Auctions and "reserves"

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TWRackers

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Well, I just did my first two auctions ever, in this case over on Rocketry Planet. When setting them up, I had to set a starting bid for each, and I also set a reserve price which is optional. I know HOW the reserve price works, but what I'd like to know is WHY is there such a thing? If the reserve price is the minimum the seller will accept, why don't sellers just set the starting bid at that point?


woo-hoo! My post count is double digits now! :D
 

Gillard

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logically - i don't get it either, just start the bidding at the reserve price, but i guess that the low starting bids attract people into your auction, they might have been put off by a higher starting price. so I guess its putting bait on a hook.
 

kelltym88

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Speaking from personal experience, I know that if I've had an item that perhaps I really didn't want to sell, or wanted to make sure that I got what I felt I should get for it, then I set a reserve price. That was on ebay.
 

jadebox

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As a buyer, I never bid on auctions with a "reserve." It's annoying to place a bid on something and have eBay come back and tell you that your bid is below the reserve. It also implies that the seller has something to hide - not a good sign in a business relationship.

-- Roger
 

H_Rocket

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If there is a reserve. I place one bid, if it is below the reserve I will not place another. I don't have any desire to play "guess how much I want for this thing I found in my basement". Use a minimum bid price, or simply say in the text what you want.
 

kandsrockets

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I hate reserve auctions. Just start the bid at what the lowest you are willing to sell it at or just make it a buy now only auction and put what you want for it. Why play guessing games on what you want for it.
 

Peartree

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I also will place a single bid in a reserve auction but I understand why reserves exist. It's a psychological thing. I have been to real live auctions where the auctioneer knew the value of the thing for sale. He tried starting the bidding near the actual value - no bids. Then tried again at about half the expected value - no bids. Then finally gave up and started bidding at some ridiculous number like $1. Bidding started and was enthusiastic and finished well in excess of where he tried to start the first time. I guess that way the bidders were sure they weren't starting too high and getting ripped off?
 

luke strawwalker

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I also will place a single bid in a reserve auction but I understand why reserves exist. It's a psychological thing. I have been to real live auctions where the auctioneer knew the value of the thing for sale. He tried starting the bidding near the actual value - no bids. Then tried again at about half the expected value - no bids. Then finally gave up and started bidding at some ridiculous number like $1. Bidding started and was enthusiastic and finished well in excess of where he tried to start the first time. I guess that way the bidders were sure they weren't starting too high and getting ripped off?
Oh yeah... Hehehe... farm equipment auctions are pretty fun... :) One thing I've learned is to go look at everything that remotely interests you and then formulate "how much you're willing to pay" before hand, and pretty well stick to it.

I've seen similar situations. I was watching the auction work it's way around to a piece of equipment I had my eye on, and was rather disinterested because nothing in the area he was auctioning was of any interest to me. Well, he starts auctioning off a beat up old IH grain drill. No bids. Lowered the starting bid to $100. No bids, so he lowered it to a dollar. No bids, but I had glanced at it and it has two almost brand new 15 inch tires on it that would fit a trailer, so I bid a buck. Then the frenzy started. Three others upped me to $10 and then dropped out, leaving me and another guy-- he upped to $12 and I bid $15 and it ended as quick as it started. I got the drill. I thought about rebuilding it to use on the farm but it was pretty far gone and old as the hills, and so I pulled the two tires off to use on a trailer and ended up hauling the rest for scrap iron-- got $20 out of it in iron... not a bad deal!

I've seen guys get into 'peeing contests' at auctions though and bid up junk to unbelievable prices! I was once loading out some stuff into the back of my truck that I bought, and this guy backs in next to me and starts loading up a little three-point spinner/spreader into the back of his truck. His wife has her window down and she's making some rather snide comments, really chewing nails! He looks kinda sheepish and I give him a hand loading it up... I had looked at the spreader before the sale, an older TSC brand spreader, nothing special, and it had seen a lot of summers and use. Brand new they sell for about $250. He got in a bidding war and ended up paying over $300 for it, a beat up USED spreader, and his wife was certainly going to remind him of it for a LONG time to come from all indications!

