Reserve Price Auctions

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Posted By: t-206collector

Runscott said: "This card is no longer for sell, but I'm really curious - why is this only a $79 card? Any thoughts?"

http://cgi.ebay.com/ws/eBayISAPI.dll?ViewItem&item=4128873925&ssPageName=ADME:B:EOAS:US:3

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My response is that the fact that the final bid was $79.00 doesn't mean that it is only worth $79.00, because it was a reserve price auction. In my opinion, this was the main reason it didn't get bid up higher.

Personally, it has to be a very special card for me to bid on a reserve auction if the current high bid hasn't yet reached that reserve limit. My assumption is always that the seller isn't willing to let the market dictate the value of the card. I don't have much of a problem with that, but the seller should instead set a minimum bid. Let the buyer know what your floor is. Hiding the floor is akin to saying "I don't really want to sell the card for market value, I just want to find out what it might be worth if I did ever want to sell it."

If you take the reserve away, I suspect it would go higher.

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Posted By: Nickinvegas

T206:

As a seller I can tell you it is a tough call. I used to place a reserve on any items valued over $100; And I received a few complaints about my placing reserves on everything, so I stopped. I then tried placing a resonable minimum bid, there is very little action on items with starting bids that are a signifigant percentage of the items value.

I have recently been trying a low minimum bid(no reserve)and my items have not done well.

I have been burnt many times going with no minimum no reserve, but those are the auctions that typically get the most bids.

Nick

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Posted By: runscott

You're right - the high bid could actually have been 1 cent under the reserve. I had forgotten that.

Actually, having a reserve doesn't say what you had in mind at all - it simply says: "I don't want to sell this card for less than my reserve price". The advantage of having a reserve is that you can start bidding low and still protect your investment. If you start the bidding at your minimum required amount the bidding may never even start. But you are right - I wasn't willing to let the market dictate the price - mainly because SGC-graded HOF'ers haven't been selling high enough for me lately. In any case, the item didn't sell at my minimum requirement, and i'm happy to keep it. I also started several gloves off at too-high minimum bids, which were still below market value (I thought they were, anyway), and as I predicted, bidding never even started. Despite this, my sales were good on that day, and I didn't get hammered on my investments for the items that did not sell.

I use reserves and higher-than-9.99 minimum bids in three situations:
1) if ebay community knowledge of a product is questionable (rare items, for instance).
2) if market is running lower than normal.
3) I have a back-up outlet to sell the items - in this case, I'm taking them to a show where I will have no problem getting my price (I just didn't care to wait).

Dealers and sellers with a lot of exposure can afford to do the "one penny, no minimum, no reserve" thing, but unfortunately I cannot - interpret that as you may.

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Posted By: AdamBaxter

Just my opinion, but I think the reserve issue depends alot on who the seller is. If your a seller with a lot of financial resources to fall back on, then getting hit once in a while on a no reserve auction probably won't hurt as much. But if your selling something and you can't take the hit, then your screwed. Case in point, is the auctions I've been running lately for a couple of 19th century cabinets. I'm not wealthy and I'm not a professional card dealer so if I take off the reserves and they sell for less then the market price or even for less then what I paid, then I'm being a fool. I understand that everyone goes on Ebay to look for deals, hell I'm one of them, but sometimes you have to be firm on the price to protect your investment.

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Posted By: Aaron M.

You can easily get around E-Bay's reserve price auction. All you have to do is place a very high bid that you believe will be above the reserve and then retract your bid (entered wrong amount). Then you place a small bid that you know will fall below the reserve (or even below the high-bidder if you like). Then you can follow the auction to its end and bid appropriately if you believe the reserve is fair.

The whole thing takes about a minute and adheres to all of E-Bay's bidding rules.

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Posted By: AdamBaxter

If you really want the card there's no harm in e-mailing the seller and asking them what the reserve is. The worst that can happen is that the seller won't tell you. Sometimes they are more then happy too disclose it in the hope that you might bid anyway.

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Posted By: t-206collector

...I choose not to bid high and then retract in order to discover the reserve price. If I am truly interested in an item, I will e-mail the seller and ask for the reserve, which is only rarely ever withheld. Otherwise, I just avoid the auction.

