What is an Auction Reserve?

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When participating in an auction, you might come across a term called “Reserve.” But what does it mean, and how does it affect both sellers and bidders?

What is an Auction Reserve?

An auction reserve is a safety net for sellers. It’s a predefined minimum price that a bid must meet or exceed for an item to be sold. This ensures that high-value items aren’t accidentally sold below their worth.

How Does It Work?

  1. Setting the Bar: When a seller lists an item, they can set a reserve price. This is the hidden minimum amount they’re willing to accept for the item.
  2. Bidding Process: As bidders place their bids, they’re unaware of the reserve price. The excitement of the auction continues as usual.
  3. End of Auction Outcomes:
    • Reserve Met: If the highest bid equals or exceeds the reserve price as the auction ends, the highest bidder is declared the winner.
    • Reserve Not Met: If bidding fails to reach the reserve price, the auction concludes without a winner. The item remains unsold.

When Should You Set a Reserve?

While reserves can be a useful tool, they’re not suitable for every item. Here’s a guideline:

  • High-Value Items with Low Starting Bids: If you plan to entice bidders with a low starting bid on a precious item, setting a reserve ensures you don’t inadvertently sell it for less than it’s worth.

Remember, an auction reserve is a way to balance attracting bidders with a low starting bid while safeguarding the intrinsic value of an item. Use it wisely to ensure a successful auction experience!