What's the logic behind hiding the reserve?

alvin · 01-23-2009, 07:17 AM

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

A.Mifsin · 01-23-2009, 07:45 AM

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

Alf

alvin · 01-23-2009, 07:59 AM

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

Edward Tinker · 01-23-2009, 10:43 AM

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

alvin · 01-23-2009, 06:57 PM

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.

383 magnum · 01-25-2009, 12:54 PM

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?

Edward Tinker · 01-25-2009, 01:16 PM

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

383 magnum · 01-25-2009, 01:48 PM

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

revolverforums · 01-31-2009, 07:10 PM

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........

Edward Tinker · 01-31-2009, 07:18 PM

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

383 magnum · 01-31-2009, 07:29 PM

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.

alvin · 02-01-2009, 08:09 AM

Quote:

Originally Posted by 383 magnum

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

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?"

another one, yet another one....

revolverforums · 02-01-2009, 09:22 AM

Quote:

Originally Posted by Edward Tinker

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

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......

jonnyc · 02-16-2009, 10:00 PM

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???

lugerholsterrepair · 02-16-2009, 11:03 PM

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

383 magnum · 02-16-2009, 11:16 PM

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.

Merick · 02-25-2009, 04:17 PM

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.

alanint · 02-25-2009, 04:36 PM

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).

lugerholsterrepair · 02-25-2009, 04:37 PM

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

alvin · 02-25-2009, 04:39 PM

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.

01-23-2009, 07:17 AM	#1
alvin User Join Date: Jul 2007 Location: US Posts: 3,843 Thanks: 132 Thanked 729 Times in 438 Posts	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?

01-23-2009, 07:45 AM	#2
A.Mifsin User Join Date: Dec 2002 Location: Malta Posts: 570 Thanks: 74 Thanked 12 Times in 12 Posts	to check what others are willing to pay for the item, I think. Alf __________________ I prefer a Luger

02-16-2009, 11:03 PM	#15
lugerholsterrepair Moderator Lifetime Forum Patron Join Date: Jun 2002 Location: Arizona/Colorado Posts: 7,775 Thanks: 4,995 Thanked 3,133 Times in 1,439 Posts	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 __________________ Jerry Burney 11491 S. Guadalupe Drive Yuma AZ 85367-6182 lugerholsterrepair@earthlink.net 928 342-7583 (CO & AZ) Year Round 719 207-3331 (cell) "For those who Fight For It, Life has a flavor the protected will never know."

02-25-2009, 04:37 PM	#19
lugerholsterrepair Moderator Lifetime Forum Patron Join Date: Jun 2002 Location: Arizona/Colorado Posts: 7,775 Thanks: 4,995 Thanked 3,133 Times in 1,439 Posts	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 __________________ Jerry Burney 11491 S. Guadalupe Drive Yuma AZ 85367-6182 lugerholsterrepair@earthlink.net 928 342-7583 (CO & AZ) Year Round 719 207-3331 (cell) "For those who Fight For It, Life has a flavor the protected will never know."

01-23-2009, 07:59 AM	#3
alvin User Join Date: Jul 2007 Location: US Posts: 3,843 Thanks: 132 Thanked 729 Times in 438 Posts	For hot items, that makes sense. For 'cold' items.... I got it, it's just for fun

01-23-2009, 10:43 AM	#4
Edward Tinker Super Moderator Eternal Lifer LugerForum Patron Join Date: Jun 2002 Location: North of Spokane, WA Posts: 15,966 Thanks: 2,066 Thanked 4,595 Times in 2,116 Posts	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

01-23-2009, 06:57 PM	#5
alvin User Join Date: Jul 2007 Location: US Posts: 3,843 Thanks: 132 Thanked 729 Times in 438 Posts	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.

01-25-2009, 12:54 PM	#6
383 magnum User Join Date: Sep 2002 Posts: 120 Thanks: 1 Thanked 1 Time in 1 Post	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?

01-25-2009, 01:16 PM	#7
Edward Tinker Super Moderator Eternal Lifer LugerForum Patron Join Date: Jun 2002 Location: North of Spokane, WA Posts: 15,966 Thanks: 2,066 Thanked 4,595 Times in 2,116 Posts	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

01-25-2009, 01:48 PM	#8
383 magnum User Join Date: Sep 2002 Posts: 120 Thanks: 1 Thanked 1 Time in 1 Post	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

01-31-2009, 07:10 PM	#9
revolverforums Banned Join Date: Jan 2009 Posts: 23 Thanks: 0 Thanked 0 Times in 0 Posts	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........

01-31-2009, 07:18 PM	#10
Edward Tinker Super Moderator Eternal Lifer LugerForum Patron Join Date: Jun 2002 Location: North of Spokane, WA Posts: 15,966 Thanks: 2,066 Thanked 4,595 Times in 2,116 Posts	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

01-31-2009, 07:29 PM	#11
383 magnum User Join Date: Sep 2002 Posts: 120 Thanks: 1 Thanked 1 Time in 1 Post	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.

02-16-2009, 10:00 PM	#14
jonnyc User Join Date: Dec 2008 Posts: 425 Thanks: 2 Thanked 46 Times in 34 Posts	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???

02-16-2009, 11:16 PM	#16
383 magnum User Join Date: Sep 2002 Posts: 120 Thanks: 1 Thanked 1 Time in 1 Post	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.

02-25-2009, 04:17 PM	#17
Merick User Join Date: Feb 2009 Posts: 32 Thanks: 1 Thanked 6 Times in 4 Posts	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.

02-25-2009, 04:36 PM	#18
alanint User Join Date: Mar 2008 Location: Marco Island, Florida Posts: 4,867 Thanks: 1,685 Thanked 1,917 Times in 1,193 Posts	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).

02-25-2009, 04:39 PM	#20
alvin User Join Date: Jul 2007 Location: US Posts: 3,843 Thanks: 132 Thanked 729 Times in 438 Posts	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.