What Is a Reserve Price in an Auction?

How does a reserve price work?

The seller and the auction house agree on a reserve before the sale. Bidding opens lower, often much lower, and the lot shows its status as bids come in: reserve not met, then reserve met once the high bid reaches it. The amount itself is usually hidden.

Example: a riding mower has a $900 reserve. Bidding climbs to $850 and stops. The lot closes unsold and the seller keeps the mower. If one more bidder had gone to $900, the mower would have sold at that price, or higher if the bidding kept going.

Why do sellers use a reserve price?

A reserve protects a seller from giving away something valuable on a slow night. An owner with a tractor worth $15,000 may not want to risk it closing at $4,000 because of bad weather or a thin crowd. The reserve means either the price is acceptable or the item goes home.

The trade-off is fewer bargains and fewer sure sales. Many bidders prefer absolute auctions, where everything sells to the highest bidder regardless of price, and some sellers skip the reserve to draw a bigger crowd.

Reserve price vs opening bid vs estimate: what is the difference?

These three numbers get mixed up often, and they mean different things.

• Opening bid: the first amount anyone can bid, and it is public. A lot with a $50 opening bid and no reserve sells for $50 if only one person bids.
• Reserve: the hidden minimum the lot must reach to sell. It can be far above the opening bid.
• Estimate: the house's guess at what the lot will bring. It is a guide, not a promise, and not a minimum.

How should you bid on a lot with a reserve?

Bid your real number, not a test number. Bidding small amounts on a reserve-not-met lot only tells you the reserve is higher. Set a max bid at what the lot is worth to you; if that meets the reserve, good, and if it does not, you have lost nothing.

Watch the status as the close approaches. A lot that flips to reserve met can draw more bidders, because people now know it will sell. On Auktia every item (lot) shows whether its minimum price (reserve) has been met, and an item sells only if bidding meets the minimum price.

What happens if the reserve is not met?

The lot does not sell and nobody owes anything. Depending on the house, the seller may relist it in a later sale with a lower reserve, sell it another way, or take it back. Some houses contact the high bidder afterward to ask about a deal at the reserve; that is the house's choice, not a rule.

If you really wanted a lot that went unsold, ask the house politely after the sale whether it will be offered again. It costs nothing to ask, and it puts you first in line if the seller lowers the price.

Are reserve auctions worth bidding on?

Yes, if the item is worth your number. A reserve does not raise the price you pay; it only sets a floor the bidding must reach. If you would happily pay $1,000 for a tractor attachment and the reserve is $800, you lose nothing by bidding, and you may win it at $800 or a little more.

Where reserves cost bidders is time. You can follow a lot for a week and watch it close unsold. If you only have a few evenings, put your effort into no-reserve lots, which sell to the high bidder whatever the price, and treat reserve lots as a bonus. A reserve that is met early is a good sign the seller priced it sensibly.