Auction Houses with Hidden Reserves

[Rhotchkiss]

There are many new members lately, and I assume several of them are learning about auction houses and starting to participate in auctions. For the benefit of these folks (and others), this thread highlights and discusses the existence of hidden/secret reserves:

It is common for auction houses to allow consignors to put a reserve on a lot. Most auction houses will state, up front, on the listing, that there is a reserve and whether or not the reserve has been met. Often times, when a reserve has not been met and the auction is nearing its close, the auction house will disclose the reserve amount by making that the necessary next bid (see Heritage). It is all very obvious and transparent. However, this is not how all auction houses deal with reserves.

Sometimes, auction houses will not disclose that there is a reserve, and, even worse, they will bid the item up to that non-disclosed reserve amount in an effort to get someone to bid that minimum. I think this sucks ass because it makes it appear as though other people are bidding on the item, when they are not. RR Auctions does this (from their terms and conditions):

11.3 Reserves

Lots may be subject to a reserve which is the confidential minimum price below which the lot will not be sold. Consignors may not bid on their own lots or property. RR Auction may, from time to time, bid on items that it does not own. RR Auction may execute bids consecutively or otherwise up to one bid increment below the reserve.

These auction houses rely on rules contained in their terms and conditions (like above) to justify their ability to bid on individual lots to push a card, artificially, to the minimum price its consignors want. The auction house has no interest in buying the item and has no intent to buy the item. This is literally the definition of shill bidding: "the illegal practice of a seller or a seller’s acquaintances placing bids on his or her goods in order to drive up the price". Yet, somehow, this practice is not legally shill bidding (enter Scott Russell with explanation).

Regardless, I think its a real shitty practice. First, because its literally a form of shill bidding. Second, because it makes a buyer feel like they have bested real suitors when they have not; instead, it was them against an auction house pushing a lot to a hidden reserve price. Third, it creates fake and semi-fake comps; they are fake when the "highest bid" is the AH and the lot does not sell but that fact is not designated in the listing and semi-fake when one person wins a lot for 2+ increments higher than a real buyer was willing to pay.

Feel free to use this thread to out auction houses with hidden/secret reserves and/or to tell your story about hidden reserves.