What's the logic behind hiding the reserve?
 

Many auction sellers refuse to reveal the "reserve" price in auction. Is there a specific reason to hide it? :rolleyes:

to check what others are willing to pay for the item, I think.:D

Alf

For hot items, that makes sense. For 'cold' items.... I got it, it's just for fun :)

Because folks tend to wait to the last minute and bid reserve plus a dollar (or like amount). As a seller this is disappointing; you'd rather get several folks excited and bid it waaay up ;)

Seriously, as a seller, it can be frustrating to have your item sell for only your reserve; as there are 2 ways to look at a reserve;

1. The minimum amount you hope to get
2. A lower amount, but hopefully so no matter what the item sells...

There is a difference in the two.

I wish many "buyers" would try selling 5-10 items themselves and see the advantages and disadvantages in selling; i.e. lower amounts than hoped, items not selling or not getting bids, if on ebay, you still get whacked with a fee, whether the item sells or not; on gunbroker, any "extras', such as counter, bold, etc still cost you each time it lists; then paypal fees, it all amounts up to a lot of irritation and cost to the seller; which the buyer never sees :)

ed

Thanks Ed. Great tutorial. The assumption is reserve being low. I don't know others, but I never sell at loss, I did not make much from guns either, but losing money is not acceptable. :nono:

Many reserve auctions get on my nerves. I have seen the same guns over and over again on Gunbroker that never sell due to reserves that must be sky high. Why not just start the auction with a minimum bid?

Because it is frustrating when something sells for $850 and it is worth $1600


Auctions are fickle, it all depends on who is looking "that week" that day etc.


See my reply above (not to be a pain), but if a lot of buyers tried selling, they'd look at things a bit differently...


Ed

I hear you Ed,
Auctions can be fickle, but as a buyer, I wish I would come across more auctions where something sold for half its value! The only time I have gotten that good of a deal was when the seller had a low "Buy it Now" option. I've also seen stuff sell for too high on auctions when a bidding battle erupted. Buyers and sellers certainly have different perspectives on this, of course.
Matt

A reserve auction isn't really an auction IMHO. I have never been to an auction that they didn't start the bidding at a price they wouldn't take. If no one bid at that price they either drop the price or don't sell the item. Why put something on an auction if your not going to sell it to the high bidder. If you want a minimum price then start the auction at that price. To put a reserve on it and then refuse to give the reserve will assure you of one thing, I won't bid no matter what........

Well, it doesn't work that smooth, sorry.

I have found that if I ask $300 for a holster I "might" get a bid on it at the end of the auction. But if I ask $25, the folks start to bid and decide they want it and it ends up selling for $355.

But not always, I have had many items sell for less than I'd like and losing money sucks.

I have been to many antique auctions and many times they have reserves, as do gun auctions I have been too.

Ed

One reason for a reserve may be that the seller hopes a potential buyer will keep bidding on it until they find out the reserve, whereas if it is started at the minimum price, it may not receive any bids.
Of course, when an item does not meet reserve, it is not uncommon for the seller to offer it to the highest bidder.

:D That sounds like my in-laws visiting casino -- inserted a token, nothing came out, insert another token, nothing, ??, one more, still nothing? "is it broken or what?" :grr: another one, yet another one....

I guess I'm missing the point, so your saying that your doing it in hopes of charging more then fair value? Sorry I don't follow that logic. No one ask you to lose money, that's your option. An auction to me means an item goes on the block, a starting price is broadcast. People either bid or they don't. I have been to over 100 auctions in person, never have I seen them start bidding without it being a price they would accept. To not disclose your minimum price is just an insult to a persons intelligence. If they state that in the auction to me that screams it's way more then it's worth. Just my 2 cents......

I have no problem with a Reserve Price, but what I don't get is tooting "NO RESERVE!" and then setting a very high opening bid. Duh...what is that if not a Reserve???

