Reserve vs No reserve

  • By Fred Durnbaugh
  • 14 Nov, 2017

Why placing a reserve at auction is not recommended

auction hammer with cash
Reserves are not recommended for auction
Should a reserve be placed on an item selling at auction?
 To start, let's explain what is an auction reserve. A Reserve Price is a hidden minimum price that the seller is willing to accept for an item. In a Reserve Price auction, the seller is only obligated to sell the item once the bid amount meets or exceeds the Reserve Price. A seller can lower, but cannot raise, the Reserve Price.
 It has been our experience for the last 6 years when dealing with "reserve" items they very rarely if at all sell. Reserves fail for many reasons. the seller sets the reserve too high based on an emotional valuation not market data. bidders traditionally do not appreciate reserves and many times simply won't bid on an item with a reserve. After tracking bid activity for several years, items with reserves receive approximately 40%-50% less bids vs non reserved items.
 Sellers who demand reserves simply don't understand the auction process. We usually tell these type of sellers to attempt to sell their items on Craigslist, offer up or some other venue where they can set their price and accept nothing less. Usually a majority of these people return a few months later after their failed attempt to "sell high" and tell us to just liquidate the item.
  FR Liquidation & Auctions stopped allowing reserves due to the poor performance they give. Our auctions have never really needed reserves as we have a formidable bid pool and 9 times out of 10 achieve a good fair market value due to heavy competitive bidding. A good auction house understands their market and advertises correctly to bring in the bidders who will raise the final price. We post ads on over 40 different auction, social media and classified ad sites every auction. With our ad campaigns we have succeeded in negating the need for reserves.
 Make sure when selling at auction to stay away from reserves and be prepared to stomach the roller coaster bidding ride.
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