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.
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.
Lorrie Semler is a Certified Member of the International Society of Appraisers, specializing in Antiques & Residential Contents.
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