The psychology of auctions, now that would be a fascinating study. How bidders behave, the frenzy of bidding wars often called “auction fever“, and the emotions wrapped into the pursuit of that one item everybody seems to want would be very enlightening.
Auctions are fantastic places to find great deals. I have found many clocks at auction for exceptional prices and have few regrets.
This post will explore how to use auction rules to the best advantage based on my experience and my observations. Presented are Ron’s tips that I have found effective. The focus is on online auction houses. eBay is another world but I suppose some of my advice may apply.
The photos on this page are auction wins over the past two years.
The classic auction
Although there are other types, the classic type of auction is where a seller sets the price, plus a time limit and bidders are encouraged to bid on the item. The highest bidder wins. This type of auction remains popular because of the familiarity and intuitive nature of the process.
Auctions can be live or online but online auctions are becoming much more common.
Using the “watch list” if offered
Many auction sites have a “watch list” which is a cool method of bookmarking the items you may (or may not) bid on. I generally peruse the auction offerings and click the watch button for those that interest me and in so doing generate a “list” of ten to twenty items for potential bids.
I hold off on bidding until I can determine which ones interest me the most, how much I am prepared to pay, and the total I have budgeted for the auction. I attempt to work within my budget but may make some adjustments during the auction.
The watch list also allows for a sober second thought before or during any auction. Put another way, I thought I wanted the item before but now I don’t.
Why you should not bid early
Auction sites want people to bid early to show everyone there is interest in the item. By revealing interest in the item others might be tempted to bid and this will drive up the bids. This benefits the auction house which makes more money on any item that sells higher. Novice auction goers are easily caught in this trap. Try not to get caught up bidding too high and too early in an auction even if it is something you really want. Fight the urge!
Establishing a limit
I consider each item carefully based on the photos and descriptions provided, determine what I would pay for the item in optimal condition, and factor in wear and tear or any parts missing in order to set an upper limit for my bid.
A tactic that works surprisingly well is to determine a maximum price on an item when the auction opens, make that bid and leave the auction.
Let’s say I bid $60, then leave the auction site. The next day or after the auction has ended, I will know if I won within my limit, or lost. If monitoring the auction a green win button will light on what you have won otherwise auction houses send out invoices after the auction has ended detailing items you have won. Winning is very satisfying, of course, but losing is not such a terrible thing, there is plenty of fish in the sea.
Others participating in the auction might also have set the same limit for themselves on a particular item. If I’m willing to spend $60, am I willing to spend $5 more (assuming a bid increment is $5). If I bid just higher than my limit assuming my limit is the same as others, I may still win the item without ignoring the budget I have set for the auction.
Without determining your limit, it’s too easy to get into a bidding war that might go something like this, “I was willing to spend $75, and I was outbid at $80. I could go $5 more and bid $85 but if I lose it at $85, $10 is only a tiny bit more”, and so on.
Stay within the upper limit and do not get caught up in a last-second feeding frenzy.
This is just another method of forcing the bid higher. Ignore auction estimates unless there is a “reserve” on the item. A reserve price is a minimum price that a seller would be willing to accept from a buyer. In an auction, the seller is not typically required to disclose the reserve price to potential buyers. If the reserve price is not met, the seller is not required to sell the item, even to the highest bidder.
Most auction sites allow proxy bidding, meaning they will keep your bid as low as possible so you can win, but not exceed your maximum limit.
It works this way. I decide on a $60 upper limit and the auction’s bid increments are $5. At the start someone bids $5, I have set my bid at $60 but currently have the winning bid at $10. If someone else bids $25, my bid automatically goes to $30. They come back at $35, and my bid automatically goes to $40. If the auction ends at that point, I won the item for $40. If someone else came back before the auction ended with a $65 bid, then they win, but I do not exceed my limit. I then walk away from that item and focus on the next.
Rare items that are desirable can be expensive. Humans tend to overvalue things they think are rare. However, thinking an item is rare might influence you to bid higher. The item may, in fact, be quite common. Do your research beforehand, or even during the auction.