With respect to the point that auctions with high minimum bids do not get started, I suggest that the only reason for that is because no one is willing to purchase the item at that price. It is hard for me to think of a reason why I would not bid, say, $100 on an auction with a $100 minimum bid, if I thought the card was worth $200. Of course, if I thought the card was worth under $100, then I would not bid. But if the card is at $79 and the reserve is not yet met, why put mystery into the equation regarding whether a $100 bid would win the auction. And if the previous high bid is only $79, there is some incentive not to bid $100.

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Posted By: Aaron M.

I'd say about 80-85% of the time the seller won't reveal the reserve. That's the primary reason I switched tactics.

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Posted By: Scott Forrest

For many ebayers, this whole auction thing is a game - if it isn't fun, they don't play. Thus, $100 minimum bid is interesting to a dealer who thinks he can re-sell the item for 20% more, but not necessarily interesting to all others.

Another scenario: I once had a BIN on an item that was about 50% higher than what I thought it was worth - it was sort of seller's remorse. Someone bought it. I was happy. However, if I had started the auction off at $9.99, it might have only sold for 1/4 what the BIN was - the reason being that if only two bidders are interested, and the less-interested bidder isn't REAL interested, the high bidder gets it cheap. Thus, reserves and high opening bids for rare, low-interest items.

Regarding bid retractions - I have had bidders do that to me. I then added them to my blocked bidders list. One of them was very pissed because he wanted the item, and claimed it was an accidental bid. So I un-blocked him and he did it again to another one of my items (bid, then retracted).

There are a lot of odd ducks playing the ebay game - figuring out what makes them tick so that you can get good prices on your sales can be tricky at times.

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Posted By: Aaron M.

"Regarding bid retractions - I have had bidders do that to me. I then added them to my blocked bidders list."

That's cutting your nose off despite your face and just plain bad business judgment on your part. What possible harm does a bidder who knows your reserve have--unless you don't want to have the reserve met and the item sold. Instead by blocking you are eliminating a bidder who may actually meet the reserve (and at the very least will bid up your item).

"There are a lot of odd ducks playing the ebay game - figuring out what makes them tick so that you can get good prices on your sales can be tricky at times."

Ah, and there are alot of odd ducks (not too mention out right frauds) selling out there, too. (Such as sellers who refuse to reveal their reserve. I've never figured out the logic behind that one.) Figuring them out is part of making wise purchases at good prices and making sure you prioritize your resources and attention appropriately.

E-Bay's rules may seem to overwhelmingly favor the seller (legitimate or otherwise), so it's good too know that there are E-Bay rules that work to the buyer's advantage as well.

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Posted By: Scott Forrest

I wasn't trying to be confrontational. I realize that there are a lot of you who simply don't like me and you'd like nothing more than to bait me into a fight so that you can see Bill slap my wrist again. It's not going to happen.

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Posted By: Aaron M.

Don't even sweat it. I didn't interpret your post as at all confrontational--just another POV, which I for one welcome. My response was meant as more of a "ah, touché" and not to flame.

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Posted By: warshawlaw

I generally do not use reserves because I get ticked off wasting my time playing guess the price on reserve auctions, so I figure others mught feel the same way. Also, I hate having a reserve and fielding all of the queries over what the reserve is. I typically set the minimum where I am comfortable and often spend the nickel to throw in a BIN at a level where I would be very happy with the sale. I've never been a big fan of auctioneers who set ridiculously low minimums; just doesn't strike me as honest.

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Posted By: runscott

Still, I think it's best I keep my opinions to myself for a while. I'll be back in a few weeks - you guys enjoy.

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Posted By: Aaron M.

I use a reserve if I think my idea of how much an item may be worth might differ significantly from what buyers might think. (Especially in an instance of when I'm re-selling an item and I want to make sure I at least make back what I paid for it.)

Otherwise, I always just start with a moderate minimum bid that I know is less than the item's worth. Gets the ball rolling and multiple bids always attracts more attention from other collectors.

As far as the reserves, I always give out my reserve to an inquirer. (What do I have to lose?) If enough people ask, then I just add the reserve price to the updated description so everyone knows what the reserve is.

At the end of the day, if someone meets the reserve and the item sells, then I'm happy.

