Nice, Khamul! You are very right in pointing out something that I often overlook - the fact that an auction has to be driven by more than one person. This definitely falls into the supply and demand realm. Predicting demand can be quite tough. And, what you would really need to predict is how many serious buyers are out there who are willing to pay serious prices. The vast majority of people on ebay are bargain hunters not willing to pay high (or even fair) prices. So, how would a seller possibly gauge demand?

This is very interesting to me, first because I really only use ebay to sell, but also because I like to track things like number of page views, number of watchers, and number of unique bidders. Maybe there's a nice formula for determining which selling method is most effective using projected number of page views/watchers/unique bidders, maybe even factoring in how quickly an item attracts watchers and how many early bidders there are. Being limited to only my own ebay selling details (watchers, etc.), trying to do any sort of valid market research isn't going to happen. I'll probably stick to gut feelings. However, I am sure there is some line where one selling method becomes lower risk and produces better average results.

Anyway, I like using ebay to gauge values because it is a pretty active marketplace, with many transactions to observe. For example, there are enough sales of early edition Lord of the Rings sets of varied condition, presentation, auction style, etc., to get a good glimpse at what people (on ebay) are paying.

Finally, after writing this post, I am realizing a couple of reasons why we don't exactly see eye to eye. I got into this discussion when mention of my ebay auction was made and I think I am stuck in ebay seller mentality. I guess I tend to think of value as being what I can sell something for (again, with focus on ebay), not what I am willing to pay, or even what others have been paying. I recently sold a nice condition (no jacket) 1946 A&U Hobbit that I thought was worth around $700 for only $450. After selling fees, I probably ended up with less than $400 in my account. So, while others list this book for $800 to $1000, in the end, to me it was worth $400. Kind of sucks, because I'd probably pay that to get it back! On the other side, there have been (and probably will be again) times when I have paid a premium price, knowing that I could never get my money back if I tried to sell on ebay, but just had to have an item, or needed it to complete a set. So, as a buyer and collector valuing my collection, I really do agree with you.

A great discussion
Alpingloin said 'My general view of market value is very simple. Something is worth exactly what someone is willing to pay at a given time and place'.

This will remain the comment for me although all others before are neither wrong nor right. With auctions of course you generally take a gamble and with ebay this can indeed be madness but I do find this as thrilling to watch as actually going to an auction itself of which I have attended many.

I feel a lot does revolve around expectations of both the seller and buyer and naturally these do not always align or even be close. For example how many times have you seen a Tolkien item listed at what seems a very high price on ebay. Then in the text they state something like ' these are selling on Abe for XYZ'. Rubbish- they are not selling but are being advertised and are likely to not even achieve anywhere near the high price asked.

A factor that self fuels this behaviour is in my mind the exceptional sales that we all sometimes see and hear about. These often seem to give sellers a 'dream' that they will achieve these 'high' figures and thus they go for it. I am not saying this is wrong and if you have the money and time to wait/hope/pray for that buyer who wants item tomorrow then why not.

How I look at it is that if we didn’t have all these variables/methods of selling and our own individual thoughts then matching items would be all be a very similar price and you wouldnt see the huge differences in the market.

What I like about books is they are not all the same and no doubt lots of us hunt out that perfect Silmarillion or one signed by Christopher. Would I pay extra for that copy - Yes of course but how much? Answers on a postcard too .........

One of my wife's old business professor's commentary on value -

"If someone says, 'I own a million dollar house,' I say, 'show me someone who will pay you a million dollars for your house right now.' That is the only time you truly have a million dollar house. If you can only find someone willing to pay you $500,000, then in actuality you own a $500,000 house."

This is one of the things that always stands out in my mind when it comes to investment valuation and assessing risk. And, yes, while I occasionally purchase books just because I really want them and never intend on them leaving my collection, I usually approach book purchases with investment potential in mind. I never expect to make big bucks or have any sort of business success through book collecting (although it would be a fun career!), but I do like to know that if I come across something special that I can't pass up, I can recover some capital by selling a few other books.

There was a point in time when my collection was growing rapidly and I was accumulating books like you read about (nice pun, eh?). Over time, and with financial and space constraints, my approach has evolved. Now my collection generally sees a good amount of ebb and flow. I only own a small handful of (sentimental) things, with which I am unwilling to part. I find that this approach has allowed me to own (even if for only a short time) a great variety of books, to become more knowledgeable as a collector, and still satisfy an appetite for buying more books!

ebay and abebooks are very bad parameters to find out the value of a book. Only rarity, state of the book and demand can tell us the real value.
And when it comes to selling books at their true value that is a completely different issue. One can indeed own a 1 million dollar home and sell it for 500.000 if you wish... if the state is correct, the estimate is done by a specialist it IS a 1 million dollar home. If you can sell it for that amount or not is a good test of the estimate. But when it comes to books, especially expensive ones it all comes to finding a buyer - timing is probably everything.

Beren, nice points, but...

In the case of a house, the estimate given by an 'expert' (a surveyor in the UK, or perhaps an estate agent) is simply based on the market at that time. It is really just a comparison of your house (i.e. its condition, & possibly some other factors) to similar houses; invariably the same style of house, in the same area --& taking into account historical sales & (more importantly) recent sales.

The surveyor doesn't just pluck a number out of thin air. Yes, they may base some aspect of the value on prediction (e.g. the surveyor believes that prices are, despite the downturn, holding up well --even this is drawing largely on knowledge & experience), but most is simply comparison.

