Opening price vs (known) reserve Poll

[Leon]

A friend and I were having a discussion about auction items. I would like some input from others on the subject. The discussion was centered around people bidding in auctions, and when they will and won't bid. For full disclosure I will say I am no fan of unknown reserves. I don't personally like shooting at a target that is unknown. On the other hand, if an auction item has a reserve, and the reserve is made known in the listing, then I will bid. He says more people won't bid with even a known reserve than just starting the auction out at a sellable price. Personally, I am more prone to look at auctions with action (bids) on them than higher openings with no action. Your thoughts and votes?

(we all realize sellers need to protect themselves in today's market more than ever before)

[Leon]

I should have added one more option that said:

5) I will not bid in any auction with a reserve, regardless.

[Matt]

Maybe to put a concrete face on the theoretical - in the last REA auction, the California OJ started at $100k and ended after 2 bids at $110k. If it had started at $10k with a disclosed reserve of $100k, no doubt more bids would have come in, but where do you think it would have ended compared to where it did.

[FUBAR]

i definitely think you will get more action with a low opening bid, HOPE for a good price will cause added interest. REALITY soon replaces HOPE but then the interest is there.

[WillBBC]

The only time I will bed on an auction with a reserve is if it has already been met.

I don't like having the highest bid on something only to have it not sell regardless.

[Leon]

Originally Posted by WillBBC

The only time I will bed on an auction with a reserve is if it has already been met.

I don't like having the highest bid on something only to have it not sell regardless.

Not sure of other venues, but Grandslambids will take a high bid to a reserve and let the item sell, even if it wouldn't have been met with the next highest bidder.

In other words if a reserve is $100 and there is only one other bidder at $15 and your snipe is $110, then you will win the item at $100 when your snipe is placed, which was the reserve. regards
(I need to verify this with Matt but I think it's the way the system works)

ps..I am told ebay and GSB works this way....

[Section103]

So long as the high opening bid is fair; I actually enjoy tracking it through an auction and placing a last minute bid to claim it at it's minimum price. Sometimes the writing is on the wall that entering into a bidding war is a lost cause (for me).

[Matthew H]

I really don't mind reserves with full disclosure, although I don't know why people bid if they aren't planing to meet the reserve.

You are right about action, Leon.

It really boils down to whether or not a seller is willing to take market value for his card and that's fine with me. Just tell me what the reserve is, so I know if I should bid.

[Leon]

Originally Posted by Matthew H

I really don't mind reserves with full disclosure, although I don't know why people bid if they aren't planing to meet the reserve.

You are right about action, Leon.

It really boils down to whether or not a seller is willing to take market value for his card and that's fine with me. Just tell me what the reserve is, so I know if I should bid.

I will generally not bid on cards with hidden reserves. To me it's a waste of time and I have better things to do... It seems that most times those hidden reserves are like the 4x of market BIN's.

[Cat]

I will bid in auctions with reserves but I won't place snipes (unless the reserve is already met). I will simply bump to the next bid level if it has a reserve. In the end, I do not win very many reserve auctions.

If it is an auction house and the item has a reserve and the auction house states that they will place floor bids up to the reserve, I will not bid at all.

[HRBAKER]

If it is an auction house and the item has a reserve and the auction house states that they will place floor bids up to the reserve, I will not bid at all.

Amen

[barrysloate]

When the economy was strong and prices for baseball cards were bullish, a reserve wasn't really necessary. It's a much different landscape today and like it or not, we are going to see more lots with reserves. That may soon be the only way auction houses will be able to consistently get consignments. It's a sign of the times.

[Zach Wheat]

Originally Posted by Matthew H

I really don't mind reserves with full disclosure, although I don't know why people bid if they aren't planing to meet the reserve.

You are right about action, Leon.

It really boils down to whether or not a seller is willing to take market value for his card and that's fine with me. Just tell me what the reserve is, so I know if I should bid.

Matt,

I've had sellers come back to me with an offer to sell at my bid price which was below the reserve. That would be one reason...