I've missed a couple steals by not being quick enough on the trigger, though, too. I saw a 2 row Bermuda King grass sprig planter, obviously used but had been in the barn for years, judging by the layers of bird poop and the paint was shot, but mechanically sound. I know they sell for upwards of $8000 brand new for the base models, and this one is almost identical, and they're in pretty high demand and not many come up for sale, so I figured no way I can touch this thing... I figured it would end up selling for at least $2500-$3500. Well, I was tired after about 6 hours of sale and sitting on a disk nearby half listening absent mindedly, and it ended up selling for $1400 before I could even get my wits together and bid! I could have bought it, cleaned and repainted it, planted my farm in grass, done some planting on the side as custom jobs, and then touched the paint up and sold it after a couple years and got more than that for it!!! OH well... :)

Win some lose some... but I'm with you guys-- price it at what you'll take for it, and leave the games to the Wii... I don't like playing nonsense games like "who's gonna get taken, me or you??" OL JR :)
 

RimfireJim

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That's right, Peartree. I would think anybody who has been to a live auction would understand the psychology of how they work and why they can often bring in higher prices than other methods of sale. And you don't have to go to a live auction - you can see it in the bid history of items on ebay.

What I don't understand is why some people are so bothered by reserves. The seller certainly has the right to not have to sell something for less than he is willing. And it is an auction, so he should be able to take advantage of the bidding psychology and start the item out with a low starting bid to get things going.

From a buyer's point of view, what difference, in the value of the item to YOU, does it make if the seller put a reserve price on it, or not? Do you just assume that your value is going to be less than his value and you don't bother bidding? How does not meeting the reserve price differ from being outbid by someone else? (It doesn't - essentially, you have been outbid by the seller.) Would you have bid higher if you had been outbid (instead of not meeting the reserve)? Why not just place a proxy bid at the highest price you're willing to pay in the first place, and be done with it.
 

RocketflierVB

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What I think is ridiculous is that the reserve is set at a couple of bucks below a price of a brand new item. That is not an auction, that is advertising a product. The spirit of an auction is getting rid of something you don't want or need and making a little money in the process or else you are low on cash and want to liquidate, not advertise "Buy Now" at a store price.:mad:
 
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Peartree

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What I think is ridiculous is that the reserve is set at a couple of bucks below a price of a brand new item. That is not an auction, that is advertising a product. The spirit of an auction is getting rid of something you don't want or need and making a little money in the process or else you are low on cash and want to liquidate, not advertise "Buy Now" at a store price.:mad:
In that case it probably has more to do with the s%^&* up price structure at eBay.
 

JAL3

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I hate reserve auctions. Just start the bid at what the lowest you are willing to sell it at or just make it a buy now only auction and put what you want for it. Why play guessing games on what you want for it.
Amen.

I understand, and have occsionally been sucked in by, the psychology but I don't like it at all. WHen I was still doing Ebay and entered a "high bid" only to find it below the reserve, it would usually hack me off enough to quit altogether. Occasionally, after the aucction was over and I had the high but not high enough bid, the seller would contact me and offer to sell it at that price. More often, I just passed it by.
 

AKPilot

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Yea, I have to admit I don't understand the "reserve" thing. I've bidded on items not knowing there was a reserve out there. It's kinda frustrating.

As well as I think I'm still relatively old-fashioned when it comes to auctions. I guess I expect things to start off rock-bottom low, and go up from there. When someone posts an item at 10-20% less than retail, I just don't view it as an auction. More like a store sale.
 

jadebox

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What I don't understand is why some people are so bothered by reserves. The seller certainly has the right to not have to sell something for less than he is willing.
That's what the "minimum bid" is for.

From a buyer's point of view, what difference, in the value of the item to YOU, does it make if the seller put a reserve price on it, or not? Do you just assume that your value is going to be less than his value and you don't bother bidding? How does not meeting the reserve price differ from being outbid by someone else? (It doesn't - essentially, you have been outbid by the seller.) Would you have bid higher if you had been outbid (instead of not meeting the reserve)? Why not just place a proxy bid at the highest price you're willing to pay in the first place, and be done with it.
It's very different. According to eBay your bid is a binding contract to buy the product at that bid if your bid is the highest. It should work both ways. If the seller accepts the bid and it is the highest, they should have to honor the contract and sell the product for that amount.

With a reserve, you might bid at the highest amount you are willing to pay, only to have your bid ignored because it's below the reserve. In this case, the seller has wasted your time.