So, to disagree with alpingloin, & agree with yourself, provided the 'expert' is indeed an expert, & the estimate is a good one, a "million dollar house" really should realise about this price --unless conditions are highly fluctuant, or unpredictable.

However, you state: when it comes to selling books at their true value that is a completely different issue.; & when it comes to books, especially expensive ones it all comes to finding a buyer - timing is probably everything.

How is selling a house & a book any different? With house selling surely "finding a buyer" & "timing" are just the same as in book selling? I fail to see how the two markets differ markedly or what marks out book selling as so unique.

You also state: ebay and abebooks are very bad parameters to find out the value of a book. Only rarity, state of the book and demand can tell us the real value. So what market should we gauge price, or price range from? You seem to be alluding to some 'true' value that items should carry, but which isn't readily available or known.

(Explain yourself! )

My real disagreement with the market will reveal the value model is simply this: if a book fails to sell at auction, this does not, in my opinion, mean it is literally worthless; either generally, or at the time of the auction. Therefore the market does not (always) determine value/worth.

Ultimately, I agree with your value range model alpingloin. (Your collecting method is imminently sensible too!). I don't think anyone thinks a single value can possibly be applied to a given item. And laurel, how right you are about prices. If 'true' values were revealed, we would have no underpaying, or overpaying --& frankly no book market (in its present form) at all. That would be no fun indeed...

BH

The house example is a good one to spend a little more time on, I think.

In your example a homeowner said "I have a million dollar house" and the professor says "show me someone who will pay you a million dollars"...

If I put my house on auction today, for seven days, for the highest bidder, I will get X dollars. If I put my house on the "market" and I am willing to wait for the right buyer, I will get Y dollars.

No-one can tell me what X and Y are specifically, but experts can certainly give me a reasonable range for each of X and Y, and I can guarantee you that Y is higher than X except in ridiculously spurious conditions. This is why people do not sell houses at auction unless there are serious time considerations (bank forclosure, etc.)

The same applies to rare books - if you wait for the right buyer, you will pretty much always realize a higher price than if you have a very time limited auction. The conditions (bidder frenzy) that cause auctions to go above "market price" are pretty much ignorable, from a statistical point of view.

Thus, when considering rare art, rare book collecting, antiques, etc. you will almost always see dealers buying at auction, then pricing the item and eventually finding a buyer (and making a profit). Compare this to the number of times you see a dealer buy something at fixed price (on the open market) and taking it to an auction house to realize a profit.

It is all about finding the right buyer. For an eBay auction, you have seven days to find the two people* who really want your book the most in the whole wide world. That is an incredibly short window of time to make sure your book gets marketed and discovered by all/most of the people who might be interested in it. If you have the patience to wait, you will have much better odds at finding the right buyer and getting a better price.


*As others have already pointed out, the realized price at auction is one bid above what the second-most-desperate person was willing to pay.

I agree with all of that Jeremy!

BH

Yes Jeremy, but still there is a difference with houses and books; where a house that stays up for sale will eventually drop in price, since it stays to long on the market. It is not so with rare books at all.

For example signed books... if you have some good database of sales you can see a good increase in value on a yearly basis. Two years ago it was a bit lower, this year it was better. There are people who invest in rare books because of that, since it will bring in more money then putting money in a bankaccount. Buying a house also means that the older the house gets, the bigger the chance is you need to repair things, you have a monthly cost as well, which is completely minimal in the case of storing quality rare books. And as far as I know (with some exceptions) rare books tend to become more expensive over time.

So for me the house theme is completely different from the rare book theme. Ebay is indeed a short window of space - sometimes price go up higher then they should, most of the time they don't show the real value of an item - abebooks in general is a place where prices tend to be on the high side, mainly because listing costs are quit heavy.

I'll explain how I feel about collecting. Book collecting is taking care of an item that will stay with you for a limited time. Normally a rare book will for sure live much longer then you will live. So you can treasure the items and take care for them for a while. Secondly I believe all collectors are enough interested in their items so that some kind of research is always done on the items. Someone who buys to put items in the collection and re-sell them in 10 years time is for me an 'investor' and not a collector.

So, here are mainly collectors, and that makes it difficult to discuss 'value' since for collectors any value is possible for a rare and unique item. For them - the honor to treasure the item - can cost up to the amount they have on their bankaccount. That is how crazy it can get.
Now when you talk with investors there is no room for that kind of behavior. Prices are set out of experience of the market, the value of items sold in the past, demand, etc , etc... it is like asking Google how they set their search results. 250 factors combined and you get a good answer.

So yes, Jeremy is right, when you have time someone will buy it at any price. That is especially so for collectors. But in rare book sales we don't depend on collectors (how many are there? that would be a bad business model!) but mostly on investors. Of 100 books I sell, 50 are never listed online and 40 are sold the day they arrive here... it is all about demand - will always buy in what I know that will be selling - will always look for quality - only real quality will sell to investors - and will always look at a great investment opportunity for the client. The moment I would go asking extreme prices I kill my own business. So there you have it. It has nothing to do with houses... where if the house has the right view it will sell. No it is about quality and the better the item (depending on 250 variables) the more expensive it will be!

Just thought I'd let anyone know: they've added the 30% discount again to the two super deluxe titles