Zach Wheat

[GoldenAge50s]

My thoughts:

An auction w/ a KNOWN Reserve--You might just as well make the Reserve your starting bid & have a NO Reserve auction---I don't see a difference. Knowing the Reserve, to me, does not get bidders if they think it's too high a price, no matter if you start it @ .01¢

My thinking on UNKNOWN Reserve w/a low start is to get the bidding going. I think one also has to have a reasonable reserve and I state that in my listing.

I sold all 3 T206's listed last week--all w/ a Reserve.

This week I had 4 T206's listed same way & NONE of the 4 sold--A few bids came in but they were very low. My Reserves were reasonable for the quality of the cards as they were a week ago.

Go figure!

[HRBAKER]

Originally Posted by barrysloate

When the economy was strong and prices for baseball cards were bullish, a reserve wasn't really necessary. It's a much different landscape today and like it or not, we are going to see more lots with reserves. That may soon be the only way auction houses will be able to consistently get consignments. It's a sign of the times.

Barry,

I agree with you but what you end up with is little more than a fixed price sale masquerading as an auction.

[GoldenAge50s]

Originally Posted by HRBAKER

Barry,

I agree with you but what you end up with is little more than a fixed price sale masquerading as an auction.

Jeff---

That's true, but if you have a Reserve that's in line w/ current values you are just protecting yourself from someone literally stealing a card from you by lowball bidding--and I'm not including those ridiculous 4x-6x BV Sellers.

I'm willing to sell my cards at fair market/decent values, but just because the economy is off I'm not going to GIVE quality cards away!

[HRBAKER]

Originally Posted by GoldenAge50s

Jeff---

That's true, but if you have a Reserve that's in line w/ current values you are just protecting yourself from someone literally stealing a card from you by lowball bidding--and I'm not including those ridiculous 4x-6x BV Sellers.

Or you are protecting yourself from "current values."

In some instances really.

[GoldenAge50s]

Well, Reserve or no Reserve, low min or start @ what you expect, I think a Seller builds his reputation on many things, among them is not asking Strasburg prices if you only have a t206 Wagner to offer!

Buyers get to know how you operate if they give you a chance, and I value quality along w/ reasonable pricing as my way of doing business.

[White Borders]

Originally Posted by WillBBC

The only time I will bed on an auction with a reserve is if it has already been met.

I don't like having the highest bid on something only to have it not sell regardless.

This is how I feel about it, too. Unless...

Originally Posted by Leon

Not sure of other venues, but Grandslambids will take a high bid to a reserve and let the item sell, even if it wouldn't have been met with the next highest bidder.

In other words if a reserve is $100 and there is only one other bidder at $15 and your snipe is $110, then you will win the item at $100 when your snipe is placed, which was the reserve. regards
(I need to verify this with Matt but I think it's the way the system works)

ps..I am told ebay and GSB works this way....

...is true, then I would bid at or above the reserve.
.
.
.

Originally Posted by Rob D.

(As an aside, I'm very excited about executing my first double quote.)

And Rob D. isn't the only one that can put more than one quote in a post (see TBob's Has anyone received their winnings from the SCP auction yet? thread)

[barrysloate]

Jeff- you made a very good point and it is something I have been thinking about. There was a time in the hobby when retail sales and auctions were both pretty prevalent. Back then the auctions were informal and not necessarily the main method of selling memorabilia.

When the economy and card market got hot the auction became the way to go. One could achieve incredible prices simply by letting collectors fight it out.

In this bad economy the bidding war is not what it used to be. So I predict over the next few years we will see the resurgence of the fixed price sale. Auctions are just too risky in this climate.

[Matthew H]

Originally Posted by HRBAKER

Or you are protecting yourself from "current values."

In some instances really.

There is nothing wrong with this. Auto auctions run like this all the time. It's well known that some sellers sometimes just want to see what the current market is for their car, and if it meets their reserve, then they will sell. This doesn't seem to bother anyone. My uncle bids on cars all the time, I've never heard him complain about reserves.

Alot of cards do sell for their "current value" today, some people are taking losses. I also think that some collectors are still licking their wounds from previous years and are reluctant to bid. I think this trend is temporary. I'll find as many good deals as I can, while I can, and so will everybody else.

When it comes time for people to sell all of these great deals they found during these tough times, they won't be putting reserves on their cards. They won't have to.