In my opinion, reserve auctions exist only to take advantage of (and annoy) bidders. That's why I will never place a bid in a reserve auction on eBay.

-- Roger
 

Peartree

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It's your option to do as you please of course. But try to remember that auctions and most auction practices including starting bids and reserves are FAR, far older that eBay.

Real live auctions have even more potentially entertaining/annoying/complicating wrinkles. Phone bids, proxy bids, professional bidders hired by others, all sorts of stuff.


What's the point in complaining about a standard business practice? I hate it that since bar codes and scanners most stores don't put price tags on anything. I know it save them a ton of labor but I really dislike wandering the store looking for scanners that only work half the time to find out how much stuff costs. I hate it but I'm not likely to change Wal-Mart's mind about the way they do business. I only choose whether I shop there or not.
 

hilltopper

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if a person sets a minimum bd on ebay it costs them more than setting a reserve if I remember correctly.
 

luke strawwalker

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It's your option to do as you please of course. But try to remember that auctions and most auction practices including starting bids and reserves are FAR, far older that eBay.

Real live auctions have even more potentially entertaining/annoying/complicating wrinkles. Phone bids, proxy bids, professional bidders hired by others, all sorts of stuff.


What's the point in complaining about a standard business practice? I hate it that since bar codes and scanners most stores don't put price tags on anything. I know it save them a ton of labor but I really dislike wandering the store looking for scanners that only work half the time to find out how much stuff costs. I hate it but I'm not likely to change Wal-Mart's mind about the way they do business. I only choose whether I shop there or not.
Yeah, you should see some of the monkeyshines I've seen at the ag auctions... including one from my Dad's best friend Frank (when he was growing up anyway).

Frank was a strange fellow. I was teamed up with him baling hay on his place and we split the hay. Well, he decided to sell his old 1456 IH tractor. We drove his tractor to the auction and dropped it off, and I drove him back, and he was bragging that it was worth like $8,000, from what he'd seen other similar tractors going for at auction. Well, those were for real nice tractors, let's just say his was "rode hard and put up wet". Well, we headed over there on auction day for the auction, and went over to his tractor when the auctioneer worked his way up to it. A guy bids to like $3300, and Frank keeps bidding against him. The guy bid to $3500, and Frank upped him again, and he turned around and walked off, so Frank got his tractor back. The next month, we went over there again for the sale. Before the sale, we noticed a young farmer about 25 or so looking at the tractor pretty closely with his Dad who was about 60 or so. When the bidding started, he and his Dad and a few others were bidding, and they dropped off one by one until it was just the kid and his Dad and Frank still bidding. The kid bid it up to $5500, and Frank upped it again and they shook their heads and wouldn't bid up so Frank bought his own tractor AGAIN! On the way home, Frank was griping about the commissions he owed the auction company on the last two sales. The next month, we went back, and it didn't look very promising, as it was mostly 'traders' walking around... the kind of guys wearing big cowboy hats and fancy boots and driving big diesel pickups, who don't farm but hit all the sales and bid the prices up on all the older equipment that a little 'poor' farmer like me would like to buy and fix up to use on the place, but they bid it up and snatch it out from under you, take it home, slap a coat of paint on it and double the price and then expect you to pay for it and STILL have to do the mechanical repairs on it before you can really use it. They're also notorious for buying big high-dollar equipment like tractors and pickers and combines dirt cheap, if there aren't any farmers there that actually need the stuff to outbid them. Well, nothing much in the crowd but traders today. They work around to Frank's tractor, and sure enough, nothing but traders bidding, and Frank bids it up to $3200, and one of the traders he's bidding against gets a sour look on his face but bids up to $3300, and the auctioneer ups it and Frank kinda looks despondent and lets it go. Later on at the office, he settles up for the $800 in commissions he owes from the three sales and gets his check for $2500, which is a $1000 less than the first guy bid three weeks before, and less than half what the kid had bid the week before! They didn't do reserves, so Frank decided to 'up the bids'. Sometimes you can outsmart yourself...