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Posted By: Elliot

A few points:

1) Although nobody has mentioned it, I think (besides the reserve) one of the reasons the Crawford only got bid up to $79 is that it is a rather weak "4". Perhaps, in person the color and the registration justify the grade, but from the scan it looks like a marginal "4".

2)Like a lot of other people I'm reluctant to waste my time bidding in a reserve auction, where a lot of times the seller has set an unrealistic reserve.

3) If you're willing to disclose the reserve price to everybody and in the auction listing, why not just start the bidding off at that level and save the ebay fee.

4) Although not technically wrong, Aaron's method of reserve identification goes against the spirit.

5) I've always failed to understand why what you have paid for an item has any relevance to the price you're willing to sell at, unless you only have the item on consignment. Don't get me wrong it's always nice to sell at a profit, and overall, if you're in business you better be making money, but on any individual item/sale the price you paid for it is irrelevant. However, you should however be trying to get market value or better.

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Posted By: Aaron M.

"3) If you're willing to disclose the reserve price to everybody and in the auction listing, why not just start the bidding off at that level and save the ebay fee."

If you are trying to get an accurate gauge of the market value for the item. That way you aren't bound to the sale if it doesn't reach a high enough price (basically people disagree with your reserve) for you to be happy selling the item at that particular time.

Pretty much, you can't lose. If the reserve is met, great, item sold. If the reserve is not met and the item doesn't sell, then you have a better idea of what to set your minimum bid and expectations for a sale if you decide to relist. Plus, there's always the opportunity of making a sale in between the high bid and reserve price off-E-Bay with the high bidder (or even one of the under bidders). I've had that happen several times in both directions.

"4) Although not technically wrong, Aaron's method of reserve identification goes against the spirit."

And selling those paper cutouts as bona fide collectibles, while not technically wrong (at least in the eyes of E-Bay), goes against the spirit. Do you think that's a practical and useful stance given the circumstances?

As a regular user of E-Bay, in a field of collecting literally infested with fraud and deception, where E-Bay offers little to no protection to the buyers, then I think we as buyers are entitled to use whatever tools are at our disposal to help level the playing field.

"5) I've always failed to understand why what you have paid for an item has any relevance to the price you're willing to sell at, unless you only have the item on consignment."

Uhhhh, so you don't take a loss on the item? Especially for those of us who sell excess pieces of our collection with the intent to put the proceeds back into our collection. It helps keep your hobby money self-contained and prevent you from using money that's earmarked for other purposes (like bills, etc.).

"Don't get me wrong it's always nice to sell at a profit, and overall, if you're in business you better be making money, but on any individual item/sale the price you paid for it is irrelevant."

Man, I wish other dealers though like you. Why they're out there trying to make money, I have no idea. They should just be happy to take a loss, knowing that they've made people happy. Kinda like charity.

On the serious side, those individual transactions add up to your overall business model. In plainer terms: if you build your business with the thought that it doesn't matter if you make a profit on an individual sale, how then do you ensure that you make a profit on your overall sales?

"However, you should however be trying to get market value or better."

Yeah, I think that's the general idea.

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Posted By: Elliot

So, if other people act sleazy on eBay, that gives everybody the right to act sleazy. Not that I actually don't see the argument in favor of that, just not something I could do.

Regarding the selling at a profit. Clearly you need to sell at a profit "overall" otherwise why be in business. However, trying to make a profit on each and every item, only ensures that you sell all the items that are "hot" and going up in price and keep all the items that are going down. Basically, you just have to make sure that you are selling at market or better, and selling what you want to sell, given your view on the product.

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Posted By: Aaron M.

"So, if other people act sleazy on eBay, that gives everybody the right to act sleazy. Not that I actually don't see the argument in favor of that, just not something I could do."

I don't see bid retraction as at all sleazy, not even in the slightest.

E-Bay operates in an entirely different system than major auction houses such as Mastro and REA, where reserves are not hidden, thus justifying its disallowing bid retractions. (And for the record, I would oppose someone from from retracting a bid [other than for a legitimate mistake] in a non-reserve E-Bay auction. In that instance you are just playing around and messing with someone's auction.)