[HRBAKER]

Originally Posted by GoldenAge50s

Well, Reserve or no Reserve, low min or start @ what you expect, I think a Seller builds his reputation on many things, among them is not asking Strasburg prices if you only have a t206 Wagner to offer!

Buyers get to know how you operate if they give you a chance, and I value quality along w/ reasonable pricing as my way of doing business.

Agreed. My comments were of a general nature. Now is a "risky" time to absolute auction a lot of things and not so others. My point was that some sellers (as is their right) don't want to acknowledge that "current value" may not be what they think it is.

[GoldenAge50s]

We are on the same page! Thanks for your comments!

[steve B]

I'm more likely to bid on a no reserve auction. I know if I'm the high bidder I'll win it.

But I also bid on auctions where there's a reserve, either stated or hidden.
If it's stated, I just have to decide if I want to pay that much. Pretty easy, protects the seller, and gives me an idea wether I'm going to be close to affording it. If the reserve isn't stated, and I'm really interested, I'll ask what it is. Sometimes The seller will say what the reserve is if asked. I've sold maybe 5-6 things with a reserve over 10+ years. I don't always state the reserve, but will if asked. All but two of my reserves were laughably low, one ended up being 1/6 of the final selling price. The two I was too high on I ended up discussing the price with people that eventually bought the items.
One convinced me I was too high by about half, the other I had a lot of profit, the price was ok and the collection it went into was a great match.
(The buyer taught a college program on the books topic)

What I don't get is the sellers that refuse to state the reserve even when asked. Usually they say it's to "be fair to the other bidders" which makes no sense to me. And usually I won't bother bidding. If they say it's just their policy to not reveal reserves, I may bid, but usually bid less than I might if I knew the reserve.

Of course on Ebay there's sneaky ways of finding out. I've never done it, but it's possible to have a friend place a very large bid which goes immediately to the reserve, then retract it. Pretty slimy, and I've never wanted anything badly enough to resort to that.

Steve B

[3-2-count]

I voted, # 1 and #2 are about the same for me. I have no problem bidding on an item if I know what the reserve is .
If it's placed higher than what I think the cards worth I just don't bid. Pretty simple........

[botn]

As Barry stated due to the economic environment you cannot expect all consignors or sellers to willingly list items in the auction format without reserves. I think we are going to see a lot more measures taken to offer some protection to those whose material is being offered up. It takes at least two interested parties to make an auction successful to bring the item to current full market value and right now you cannot count on having two interested parties willing to do that. If one person thinks something is worth $1,000 and has the means and others who are interested have more limited means and can only take the item up to $600, what is the item worth? If you are the buyer you say the next increment over $600 but if you are the seller and you have an interested buyer are you not entitled to get the $1,000?

That said I have no trouble participating in an auction with high opening bid or one which employs reserves (disclosed or not). I think it is kind of foolish to be turned off from bidding in an auction with an unknown reserve. The very act of bidding in an auction where you do not know who your competition is carries with it the same concept of a hidden reserve. You do not know who you are bidding against and what level it is they are willing to go to. We have seen countless times where an item sells for far more than we "think" it is worth. The result can be the same as what we perceive as a high hidden reserve. The value of an item is not necessarily the same to all interested parties. In the example above I would have no problem being the bidder who paid the $1,000 for the item since getting the item is what is important to me.

High opening or reserve auctions are not as appealing since many bidders interpret those mechanisms as a seller setting a fixed price and assume the seller is going to be unreasonable. The reason the auction format is so appealing to bidders is that they feel they are in control of what they pay for an item since they are bidding and setting the price. But it is not an isolated event as bidders are bidding against other interested parties whose means and interest they cannot gauge. Sure it is a free market but the result may not be any different than a seller saying I want $X for my card. Many times a bidder is willing to pay even more than a seller would be asking.

An item is only worth what someone is willing to pay for it at that given moment under very specific conditions. When you have more than one person participating in the pricing then you find a more accurate market value on that item. But what about when you don't? Auctions are not supposed to unfairly enrich a either a buyer or a seller but in a buyer driven market selling without reasonable reserves or reasonable higher opening bids may result in buyers being enriched to the detriment of the seller more times than not. The market is clearly unbalanced right now and the reserves or high opening bids create equilibrium as long as those who are setting them are reasonable.