We (other farmers I talked to) were pretty universal in our hatred of the 'traders'... I nearly bought a 40 year old farm implement one time-- somebody had pulled it out of the weeds and it still had vines and canes stuck on top of it that had grown over it and pulled out of the ground when they brought it to the auction. It needed some bearings and the rust busted, bolts replaced, a few missing dirt scrapers and stuff like that, nothing major, but definitely a couple weeks repair work and a few hundred dollars in parts to get it going. Well, I knew what similar machinery was going for on the used lot at the tractor dealer, and figured what I could pay for it and still come out after buying parts, to have a better machine than what's on the used lot at the dealers... sometimes the stuff they have is more worn out than auction stuff, sometimes a little better but priced five times higher than the auction. I could go to like $700 I figured, as the dealer would have one, if I could find one, for $1000-$1200 in decent shape. A stupid jerk trader who was buying everything he could lay his hands on swooped in and bid it up to $900 or so. So I shook my head and walked off. Thing was, this particular jerk we knew, and sure enough, within two weeks of the sale the same machine was in front of his place with a 'for sale' sign on it. I stopped and looked for grins and all he had done was pull the vines and canes off, shoot a coat of TSC implement paint on it, and put it by the road with a for sale sign on it for $1100... what a crock! The same bearings that needed replacing and parts that needed fixing hadn't been touched and would still need repair before the tool could be used...

Traders finally drove that auction out of business-- farmers wouldn't hardly come because the traders would outbid them on all the 'cheap equipment' they wanted to buy cheap and fix up, and other farmers wouldn't bring big ticket items because there were so few farmers coming and the traders would 'steal' the big stuff dirt cheap... they were broke and gone within two years... OL JR :)
 

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I don't like them either.

They are a total waste of my time. I don't like to look at the item, maybe dig around to find out what it cost new (or if it is even available anymore), and generally spend time paying any attention to it if the seller is not straightforward enough to come out and say what bids he will accept. For me, not wasting an hour is more important than saving five bucks.

As to ebay auctions in particular, my use of ebay has dropped to about nil. It is now full of plain old retailers trying to sell their wares at (or above) full retail prices. There are very few 'deals' left. And ebay has continually upped their fees and changed their policies to where people with only one or two items (that they ARE trying start off as 'deals') have been chased off the auction site. Why bother? I can get most stuff cheaper, faster, and with valid active warrantees by dealing directly with other vendors. Ebay doesn't know it yet but it is over with--they've pretty much piddled it out any usefulness.
 

Peartree

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I don't like them either.

As to ebay auctions in particular, my use of ebay has dropped to about nil. It is now full of plain old retailers trying to sell their wares at (or above) full retail prices. There are very few 'deals' left. And ebay has continually upped their fees and changed their policies to where people with only one or two items (that they ARE trying start off as 'deals') have been chased off the auction site. Why bother? I can get most stuff cheaper, faster, and with valid active warrantees by dealing directly with other vendors. Ebay doesn't know it yet but it is over with--they've pretty much piddled it out any usefulness.
Hard to argue with any of that. Whatever happens to ebay they've done to themselves.
 

jadebox

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if a person sets a minimum bd on ebay it costs them more than setting a reserve if I remember correctly.
Actually, it's the other way around. It costs $2.00 to $50.00 extra to create an auction listing with a reserve.

-- Roger
 

cydermaster

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As to ebay auctions in particular, my use of ebay has dropped to about nil. It is now full of plain old retailers trying to sell their wares at (or above) full retail prices. There are very few 'deals' left.
Good point and very true in many cases but I still manage to get the odd 360 game off there 2nd hand for less than half the price - its just a case of bidding low and often ... you only have to be lucky once!
 

WiK

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There are very few 'deals' left. And ebay has continually upped their fees and changed their policies to where people with only one or two items (that they ARE trying start off as 'deals') have been chased off the auction site. Why bother?

Maybe it's just because I didn't use eBay back when it was first starting out, or maybe eBay UK is different, but I haven't noticed any of this when I've been buying or selling there. If anything, ebay UK has removed some of the fees - I'm pretty sure they used to charge for a 'Gallery' photo.
But then again, I think all the retailers on ebay isn't a bad thing either... I've definitely scored some deals on electronics by buying stuff direct from China, from shops I wouldn't have considered buying from if it wasn't for the ebay feedback system. You can always just see the 'deal' items by hitting the Used check box when searching.

As for reserve auctions? I don't really see the problem. It doesn't mean the seller *won't* sell at that price, just gives them the option of not being contractually obliged to sell. If it's the only auction for that item then it's not an issue, and if it's not then you can always bid on the item from a different seller.

Phil
 
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