BUYING POSTAGE STAMPS AT AUCTION

Author - Richard Lehmann | Sunday, 14 December 2014

While investment quality stamps have a steady history of appreciation, their value at any one point in time is fairly well known. It is therefore important for someone buying stamps as an investment to do so at a price as close as possible to the wholesale value of the stamp rather than its dealer retail price. Let's distinguish between the various auction venues since they affect what you can expect.

The Ebay and StampWants venue, are where auction lots are mixed in with sale lots. The sellers can often be non-professionals and some opportunities may exist since bidding is sporadic and competition thin. The lot descriptions here are generally scant and so, much of what is offered has defects you cannot see. Check the commentary for the dealer to be sure you can return an item which does not measure up. The watchword here is, if it looks to good to be true…..

Hundreds of dealers run weekly or monthly mail and internet only auctions. Dealer based auction are that in name only. Their auctions are designed to move inventory quickly by offering a small discount over otherwise retail prices.

The major auction venue are established auction houses who hold only a handful of sales each year and offer the premier stamps of investment interest. They publish expensive catalogs available on line for viewing as well as to place bids. The names of these firms, their web addresses and dates of the next auctions can be found at two main websites Stampauctions.com and yyyy.com. You will find hundreds of true auction houses, whose principal activity is selling individual investment quality stamps and various collections and specialties from mainly deceased collectors. Here is where most investment buyers should focus. When buying at auction it is essential that one observes a number of rules. If you attend the auction, note the following:

" Know in advance the highest price you are willing to pay for a stamp and stick to it. Remember that you are often bidding against a collector who is trying to fill a hole in his collection and will overpay to do so.
• Try to spot the dealer bidders in the audience. Their bidding will tell you what a lot is worth. But don't confuse a dealer with an auction agent. They generally represent collectors, so they too will pay closer to a retail price.
• Have a throw away bid in mind for any lot that is of even marginal interest. Every auction has a few steals where no-one in the room was aware and the auctioneer had a stronger interest to move on. This often happens when multiple lots of the same item come up for bid.
• Find out the viewing schedule for lots and examine the items beforehand. Higher priced items should have a certificate as to being genuine in all respects. This means not just that it isn't bogus, but that the gum and perforations and defects are all as described (or not). Note that after you buy an item, you can request it be certified before you take delivery, for a small fee of course.

A more common way of buying at auction is by email bidding or through use of an auction agent. Here too there are rules to observe, and they are even more essential:

• Submit only firm limit bids. In theory, you will get the lot at one increment over the highest floor or other email bid so you are encouraged to set a high limit. Don't hesitate to submit lots of throw away bids. You may get lucky on one or two. Auction houses love under bidders since it ups any higher firm bids. Auction houses offer you the ability to up this by a stated percentage if needed. It's not needed, this is only for the must have bidder who you don't want to compete with.
• Lots often have starting bids which may be a seller's minimum or highest firm bid. Note, however, that many auction lots may be owned by the auction house. Hence, even if you are the only bidder, your limit bid will magically be reached. This is one reason you may want to use an auction agent.

Using an agent at an auction you can't attend can be a cost saving. The agent allows you to keep secret from the auctioneer exactly how high an opening price he can set and where he can fabricate bids to push up the price, i.e. the infamous telephone bidder. Even if a lot has no minimum or is not house owned, the auctioneer get paid based on the price realized. Agents are generally paid at a flat rate per lot bid and can also be used to examine lots beforehand on your behalf and give you their opinion.

If you buy wisely at auction, you have the comfort of knowing that your purchase begins appreciation from that point forward and hasn't paid a penalty of many years appreciation just to get back to resale value.