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Auction Bidding Techniques

Auction bidding techniques! "Tis not a simple thing. Somebody's always changing the rules. When asked to come up with a few thoughts on this topic, I had to pause and think. For one thing, the bidding of some buyers is a thoughtfully worked out formula, a very private thing which they would hate to see show up in print. So, I'll deal with the more general principals, pointing out in particular how the tactics need changing as the rules of each auction are considered.

Bidding has to start from a knowledge of what a given record usually sells for, and many collectors new to auction buying have anxious moments here. Experience is the sure answer, but that takes time.

There are always surprises in what records sell for. Some dealers do inform you as to what the item you missed sold for, which gives you a current update as to what someone was willing to pay for it. A few publish lists of the winning bids at billing time, a most informative document for learning current price levels. Such lists, taken into proper perspective, are a valuable resource, for example, to an appraiser in his business of evaluating an estate containing a major record collection. If you do your homework with such lists, you are far better prepared to bid effectively.

Every auction has its own rules,its unique constituancy with its particular bidding habits. You do not get an equivalent record at the same price in different auctions. You can often buy a record for less when its subject matter is a minor issue in the auction that is offering it. You find less of your type offered, but you have less competition.

Consider now a record you want to bid on in a current auction: you need to keep in mind one of three tactics to use after you consider its current value. Suppose there are a number of records you are marginally interested in. It wouldn't break your heart to miss out on some. You can gamble that there will not be much competition, and bid just a bit over minimum bid. Most established dealers would be satisfied with selling it that way than not at all. This shotgun approach can produce a 5-to-10% rate of success, depending on the intensity of bidding on that subject matter. I've seen some try that on the hottest items in the auction to almost complete failure, so donít waste your's or the auctioneer's time entering shotgun bids on high demand items. The middle of the road bid is one which tries to equate with the current accepted value. You can come close to a 50% chance of success with this unless the particular auction is being unusually heavily bid on.

In my last two auctions, the bidding has been so intense that an average buyer got only 20% of what he bid on! Part of that phenomena is that prices are on the rise, and all buyers have not caught onto the new levels of action. Thirdly, there can be a case of your finding listed a record you have sought for years, perhaps one that will help complete a collection of a particular artist. Would you be happy with 50% odds for such a record? 60%, 70%, 80%? 90%! (That's more like it.) For such an item so special to you, bid at least double the normal accepted value. When will you get offered that item again? Do what you are able to do to land the big one. I have sold even common records to people who bid that way, but they practically insured that they would be successful, and were happy with the results.

If you are bidding on a true closed bid auction, stop and think who your real competition is, and how you can beat them out. If you are thinking about $10.00 and only bid $10.00, you will only get it if there are no other bids in that area, or that yours was the first bid of an even ten dollars. You are not competing with a $9.00 or an $11.00 bidder, so what can you do? You use cent increments over the even ten bucks, keeping as close as you can to beat out competition that also goes a few cents more than the even money. Some use $10.01, $10.06, $10.11, $10.16, etc. You figure your own tactics. If you know what bid you lost out to before, and they always bid in 11 cent increments above even dollars, you bid 12. You can expect him to raise occasionally. This is where real competition and tactics have a part in your auction bidding. I leave you to your own little schemes in this department. There are many. I appreciate odd cent bids because it greatly reduces the incident of tie bids. So many people who bid just in even dollars lose out that it's worth considering.

Perhaps the auction you are interested in is not a closed bid type, but has some scheme of letting you top the current highest bid by phone or letter, usually with a clause calling for at least a 10% rise. You usually have to log in with a letter bid to qualify for later raises in that way. Lets contrast bidding tactics with closed and open auctions: I have strong opinions on this, so I admit in advance that my point on this may not be objective.

A closed bid auction works well with customers spread throughout the country and the world who have greatly varied access for follow-up adjustments. You can start with your strongest bid, knowing,if you trust your dealer, that your bid will be revealed to no one else. In contrast, with an open auction you do not reveal your true interest in the record with your first bid, you simply log in with a modest bid, and hope to raise it as necessary at the final hour to what itís really worth to you. You hope that you will end up paying less for it.

My opinion is that the open bid mail auction tries to give you the competition of a live, all customers-in-attendance auction where they can bid each other up till someone prevails. But, this cannot be. There is such a disparity of access for updating between bidders, that there is no way to be fair to everyone. In fact, it gives advantage mostly to the local boys who can up their bids with a quick local call. On closing day, the phone lines and faxes are really humming. Key items keep changing hands through most of the day. The phone line is so busy, that not everyone can get through. I think you can see some reasons why I prefer to be fair to everyone and run a closed-bid auction. You can always change your bid up to closing time at midnight, should you feel that you had bid unwisely. You really do compete, but in the context of a mail-auction you do it from the very beginning when you calmly work out what your bid should be. I find that more buyers end up being satisfied with the closed bid style.

There's been another twist in auctioning lately that has intrigued me as to the best tactics to take advantage of it. One dealer, maybe more, will reduce your bid to only 10% over the second bid whatever that is. This sounds great ó as if you'd always pay less, but stop and think. With that kind of rule the strategy of bidding changes. You can bid higher to win without having to pay as much as you bid, you hope! What happens if two bidders both bid high on the same item. You'll end up paying more for sure, so as the buyers get used to that possibility, the advantages slip away as sharp bidders get used to bidding higher. The dealer in question says that the result, I speculate, hasn't been seen by him much yet, but I theorize that it is just a matter of time. I'd like to have your input should you differ or agree,in the "Letters" section of this publication in the months ahead. I hope you have increased success with bidding.