[Leon]

Good points, Greg. You really got going on that post!! Nice one. Without quoting the whole thing here is a part I will comment on.

"The reason the auction format is so appealing to bidders is that they feel they are in control of what they pay for an item since they are bidding and setting the price. But it is not an isolated event as bidders are bidding against other interested parties whose means and interest they cannot gauge."

For me, the appeal of an auction is that I KNOW the item will be sold. As for a known reserve at least I know what I am shooting at. For an unknown reserve auction, experience tells me that many times those prices are set at unreasonable levels, at least to me, and I won't participate. I know there are some others that feel the way I do and some that don't. It's what makes the world go around. Intersesting debate so far. Also, sometime in the future I will probably do a poll and see what SELLERS prefer, since this one was primarily aimed at buyers.

Thanks to everyone who has put in their 2 cents so far. Interesting topic. regards

[HRBAKER]

Agreed, Greg's post make some excellent points. But to me what he is describing is a sale purporting to be an auction. Maybe it's semantics but if it is an auction with no reserve then again as was pointed out - you know it is going to sell and I am engaged. Otherwise not so much. However I do understand all of the rationale for a seller protecting his flank.

[botn]

Jeff,

I guess you could call what I have described as a Sauction. Is the domain Sauction.com available???? It is a hybrid of an sale and an auction and only works if the seller establishes a fair and reasonable floor which would invite more than just a single bid. With as much shill bidding as has been alleged recently one could argue that there already an abundance of auctions employing "reserves" and "high openings".

Greg

[HexsHeroes]

.

For those auctions inwhich the reserve is unknown, I send the seller a polite inquiry. If the seller refuses to divulge the amount, I bail on the auction. My time is valuable (at least to me) and I am not a fan of guessing games.

If the seller does reveal the reserve, I feel I may have a slight advantage on most bidders in the auction. Some may pass, since there is a reserve. Others may assume the seller will not reveal the reserve amount. In those instances, I know something they do not. And I know others will have asked (and been answered) too.

I like auctions with high but fair minimums, when it's an item I covet very much. For those auction items, I would prefer fewer bidders (especially the resellers) participate in the chase. But I realize there are other, serious collectors who may value the same item as much as I (but with deeper pockets.

For those auction items inwhich a bargain is desired, lots with higher minimums and reserves are passed on.

For the seller, I understand the value of a reserve or minimum, inwhich to establish a minimum sale price in an auction format. It may limit/discouraged heated bidding and a higher sale price, but it eliminates giving an item away.

[dstraate]

I've got nothing that hasn't been said already, but I won't typically bid on unknown reserve items. It feels like a waste of time somehow.

[AndrewJerome]

This is an interesting issue.

No bidder likes a hidden reserve. However, material usually trumps all. I will bid regardless of the format if I really want the item. To me it is silly to boycott a great item because of the bidding format.

I voted #1 and #2 about the same. It really will depend on the particular item and the level of the reserve/starting price.

I am ok with a market (or even above market) known reserve because this still allows bidding and possibly negotiation when the auction closes.

A close to market starting point generally is good for a bidder who really wants the item. An initial bid may be the only bid. However, an above market starting price (in the opinion of a bidder) is frustrating. As a bidder, who wants to look at an auction full of lots with high starting prices and no bids? The sticky point here is how to know the market value of rare items. It can be very difficult. And around and around we go. . .

Andrew

[Rob D.]

Bidding on auctions with a hidden reserve can be too time consuming? How long does it take to place a few extra bids to see whether you hit the reserve? A minute? Two minutes?

Quite often a popular response when the topic is shill bidding is, "I bid the highest amount I want to pay, and that's it. That way I know I won't be shilled."

Even though that's severely flawed thinking, it's a standard for many people. So be it. But why not apply that school of thought to auctions with hidden reserves? Place a bid that's the most you want to pay, and if hits the reserve, great. If not, move on.

[Exhibitman]

If the opening bid is the reserve there is no need for a reserve, it is just a higher opening bid.

As for whether or not an item is sold via an auction, if it isn't sold to me it doesn't matter to me.