How to Set a Reserve Price in an Auction
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.
Re: Auction House Commissions
I agree strongly with the last 2 comments, maybe we need to start a petition?
Re: Auction House Commissions
I view the charges as legalised theft, extortionate plus VAT, simply ridiculous.
Re: How to Set a Reserve Price in an Auction
I recently purchased a number of items from an online auction (auction house up North) and bought numerous items…
Re: Consumer Law and Auction Goods
My neighbouring Methodist chapel was put on the market and bids invited for the purchase by local Estate Agents. My bid was much…
Re: Consumer Law and Auction Goods
I bought a land with planning permission at online auction from a popular auction house and 3 weeks later found out there's…
Re: Consumer Law and Auction Goods
I purchased a 53' dry van trailer at a online auction. The company never disclosed the trailer had a leak and both side ways…
Re: Consumer Law and Auction Goods
I purchased items from global auctioneers. I asked for appraisal. Whilst there appraisal wasn't very useful it didn't give me…
Re: Selling Collectibles
I have completed set of lotr castle unopened and other characters
Re: Consumer Law and Auction Goods
I am currently in dispute with William George Auction regarding a recent purchase, I accidentally discovered after my bid that…
Re: Consumer Law and Auction Goods
I bought goods from a well-known auctioneers and due to lockdown they've been posting things out. I recently bought cosmetics of…