Gentlemen, A reserve is simply the minimum price a seller will accept. It is a common practice in all types of auctions.
A hidden reserve serves to force the potential buyer to keep bidding untill he meets the reserve. This MAY be more than he was willing to spend but it is an incentive to find the minimum price.
If a seller discloses the reserve the incentive to keep bidding deminishes. Aution fever is over because the minimum price is known and a more rational decision process grips the buyer.
A reserve then is an incentive tool used by a seller to keep buyers searching and they search by bidding.
Of course..once the reserve is met the seller is assured the auction will bring his minimum but the potential of a higher price is possible because two or more bidders desire the same item and it becomes a true auction. Auction fever reoccours as supply and demand fight it out.
If a seller will not disclose his reserve you can go the unethical route..WAY overbid, discover the reserve and retract your bid as a misplaced decimal. Hey.. I don't do it...I just heard about it.

Jerry Burney

Some auctions have a "buy it now" price and a reserve. For some reason, the BIN option disappears when the reserve is met. On some auctions, bidding battles have erupted and the the prices have exceeded the previously available BIN. I get a real chuckle out of those.

Here is something to wrap your mind around, assuming an auction is fair(which anyone that has used e&@y or gone to a farm sale knows few are) and all interested parties are present, then the winner of the auction actually overpays for the item. How so? Something is only worth what you can get for it. Therefore the most the winner could get for what he just bought is to sell it to the second highest bid, having overpaid the difference.

That said we live in an imperfect world with imperfect markets, and I have bought things at a farm sale and sold them for 100 percent profit before I had even paid for them myself.

An old auctioneer once told me essentially the same thing; An object's market value at any auction is what the second highest bidder was willing to pay. I.E., at least TWO people thought the object was worth X, so this is the item's accepted value for that given place and time, (and high profile auctions often set the object's generally accepted market value after the fact).

Herr Merick..then the winner of the auction actually overpays for the item. How so? Something is only worth what you can get for it. Therefore the most the winner could get for what he just bought is to sell it to the second highest bid, having overpaid the difference.

This statement seems to make sense but under scrutiny it falls apart. The auction has a VERY small percentage of people that could have an interest. If the market pool is broadened the buyer could achieve a much higher price and it happenes all the time. That's why antique dealers flock to farm auctions. They plan to offer their items to a specialized select clientell that were not at the auction.
I have a Friend who constantly and consistantly buys stuff on Ebay, turns around, offers it again on Ebay and makes a profit. There is a skill in HOW you offer things for sale and WHO you offer them to. This all takes knowledge.

Jerry Burney

Huh.... lots of opinions.

If I am the seller, I won't hide the reserve. I would say "the reserve is $$$" in the ad. If you want it, this is the minimum that you have to pay. If you feel it's too expansive, keep your money. Of course, the part ouside the quotation marks is implied and don't have to be mentioned explicitly in the ad. Keep life simpler.

I do not like hidden reserves to the point that I will not bother to bid on any auction with a hidden reserve. If you are too cheap to pay the listing fee to start the auction at the minimum price you will take for it, why should I participate in an exercise in futility. I buy a lot of things on eBay and I always use Auctionsniper to bid for me 7 seconds before the auction closes. I know a lot of people do not like this , but eBay is full of people trying to buy a hundred dollar item for a couple of bucks. this allows me to buy the item without someone bidding an extra $0.50 twenty times to find what I bid. I am never sorry I did not bid more on any auction. I bid the maximum I am willing to pay and if someone else is willing to pay more, it is theirs. As for the winner paying too much... A BYF toggle with a #32 on it would be worth more to me than most other people and therefore I would not have paid too much.

Lynn

Lynn

Lynn says...I do not like hidden reserves to the point that I will not bother to bid on any auction with a hidden reserve. If you are too cheap to pay the listing fee to start the auction at the minimum price you will take for it, why should I participate in an exercise in futility.

Having sold many thousands on Ebay I have found Lynn's statement to be short sighted from a sellers point of view.
If you start out a Luger holster for $300 because that's what you must have... it will often not get any bids. People like to start low and build up. I know cause I tried. They feel too committed early in the auction to plunk down the big money but they will build up to it searching for the reserve.
I don't know why but after trying everything known to man over the last 12 years I know it's human nature.

