Thread: General auction/Ebay question

I'm the first to admit sometimes I'm a bit slow or I can't see the obvious; "takes some people longer".

Generally in auction theory which also applies to Ebay listings, what is the purpose of the invisible "Reserve"? I understand a seller wanting to set a reserve to ensure that an item sells for at least what the seller would want to get for the item, but how is that different than a seller setting a minimum bid that all can see?

I'm watching a non-razor related Ebay auction listing. The retail value of this item is well over $2,000. There has been low bid after low bid and with 4 days left, the top bid is at approx $725 and........the reserve is not met. But, no one but the seller has any idea what the reserve is. That's the part I don't understand. Is this done in the off chance that a bidder is curious enough to continue to bid just to see what the dang minimum is whereas otherwise no one would probably bid that high and the item wouldn't sell? From a buyer's perspective, just tell me the minimum you'd take for it and if that's higher than I'd pay, I wouldn't bid and wouldn't waste your time or mine.

As you can see, I'm confused.

Chris L

I've wondered the same thing. Some sellers will even mention in the description that they won't tell you what the reserve is so don't even ask. What really amuses me is the sellers who post,"Serious bidders only" as if they could somehow enforce that.

Chris

You can always use the contact seller option and see if the seller will tell you the reserve. Some will and some won't for some reason.
The idea behind not starting the auction with the reserve price is that it can run off potential buyers so they just set the price low to attract bidders and set the reserve.
What it comes right down to above those reasons is some sellers just aren't very bright when it comes to dealing with buyers! In fact I've seen the same razor up for over two months straight and it still hasn't sold because it's to high whatever his reserve is.

Whew, I'm not the only one then. Thanks Jimmy.

It'd be different if it was a poker game and we'd be keeping our hands to ourselves, but generally I don't like playing games when it comes to money.

Chris L

Originally Posted by Gunner777

Chris

You can always use the contact seller option and see if the seller will tell you the reserve. Some will and some won't for some reason.
The idea behind not starting the auction with the reserve price is that it can run off potential buyers so they just set the price low to attract bidders and set the reserve.
What it comes right down to above those reasons is some sellers just aren't very bright when it comes to dealing with buyers!

I guess I didn't see this auction from the very beginning so I didn't know whether the seller set a starting bid at maybe $100 but yet maybe his invisible reserve is $1,500? I see what you're saying as to the possible logic for those who use it. It still seems like game playing to me but again, maybe I'm not understanding it from a seller's perspective since I'd be a potential buyer in this auction.

Chris L

Lately on high dollar items, bicycles and such, I've used the fixed price auction with the buy it now at more than I want along with the best offer feature. You can set the best offer to automatically decline bids below your minimum or automatically accept at or above your minimum acceptable price.

You know the buy it know option is something I like. Simple and straight forward but I think greed gets in there and some sellers think a bidding war will start and they can make a killing.

I like the BIN both as a buyer and as a seller. What do you mean about a bidding war though? With BIN if one person goes for it, it's done.

Chris L

When I was a kid, I used to go the monthly "horse and tack" auction in the next county over.

They did the same thing there. People would be selling a saddle, or a horse, or whatever else, and the bidding would start at nothing, but they'd have a reserve price set.

I actually talked tot he auctioneer once about it. He said that the reason behind it, is that let's say you have a saddle that you want to sell for not less than $300. If you start the bidding at $300, people will think hard about whether or not they want to bid.

However, if you start the bidding at $15, everybody will bid. People will get into little bidding wars, and frequently you'll end up making WAY more off the auction than you ever would have starting at $300.


Ebay used to be just like that. When I first started buying and selling on ebay, people didn't trust the auto bid system so they'd manually get into little bidding wars, and it was great fun. Sadly, in the last few years it's gotten to the point where winning an auction is rarely about who is willing to pay the most, but frequently about who can get their bid in with the fewest seconds left in the auction.

Thanks for that info, Steve. See I could see that angle for a live auction; I've been to a few myself. A good auctioneer tries to whip up the energy of the crowd, always building on the increased waves of bidding fervor. It's in real time and there's an immediacy and energy the auctioneer can use to the betterment of the seller.

For a seven day Ebay auction, IMO as a buyer an invisible reserve is an irritation.

BTW, in my area, rural Minnesota, auctions happen all the time including real estate auctions. Unless it's an "absolute auction" meaning, no matter what, the property will be sold that day at auction (essentially a property auction with no reserve), you get the same outcomes as a lot of these really high invisible reserve Ebay auctions. No one meets the reserve and in the end it's a big waste of time for the potential buyers AND the seller. It happens more often than not right now where I live. The bad economy probably has something to do with it. I think property sellers could do better at the auctions I speak of if they came right out with a minimum bid.

Chris L