If an E-Bay seller chooses to hide his reserve price (thus wasting the buyer's time and attention and possibly financial resources), then a buyer has every right to operate within the rules of E-Bay to discover such hidden reserve.

What if you have $1,000 to spend in a given week. Two cards pop up on E-Bay that you desperately want. One card has a low minimum bid, the other also has a low minimum bid, but carries a reserve. You contact the seller, but he refuses to reveal the reserve. You know that you won't be able to afford both cards with your $1,000, but you want them equally (in fact you may even want the reserve auction more). You decide to bid on the reserve auction and bid your full $1,000 but still do not meet the reserve. Meanwhile, the other card sells for just over $800. You end up with neither.

If, however, you had known that the reserve was $1,500, then you would have known up front that you couldn't afford it and concentrated your attention and financial resources on the non-reserve auction. Thus you end up with that card.

That's "sleazy"? Pshaw.

Bid retraction is a meager defense for buyer's, but effective nonetheless.

"Regarding the selling at a profit. Clearly you need to sell at a profit "overall" otherwise why be in business."

Some people (in fact I would venture the majority of sellers on E-Bay) sell from an extremely limited inventory, very rarely offering items. In this case, the importance of profiting (or not taking a loss) on every item is magnified.

Not everyone has a large inventory, constantly offering new items, with the possible luxury to look big picture.

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Posted By: jay behrens

You seem to forget that eBay will also suppend you if have too many bid retractions. And all it would take is one pissed off PowerSeller complaining to eBay to get you suspended. Your methos is cute, but also very tacky. And just because the rules don't forbid it, doesn't mean that is OK or ethical to do so. Then again, when it comes to money and/or collectibles, peopole's moral adn ethics seem to go out the door.

Jay

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Posted By: leon

Not to get into a war but I would not appreciate someone retracting a bid just to find out my reserve. If I knew they did it just to find out, after I made it clear I didn't want to tell, then I would politely block that bidder from all future auctions of mine. . Just my opinion.. best regards

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Posted By: Aaron M.

"You seem to forget that eBay will also suppend you if have too many bid retractions."

Nah, that's why you place a lower substitute bid in place of the retracted bid. Still within the rules.

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Posted By: Aaron M.

"If I knew they did it just to find out, after I made it clear I didn't want to tell, then I would politely block that bidder from all future auctions of mine."

How does this benefit you?

And why would you not want someone to know your reserve?

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Posted By: jay behrens

Aaron, you seem to forget that eBay will protect their precious PowerSellers at all cost. If you piss off a PowerSeller by pulling that stunt adn they complain to eBay, I have no doubt you will find yourself with a suspeneded account. That's just the reality of eBay. Doesn't matter if there is a loophole or not. It's all about the PowerSellers as far as eBay is concerned. You and the money you spend doesn't matter.

Jay

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Posted By: leon

Certainly nothing personal here just a friendly discussion. The reason I might not want my reserve known is that if I tell that it's $1000.00, and that person was going to bid $1200, then I might be leaving money on the table....as the bidder could bid $1005.00 and win it (potentially if no one else bid). The reason I would block a person for doing that is out of principle. They jab me and I jab back....it's easy.....take care

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Posted By: hop373

Reserve prices are nothing more than head games played with potential customers. I have written eBay to complain about what a lousy practice I have always felt reserve bidding is. They answer back was that it allows sellers to "research the value of their items just like buyers are able to do their own research"...???? Does anyone else see the difference between buyer's research and seller's research. Can't sellers research items the same way as buyers?
If you have an item, and you feel you have to have a certain price for it, just be honest, set a minimum bid and if it sells...great. If it doesn't, your minimum is too high...it isn't a puzzle. I hate head games, I will almost never bid on an item that has a reserve (almost). Can someone tell me the advantage to starting a bid at $20 but setting a reserve of $30....that just seems ignorant. If you need $30...start at $30.

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Posted By: jay behrens

I've got 8 years experience selling on eBay, and from that experieince I can tell you that if you high demand item, then starting with low minimum and letting he auction runs works fine. However, if you have a low demand or unusual item you are uncertain about, you can go do the above and hope 2 people want the item, but chances are you will loss money most of the time.

