What is Something Worth When It Doesn't Sell?

Long-time readers of this column know that I record as many sales of North America scripophily as I can, all the while trying to maintain some semblance of a normal life. That means I capture images, serial numbers, denominations, autographs, start prices and sale prices from as many sales as possible. One of my lingering questions, a question that arose within minutes of recording my first certificate, is how to estimate prices for items that do not sell.

In general, I try to avoid guessing about prices, choosing instead to estimate prices in some sort of justifiable middle ground between the highest and lowest prices I’ve seen in the most recent past. One of the problems, though, is that I frequently notice items that fetch high prices in one auction and then go unsold at lower, even much lower, prices in a subsequent sale. What are those unsold items really “worth?”

It would be easy to assume that values of unsold items have dropped since they last sold. While possibly true, that conclusion is far from certain and far from absolute.

Obviously, every one of us can come up with numerous, valid explanations for why items don’t sell at an auction or from inventory. Small, bad or non-existent images. Poor or non-existent descriptions. Overly high minimum bids. Too many recent sales. Stiff competition. Interest rate concerns. Declining stock market. Money needed for other purposes. Computer problems. Terrorist attacks. Disagreements with spouses and children. Weather. Etc., etc. ad infinitum.

Admittedly, current condition suggest some offering prices are plainly silly. We can do nothing about those situations except ignore them. Conversely, even if every item were offered at fair, or even low prices, some items would still go unsold. That is the nature of sales of collectibles.

Assuming that offering prices for unsold items were fair relative to the existing market, it is possible that the "right person" simply did not see the offering. In a case like this, I define the “right person” as someone who has both the money and inclination to buy at the “right time.” That “right time” may be a minute or two before clicking the button on a computer. It might extend for one or more weeks between receiving a sale catalog and submitting a bid by mail, fax, phone, email, internet or in person.

In my estimation, it is terribly hard for sellers to plan, execute and pay the exorbitant price necessary to capture this intersection of money, willingness and timing. Sellers can try to affect the money factor, of course, by lowering prices. They can try to affect the inclination to buy with advertising to the largest numbers of potential buyers. They can try to affect the issue of timing by understanding that certain times of the year are better or worse for selling collectibles. Some sellers avoid the timing issue entirely by maintaining large inventories and offering items for sale continuously.

As a cataloger, I assume that inventory-style sellers must sell at or near their listed prices at least occasionally. Otherwise, they would lower prices until items sold. I generally assume dealer prices are reasonable for their market segment because, simply put, no dealer can survive on inventory without making sales.

In terms of estimating values of unsold items from mainline auction houses, I always ignore clearly outlandish offerings. Of the remainder, I generally assume that real prices of unsold auction items are probably within a few percent of minimum bid prices. Again, I assume that the pursuit of profit demands a clear understanding of realistic pricing within their chosen market segment. Having said that, if I see the same certificates offered time after time with no apparent auction bid, I must conclude their prices are too high.

And in case anyone is still curious, I never record unsold eBay offerings of any type nor do I use such prices for price estimation.