For example, ogee-style clocks that some people would consider to be quite rare are, in fact, very common as thousands were produced by many American manufacturers over a span of 70 odd years.
Not so hidden fees and costs
There are additional fees and taxes as you would expect. Auction fees called “buyer’s Premium” is set by the auction house. The buyer’s premium is a percentage that is an additional charge on the hammer piece of the lot which is paid by the winner. Some auction houses will call it a service fee but think of it as a commission.
Buyers’ premiums may be higher for online auctions than live auctions and the percentage varies from auction house to auction house, typically between 15% and 20%. Some auction houses may even have an additional service fee above the buyer’s premium. Add taxes to determine the final price. A winning bid of $60 with a 15% buyer’s premium (our local auction houses) and sales taxes of 15% (Nova Scotia) pushes the final price to $79.35. It is the final price assuming you can jump into your car and bring the item home, otherwise, there are shipping costs. Suddenly your $60 win costs $200.
As a general rule, I do not request antique clocks to be shipped as the risk of breakage is too high.
The psychology of ownership
Here’s how it works. While you hold the winning bid, you begin to feel a sense of ownership, and the longer one holds the bid the stronger the sense of ownership. When outbid, you may think someone is trying to steal something from you and you want it back but now you are caught up in bid frenzy. To get it back you bid higher. However, even if you win the item you still lose because you have likely overpaid for it. Buyer’s remorse is the sense of regret after having paid too much.
Related is the Endowment Effect, meaning people will assign more value to an item that they own purely because they own it. This type of behaviour is typically triggered with items that have a strong emotional or symbolic significance to the individual such as something they had as a child or other nostalgic item.
A pocketful of money
Let’s say I plan on spending $500 at an online auction including buyer’s premium, tax, and shipping, so, I am limiting my actual bidding to approximately $300. Perhaps I am looking at only two items in the auction. For one I’m willing to go to $100, and for the other, I’m willing to bid up to $200 for a total of $300. I win the first item (for which I was willing to spend $100) for $25. I can now decide whether I should spend $200 on the second item, or if I’m now willing to go up to $275.
Determining a budget limit introduces an element of self-control and allows one to refocus attention on other auction offerings. It is also helpful when you are not watching the auction when it ends.
This is always an individual choice based on how much you feel the items are worth and what your research is telling you.
Clock auction houses
An auction that consists only of antique clocks is a tough one to navigate and to win an item at a decent price. These auctions attract all manner of collectors and you might be bidding against a very determined collector who will want an item at any cost.
I find the prices in antique clock auctions to be generally quite high and unless you are looking for that special clock it is best to avoid them unless money is no object. I have much better success with estate auctions that do not generally attract dedicated clock collectors so, for the most part, you are bidding against people who have poor knowledge of antique and vintage clocks.
I suppose there are plenty of other strategies but these are the ones that have worked for me.
3 thoughts on “Clock auctions – Ron’s rules for bidding”
Ron, sage advice. Really boils down to what the Romans had to say about the Agora: “Caveat Emptor”. Timeless.
Very informative well written advice. I find some of the auction houses to be on the high end price wise on the opening bid. Compared to the popular auction sites vs. auction houses, shipping cost are not up front. If more auction houses offer shipping estimates up front, without having to contact the auction house before or after the win, it would open it to a broader geographical market to those who choose not to travel or find that wanted item at the other end of the country.( Most auction houses state that they are not in the shipping business) Knowing the shipping cost affects your budget plan.You do risk damage during shipping but very rarely have I received an item damaged. Insurance is another matter to deal with. Also if an auction house really wanted to move inventory they could offer a “but it now” price, but that would defeat the purpose of the auction.
Thank you. We have a couple of auction houses that are an easy drive from where I live. I have had items shipped from one and they have arrived safely but I have not always had the best of luck with shipping. Local auction houses tend to have fairly reasonable shipping rates but they are not advertised. Sometimes unsold items are offered at a reduced price but that requires going to the auction house and dealing directly with the auctioneer. I agree, that “buy it now ” is okay for eBay but not for traditional auction houses.