You can also do the low min with a reserve or a high min and no reserve. My experience has shown that even with a reserve, you are better off going that route. If people are iffy about bidding on an item, having a lot of bids even if it hasn't met the reserve, give the person a mental queue that this item is hot and they will take a look and possibley bid. If they see that no one is bidding, they will think that this item is not in demand or popular and look right past it.

The name of the game is getting bids and generating interest in the auction. Having a high minimum with no bids will turn away more people than running a reserve that action on it. No matter how much we all say we dislike them, we will bid on them if it something we want. And I don't buy the argument that reserve auctions wastes a bidder's time. It only takes only a minutes or less to read a description and place a bid. I doubt anyone is reading and bidding on 100s of items every night.

Jay

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Posted By: leon

I agree with the folks that say they don't like reserve auctions. I don't either. Out of the hundreds of vintage cards I have sold on ebay I have done exactly 2 with reserve auctions. One was my Four Base Hits because Rocketlover dude was spending hundreds of thousands and I thought I might snag a whale. I didn't. The other was a G & B Keefe that DID meet reserve and the winner was very happy. For the most part I hate reserves too, just to clarify. later

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Posted By: bcornell

Earlier this year, I won a card from dwmorris that they had previously listed no less than 10 times with a reserve. After trying once and failing, I had refused to bid on it again - buyers can be just as stubborn as unmoveable sellers. They were getting 2 or 3 bids at no more than $100 or so the last few times they tried to strong-arm it... When the reserve finally came off, the card sold for over $300 with about 15 bids. Not a coincidence, I think - reserves may protect your investment, but they also prevent you from getting bids.

Bill

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Posted By: t-206collector

...but higher price:

http://cgi.ebay.com/ws/eBayISAPI.dll?ViewItem&category=57993&item=4131000487&rd=1

AND... it's only a ONE DAY AUCTION!!!

Why? Is the card really that much better? I think it's more likely that this one had no reserve.

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Posted By: petecld

Very bad example. This one sold as high as it did because the winner will erase the small pencil mark, re-submit, and get a 50 or even a 60.

As Elliot mentioned, Scott's card was a weak "50" and this one appears very undergraded.

The reserve had nothing to do with the final bid.

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Posted By: t-206collector

...I never bid on graded cards with writing on them, and I do not think I'm alone in this category. Moreover, the card that sold today is badly off-center. I think those factors naturally bring the value down.

These are comparable cards graded the same by the same company. Sure, not all 4's will look alike, and we buy the card not the holder. But still, today's card is currently at TWICE the final "value" of the $79 card that didn't sell. And it's selling in a one day auction at 5pm EST on a Thursday afternoon!

There are scores of factors in valuing cards and auctions. I just believe that the No Reserve for this card made a difference. Why else would the seller have pointed this fact out with bright red font?

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Posted By: t-206collector

...today's card graded out as a 3! The card that didn't sell for $79 Sunday night (arguably the best night to sell) was a 4.

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Posted By: t-206collector

My point is not that today's card is overvalued. I am only suggesting that Sunday night's card was undervalued because buyers were discouraged by the setting of a reserve greater than $79.

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Posted By: warshawlaw

I agree that a reserve will deter some people, especially when they make multiple bids that don't hit it, but to jump from there to say that the reserve on this particular item caused the item to fail because a non-reserved lot sold for more is simply not warranted. Many factors out of the hands of the seller affect the outcome of an auction, most significantly differences from day to day in who is surfing ebay looking for stuff. It always blows my mind when an item fails one week and I lower the price only to have it sell for even more the next week. Sometimes, you have a great item that goes begging one day and kills the next simply because the two key players in the latter auction did not spot it that previous time. I go through ebay religiously every day and I still end up missing stuff that I would have bid way more to own than the winning bid had I seen it.

Funny aside that proves the inconsistency of ebay purchases: I once sold a Football HOFer rookie card PSA 7 graded to someone in the midwest. I got around $15. He claimed that the card was damaged in shipment and I agreed to refund it. The envelope looked like the mailman ran it over in his truck and the holder was shattered, but the only damage to the card was a nice horizontal crease. I relisted the card for substantially less with an explanation of what had happened and the darn thing sold for more than the original PSA 7 sale! Just proves that it is all about who is looking at the listings at any given time.