Jerry Burney

What does it matter if no one bids on your $300 opener versus 20 people bidding it up to $150 and it not making reserve? I don't see the difference other than maybe losing repeat bidders when the item is relisted over and over.

I also don't bid on reserve items. If it's something I really want possibly, but I bid my max (which is usually below the reserve) and move on. Not that I would get caught up in a bidding frenzy by a reserve item that starts at $0.25, but I don't like that assumption, which is basically what the reserve supporters are suggesting/hoping for. I also don't use reserves as a seller. If I can't afford to start an item at a price that will get bids, then I don't take the risk of auctioning it; I use the classifieds.

Not to split hairs with you but my statement stands scrutiny, but only under sterile academic theoretical circumstances where every interested party (the whole market) can attend a fair auction. Also there may have needed to be an assumption about symmetrical information, I forget. Obviously as soon as we leave the classroom and enter the real world my statement immediately falls into very very small pieces. Henceforth let us be friends.

Knowledge is a great thing to have, and is why I joined the forum. God knows I can't get by on my looks alone.

Back on topic; Ed's post #4 is correct on how reserves should be used. Unfortunately they are sometimes misused and my sincere advice is if you don't like what a seller is doing before you enter into a contract with him, you probably won't like what he does after either.

Herr Apis, Your refusal to come to terms with auctions and how they work is your business. I speak from experience. I sold $3000 in bayonets last month.. I guess we will have to agree to disagree.
What does it matter if? If a cricket had a machine gun the birds wouldn't eat him. I say what really matters is to get as many people interested as you can and you do that by starting low..using a reserve to protect your investment. Anything other than that is ignorant. You MUST have a keen sense of what your item is worth...
Of course my expertise is in selling, yours in buying.
I use the classifieds. I quit using the classifieds 10 years ago as they reach such a small market they are virtually useless except for yard sale junk. Besides they can be horribly expensive. It's vitally important to not only reach as large a market as possible but to pinpoint your buyer. Ebay and some other venues have proven to work a million times better than classifieds and are much cheaper. I would be the village idiot to offer a collector Luger holster in my local classifieds...

Herr Merick..Henceforth let us be friends. How could we be otherwise?
if you don't like what a seller is doing before you enter into a contract with him, you probably won't like what he does after either. Wise words...



Jerry Burney

Have we met?

There are certainly many opinions on this and all of them to a certain extent are valid. I really don't have a problem with a reserve if it is reasonable. It just drives me nuts to see the same stuff listed over and over because the reserve is too high. One seller even lists his stuff in 24-hour auctions and all that does is clutter up the new listings.
As Ed said, auctions can indeed be fickle and depend upon who is looking that week. For example, I bought a matching S/42 off Auction Arms recently for $651. This week, a Code 42 Luger with one mismatched part sold for a grand on Gunbroker when someone hit the BIN.

I think it humerous how buyers and sellers look at things so differently, and of course all the sellers on this thread are also buyers...


I also find it humerous how folks say, well I just won't bid on a "reserve auction"... WHY? I have won many auctions that had an increadibly small reserve; you just never know.

I also figure that if I bid my maximum, and that if I win fine. And something I also find funny, to sound snooty about reserves and in the same paragraph talk about "sniping" programs. God, I hate them as a buyer, it seems sneaky to me. Other folks would say; well, then bid what you want and you'll get the item.

All perspective isn't it?


Ed

383..It just drives me nuts to see the same stuff listed over and over because the reserve is too high. This too ticks me off on Gunbroker in particular. If they had a charge for listing it wouldn't happen so much.

Ed, in some respect you are correct..it is perspective. I know I have sold enough on Ebay that I have been able to see my mistakes and learn from them.

Jerry Burney

Please move steps to the "New Collector" column. I have an 1917 Artillery auction link there saying "PLEASE DO NOT ASK WHAT THE RESERVE IS" in its description.

Would you please take a quick look and tell a number according to its condition? :bowdown:

http://forum.lugerforum.com/showthread.php?t=21203