I am frequently asked whether prices at online auctions are good. Whether they are better than at online stores. Whether they are better than in brick-and-mortar stores. Seems like a simple question. As a matter of fact, it is not.
Those who have read my previous posts know that I’m a big fan of online auctions. And the reason I’m a big fan is that you can find truly amazing deals at online auctions. However, the simple truth is that not everyone walks away happy from these auctions. Or… they walk away happy but for no reason.
Some of the very best deals I have ever had were at online auctions. Yet, some of the worst deals I have ever witnessed were at the very same auctions.
There is a very simple explanation for this. You have to know what you are doing. If you don’t, there is a good chance you’ll lose quite some money.
It’s not to say that every time you pay 20% or even 50% more (than you could have paid elsewhere) it is the end of the world. But if you end up paying 5, 10, or even 50 times the market value, how does that make you feel? Not very good, right? I know, 50 times the market value might seem like an exaggeration. Well, it is not, unfortunately. Of course, from a seller’s perspective, you are the buyer of the year in such a case. But what about your perspective? I would definitely feel like a dummy in such a situation.
And, to be honest, there have been situations in the past when I have felt like a dummy because of my online auction purchases.
Online Auctions: Is the Price Good?
So yes, online auctions can be a nightmare if you have no clue what you are doing. As well as if you think you have a clue when you actually don’t. Have a look at these examples and you will understand what I mean. Note, although these examples are related to jewelry and gemstones (because most of my online auction research and experience are related to these fields), rest assured the situation with other types of goods is no different.
It is true that pink diamonds are one of the most expensive diamonds. However, this holds true only for decent quality diamonds. Such low-quality (clarity “pique” or “I”) purplish-pink diamonds are extremely cheap. The true market value of this one is $150 to $250. Note, the auction price has already reached $4000 and it is not over yet. It means that the “lucky” buyer will pay at least 16 times more than it is worth.
Lead glass-filled rubies, also known as composite rubies, are nearly worthless. Therefore, this unbelievably generous discount (86% OFF), just like the phony certificate, is merely a marketing ploy meant to convince you that this is the deal of a lifetime. The market value of this sterling silver bracelet is only $50 to $70.
First of all, it is important to note that this pendant is not vintage (although it has been offered at vintage collectible jewelry auction). This is a piece of contemporary jewelry and its average market price is $25 to $40. Here the buyer paid €440 + 9% auction fee. Thus, it is at least 14 times more than this pendant is actually worth. It is a rather widespread practice to sell modern jewelry as vintage.
The buyer paid $241 + 10% buyer’s premium for this snake necklace. The true market value of this Thai-made necklace is $45 to $65.
This is not an emerald (you can read more about these fake emeralds here). In reality, this is fracture-filled and dyed quartz. A fake emerald of this size and quality costs around $10 (including the “certificate”). The “lucky” buyer paid €265 + buyer’s premium in the amount of 22.5% + €8 instead (€332.6 in total). Staggering 40 times more than its true market value!
This opal necklace was sold for $3000 + an unknown amount of buyer’s premium (up to 23%). The listing says nothing about the size of opal beads. Therefore, it’s almost impossible to establish the true market value of this necklace precisely. However, these opals seem to have pretty poor play-of-color. Thus, even if the beads are bigger than average, its true market value is below $200.
You can find out more about opals and opal necklaces (and how to get an opal necklace with a 14k gold clasp for less than $100) here.
You can buy alike earrings with treated black diamonds for about $200. The buyer paid $900 + buyer’s premium in the amount of 19% instead. The price estimate here ($3,300 to $6,600) is absolutely ridiculous.
It is also worth noting that these images are severely photoshopped. The real product won’t look that glossy and perfect. In reality, black diamonds tend to have quite a lot of imperfections, such as nicks, cracks, and uneven color distribution. Therefore, be aware of photoshopped images while shopping at online auctions and stores.
Such opaque, low-quality diamonds are extremely cheap. The true market value of this one is around $100, not €4500 + 9%. Thus, the buyer paid shocking 55 times the price! Also, pay attention to the insanely exaggerated expert’s estimate (€22,000 – €28,600). This is one of the most common marketing ploys online auctions use to make you pay way more than the true market value.
Such a sterling silver bracelet costs $40 to $60. The buyer paid a total of €282.4 (the winning bid + buyer’s premium) instead.
The exaggerated price estimate ($2,200 – $2,400) is simply unbelievable! The true market value of this pendant is $10 to $15 only.
Yet another example of crazy pricing. The true market value of this diamond is $200 to $300. As you can see, the auction price has already reached $4000 and it is still open for bids.
The true market value of this ring is $15 to $25. Thus, it is nowhere near the appraised value ($450) or the winning bid ($125).
First of all, this is a lead glass-filled ruby or so-called composite ruby. Basically, it is worthless ($20 or so). The setting itself is worth approximately $400 – $500. It is definitely not worth what the buyer paid for it ($1295). Apparently, the buyer was not aware of the ruby’s treatment method (the listing does not state that) and its true market value. The seller of this item is English Excellence (Barry).
Barry describes himself as a professional who has been in the jewelry business for his whole life, a respected member of the community who has reached his retirement age. So, Barry is about to retire and this is your last chance to take advantage of one of his terrific offers – that’s the message. Barry also makes it clear that they “guarantee the authenticity of all items”.
In reality, they are constantly selling items with worthless glass-filled composite rubies and cobalt-doped composite sapphires. Barry never bothers to disclose the truth about these gemstones. Moreover, he has sold numerous rings with fake emeralds (fracture-filled and dyed quartz) as well, claiming those are natural emeralds.
Therefore, if you have bought anything from English Excellence (Barry), you can be pretty sure that the only part of your jewelry that is worth at least something is the setting itself. The rest is worthless crap, unfortunately. Sorry for the bad news…
The true market value of this wristwatch is €70 to €90. It is readily available online. The “lucky” buyer paid €350 + 9% buyer’s premium instead.
A blue topaz like this costs about $20 to $30. Apparently, the seller did not consider €189 good enough to let it go.
Yet another shameless seller is trying to convince his potential customers that this is a natural, genuine emerald. In reality, this is dyed beryl, and it’s worth a fraction of its list price. The true market value of this pendant is $15 to $25. Victorian filigree design? Seriously? This must be a joke!
Real blue sapphire… You bet it is not! This is a cobalt-doped glass-filled sapphire, also known as a composite sapphire. These composite sapphires and lead glass-filled rubies are in the same price range. The true market value of this ring is $20 to $35. The buyer paid €280 + 9% buyer’s premium instead. Not the best deal, right?
The truth is that every emerald is green beryl, but not every green beryl is emerald. You can read about the difference between the two here. For the time being, it suffices to say that green beryl is substantially cheaper than emerald. And this one here is light green beryl, not emerald. The true market value of this ring is $700 to $1000, not $3000 (+ buyer’s premium in the amount of $592).
I could go on and on with these examples. There are literally millions of them.
We have 18 real-life examples here. The total market value of all these items is $2299 to $3047. The total amount the buyers paid is $27,438. Isn’t that shocking?!
On five instances these buyers paid more for just a single item than what the combined market value of all 18 items is. Think about that!
No matter whether you are a rational shopper or an impulsive one, I bet you will agree that it is so much better to buy 10 items instead of paying 10 times the price for one item. Anyways, what’s the point of enriching someone who creates no added value for you?
Be smart. Shop smart.
P.S. What is your experience with online auctions?
P.P.S. Whenever you are unsure whether the price is good or not, ask the Community.