auction can influence the selling price.
Those that end when most people are away from their
computers (i.e., 3:00 AM or over a holiday weekend) may not
achieve the best results.
·
Don’t just
look at the final amount. Open
the auction details and check to see if there was a reserve, and
if it was met. If
not met, the item did not sell and the last amount bid is
meaningless.
·
How many
bidders were actively bidding?
It’s better to rely on the results of a hotly contested
auction than an auction with just one bidder.
·
Check the
placement of the item. If
it was listed in the wrong category, those seeking similar items
may not have found it. A sterling spoon listed with comic books won’t get the same
attention as if it had been listed with other sterling pieces. If the item is in a “featured” auction, it will also
attract more attention.
·
The wording of
the heading will strongly influence how many people will see and
bid on the item for sale. Wouldn’t
you be more inclined to click on an auction titled “19th
Century Art Nouveau Enamel Scent Bottle” than simply
“Perfume Bottle”?
·
Was the “Buy It
Now” (BIN) feature used to purchase the item?
The seller must set a starting bid, but has the option to
set a “sell immediately” amount.
If the buyer purchases using the BIN amount, it bypasses
the auction method, ends the auction, and sells at a fixed
price. If the first
bidder ignores the BIN
and bids in auction fashion, the BIN disappears from the screen
and auction becomes the only method of selling from that point
forward. A BIN
amount may not necessarily reflect a true fair market value,
since other bidders might have offered more than the BIN amount
set by the seller.
·
Completed
auction results are only available for 30 days.
eBay does not retain older records.
It is difficult to determine trends with just a 30-day
window.
Can
an appraiser, even an amateur appraiser, rely on eBay prices?
Yes, cautiously. It is always better to justify value by relying on multiple
sources, but eBay results can certainly be one of those sources
if specific facts are verified.
eBay winning bids are useful if the item being appraised
is identical to the item offered for sale, if the condition of
both items is the same, if the reserve price has been met, and
the auction has concluded with a sale to the high bidder (check
the feedback to make sure the item was sent and received).
eBay prices are an indication of Fair Market Value which
is used in appraisals for federal functions such as probate and
estate tax liability, and non-cash charitable contribution; for
jurisdictional functions such as divorce and for equitable
distribution among heirs; but never for insurance coverage or
damage claims requiring Replacement Cost rather than Fair Market
Value.
So
surf, sell, bid and buy on eBay.
Check prices. But
know the limitations of the values you’ll find online.
Our Services
Appraisals for probate/estate tax; equitable
distribution among heirs; insurance coverage and claims; non-cash
charitable contribution; distribution in marital dissolution;
bankruptcy.
Estate Liquidations by auction or tag sale.
Litigation Support
Lorrie Semler is a Certified Member of the International
Society of Appraisers, specializing in Antiques & Residential
Contents.
Thank YOU!
Your referrals are always welcome. Please
let us know how we may better serve you.
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