Auction Reserves - let’s discuss

[Aquarian Sports Cards]

Originally Posted by BobbyStrawberry

Thanks for the response, Scott. I didn't realize that this was such a common strategy. Perhaps I'm unusual in that I don't usually place any bid that I wouldn't be comfortable with as the winning bid.

I was left scrambling one time for a Hunt auction in the early 2000's. Got a ton of stuff WAY lower than I ever thought it would go. Ultimately it was good news, but was tense trying to get the money together lol.

[SyrNy1960]

Don't care for reserves, but will bid. I like high opening bid, no reserve. This way, I know what I'm willing to spend and the seller is letting me know what they are willing to settle with.

My Arod 1st Grand Slam Bat ended last night. I had an opening bid of $7,500 with no reserve. It ended at $8,250 hammer price, with BP $9,900.

I paid $3,500 for the bat in 2009. Knew I would be happy with at least $7,500+, so it's a win-win for everyone. Of course I wish it went a bit higher, but at the end of the day, I'm good.

[Fred]

I'm going to assume a consignor can tell the AH that they would like to ensure they receive a minimum amount for their consignments. In my mind, there's two ways to do that:

1) A reserve price (which to me isn't really an auction

2) A high opening bid

Do AHs disclose a reserve? I can remember bidding in an auction and I was high bidder at the end but I wasn't awarded the item. My assumption was there was an undisclosed reserve. Are AHs supposed to disclose if the lot has a reserve?

I'm going to guess that a consignor could set a minimum bid price for an item, but the auction house would have to agree to it. Also, does anyone know how AHs feel about a consignor setting an opening bid price?

[Schlesinj]

I have seen Heritage add one later in an auction. That may be random requests.

*edit: The Punch was LOTG and as Al described they bumped one spot below the reserve within one week.

[raulus]

Originally Posted by Schlesinj

REA has a reserve on the Punch Lloyd and it was known upfront.

I have seen Heritage add one later in an auction. That may be random requests.

All of the Heritage items have a standard disclosure that the reserve (if any) will post 2 days prior to auction completion. And then the reserve will actually show up then if the reserve has not yet been met. The Heritage reserve is also different because they tell you precisely how much it is, and just allow the next bidder to unilaterally bid at that price.

I think they’re trying to not scare bidders away early, yet still be able to add the reserve at their chosen time if the item actually has one, and even then only if the reserve hasn’t been exceeded yet.

[Snowman]

This idea that reserves actually cause items to under sell at auction doesn't pass the smell test to me. It sounds more like a sales pitch from a commissioned employee at an auction houses who just wants to get paid and who couldn't give two sh**s what your item sells for. At least with respect to high-end cards. Sure, nobody wants to see a reserve on a card that is easy to find and easy to comp, like a T206 Red Ty Cobb PSA 2. That might deter otherwise serious bidders because they can just grab another one, but for rare cards with much smaller buyer pools, reserves actually make a lot of sense, and I would argue that the only buyers they deter are buyers that were never serious to begin with. They only deter losing bidders, not competitive ones. Assuming the reserve is set at a reasonable price point, of course (say 75-80% of comps or something like that).

As someone who collects extremely rare copies of cards (like perfectly centered copies of key HOFers), I can certainly empathize with sellers who wish to place reserves with certain cards. As an example, I have two dead centered 1952 Topps Jackie Robinsons (there are only 9 perfectly centered copies to ever surface of this card in any grade of 3 or higher out of over 1,000 listings on VCP). A lot of buyers will look at these cards and think, "meh, there are thousands of 52 Topps Jackie Robinsons out there". They might see it and bid a little higher than they otherwise would because they know eye appeal matters, but they're not going to bid something like double or triple comps just because it's centered. They just add on a small premium to it. This type of buyer makes up the majority of the pool of bidders in an auction. However, there is another cohort of bidders, like me, who only seek out these types of cards and who know precisely how difficult each one is to obtain. To those bidders, these are rare gems. And we will pay double, triple, and sometimes even quadruple "comps" or more depending on the card. We also make up a much smaller percentage of the buying pool.

Selling cards like these can be a huge gamble if you just auction it off with no reserve. If you don't get multiple centering obsessed bidders on it at the same time, then it's going to sell for well below what someone is willing to pay for it. This is precisely what happened when I won my 52T Jackie PSA 4 last year at auction. My max bid was $35k. I won it for $20k and couldn't believe it. OC copies were doing about $17k at the time. This card should have had a reserve of at least $25k on it because of how rare the centering was. If it had a reserve, the seller would have made more money and it wouldn't have deterred me, or any other centering obsessed bidder, one bit.