Home > Selling at Auction > How to Set a Reserve Price in an Auction

How to Set a Reserve Price in an Auction

By: Chris Nickson - Updated: 25 Apr 2012 | comments*Discuss
 
Auction Reserve Value Bid Highest Bidder

In auction terms, a reserve is the price a seller sets on an item. If bidding doesn’t reach the point, the seller isn’t obliged to sell the item. It’s a way of ensuring items of value aren’t sold too cheaply and if you’re a seller, it’s a powerful weapon in your arsenal. The winning bidder not only has to meet the reserve price, he also has to have the highest bid.

When to Use the Reserve

If you’re selling an item at auction, you’ll use the reserve if you’re submitting an item that has value that you want to realise, but you’re not sure how people will bid on it. It could be a painting by an artist not known to many, a piece of jewellery, an antique, anything which might end up selling for a large amount (a reserve is also an excellent way to combat organised low bidding). You can use a reserve in both in-person and online auctions.

You will pay the auction house for using the reserve, but it’s a lot better than having something of worth falling under the hammer for far less than you’d anticipated (which has happened before and certainly will again).

If your item is entered in an auction where bidders will know its worth, you might not need the reserve, although it might still be worthwhile to invoke it. You often find it at art auctions at Sotheby’s and Christie’s for instance, involving work by famous artists which are liable to go for high sums.

Obviously, you wouldn’t use a reserve for commonplace items – there has to be some value to the thing.

Tips for Using the Reserve

Do your research before offering the item at auction. Learn how much similar things have sold for before. Set your reserve accordingly. It shouldn’t be too high or you may end up taking the item home and out of pocket for the listing and reserve fees. Conversely, don’t set it too low or you might not reach the amount you’d hoped. If anything, you’re better erring on the slightly low side and hoping bidding pushes the price higher.

Be sparing. Unless you’re dealing exclusively in high-ticket items, you won’t often need to bring in the reserve.

The more you know about your item, the more effective your reserve will be. If you can supply provenance for a picture or antique, as well as a detailed description, the more likely people will be to bid.

You do have the option to sell to the highest bidder if the reserve isn’t met. In some circumstances (say, if the bid is very close to the reserve) you might want to do so; otherwise, though, it becomes pointless to even have a reserve.

If the Reserve Doesn’t Work

There are frequent instances where goods don’t reach their reserve price. If it happens to you, examine the reasons. Did you set the reserve too high? How far did the bidding go? Or was the auction perhaps inappropriate for what you were trying to sell?

Don’t be discouraged. Enter the item in a different auction, perhaps something more specialised or possibly with a slightly lower reserve. If it fails to sell again, you might have to rethink your strategy – it might not be worth what you believe it to be.

You might also like...
Share Your Story, Join the Discussion or Seek Advice..
Why not be the first to leave a comment for discussion, ask for advice or share your story...

If you'd like to ask a question one of our experts (workload permitting) or a helpful reader hopefully can help you... We also love comments and interesting stories

Title:
(never shown)
Firstname:
(never shown)
Surname:
(never shown)
Email:
(never shown)
Nickname:
(shown)
Comment:
Validate:
Enter word:
Topics
Latest Comments
  • grieg1983
    Re: Consumer Law and Auction Goods
    Hello, I sent items to an auction house for resale, some of them being items I purchased from them 10 years plus ago. The…
    30 November 2017
  • ExploreAuctions
    Re: Consumer Law and Auction Goods
    tommalt - Your Question:A local auction house completed a house clearance for me in June (4 1/2 months ago), and the items were…
    10 November 2017
  • tommalt
    Re: Consumer Law and Auction Goods
    A local auction house completed a house clearance for me in June (4 1/2 months ago), and the items were to be sold at their next…
    9 November 2017
  • steve
    Re: Auction House Commissions
    Who pays for any insurance on goods left in the auction house while awaiting sale?
    7 November 2017
  • Rexike
    Re: How to Avoid Buying a Wreck at a Car Auction
    Hi Everyone I bought my very first car from Copart UK. I bought it as "Run & Drive". I was browsing for cars…
    18 October 2017
  • ExploreAuctions
    Re: Consumer Law and Auction Goods
    Añgelica - Your Question:I bought a 6 towel bale set x 50. I was away didn't pay for the goods straight away after 48 hours. I…
    17 October 2017
  • Añgelica
    Re: Consumer Law and Auction Goods
    I bought a 6 towel bale set x 50. I was away didn't pay for the goods straight away after 48 hours. I was charged 5 % of the…
    16 October 2017
  • Dave
    Re: Auction House Commissions
    Whoever wrote this article is way out of touch. I deal with around a dozen auction houses all but a few are around 22%. A couple of…
    8 September 2017
  • Si78
    Re: Consumer Law and Auction Goods
    @Gazzasarah - you should have checked the receipt. The auction house should conduct an investigation to see if they can find…
    31 August 2017
  • Gazzasarah
    Re: Consumer Law and Auction Goods
    My partner and I recently took some goods belonging to a relative that had passed away to our local auction room. Amungst the…
    29 August 2017
Further Reading...
Our Most Popular...
Add to my Yahoo!
Add to Google
Stumble this
Add to Twitter
Add To Facebook
RSS feed
You should seek independent professional advice before acting upon any information on the ExploreAuctions website. Please read our Disclaimer.