Question about online auctions

[Otto]

What is the point of a reserve price? More specifically, what is the purpose of having both a reserve price and a starting bid? If I understand correctly, the seller is not obligated to complete the transaction unless the reserve is met. If that is the case, why not make the reserve price the starting bid? What am I missing?

[Tycer]

You're not missing anything. Perhaps they are trying to get folks into some sort of bidding frenzy. I've been doing online auctions for almost ten years. I don't care one way or the other. If my price is high enough, cool. If not...next.

[Otto]

Okay, draw me a picture here. The reserve is required to be greater than the minimum bid. If I want at least $600, then I make that the reserve, but I make the minimum bid $500. Why not just make the minimum bid $600, and forget the reserve? I don't understand how this would start a bidding frenzy. It also seems more efficient for both sides that way, since I won't waste time underbidding on a gun I ultimately can't afford.

[Tycer]

I can't. Youre not missing anything. You're dead on. The weakness of my idea suggests I don't have a clue either.

[jnyork]

IMHO a reserve price is just silly game-playing on the part of the seller, I will not bid on anything with a reserve price, I just click off it and go on to the next one.

[Otto]

Whatever. (Not directed at you)

It seems like people are hell-bent on making simple things as complicated as possible, for no reason.

[Griff]

It's "auction psychology", otherwise known as hysteria. Otherwise why would ANYONE bid higher than the "Buy-It-Now" price?

[TedH]

A lot of times an auction with a reserve price will start at a penny or a dollar to get people bidding. Some folks act just as ignorant in an online auction as they do in live auctions, they get caught up in the bidding war. I don't see anything wrong with setting a reserve price. You are more likely to keep people interested in the auction if it starts really low, lower than you would sell.

[Otto]

It's "auction psychology", otherwise known as hysteria. Otherwise why would ANYONE bid higher than the "Buy-It-Now" price?

Okay, what is that? I'm used to normal auctions, where one hold's up a paddle, or nods, or shakes his head, and the last guy to nod or wave his paddle wins. Simple.

[jjames]

I hate reserve auctions and with very few exceptions will not bid on one unless the reserve is already met. I can't figure those sellers out. By the same token I can't figure out buyers that will bid $200 on a Reserve auction when there is a Buy Now price of $3,000.

[2ndovc]

It's a simple case of " What will they Pay"

Set a reserve for what the min. you will take and see what happens.
If it sells, great. If not you keep it for a while longer.

At the gun shows we used to call it " The double secret stupid price"

Testing the market. That's how I see it.

jb

[jdad]

A lot of sellers use a reserve auction to "fish" for the market value of their stuff. Then they will relist it with a high starting price and go "fishing" again, then after a while they will lower it, and then.......

[Griff]

It's "auction psychology", otherwise known as hysteria. Otherwise why would ANYONE bid higher than the "Buy-It-Now" price?

Okay, WTF is that? I'm used to normal auctions, where one hold's up a paddle, or nods, or shakes his head, and the last guy to nod or wave his paddle wins. Simple.

Sometimes the seller will post a price that he's willing to sell at, regardless of the activity in an auction, a bidder can meet the "Buy-It-Now" price and the auction is closed.

[Gun Smith]

I always use the "no reserve" feature when I sell. But I set the opening bid at the least I will take.
I don't even look at the GB ads any more that have a reserve on them unless they have a "buy it now" price. If I do look at a "reserve" gun, I simply bid what I will pay and wait. If it isn't enough to get it, I walk away.
By the way, has Gunsamerica always had the pay for membership and buyers premiun on their site, or is this new?

[kimwcook]

IIRC, it's always been there. Or as long as I can remember.

[Hobie]

Reserves are used in live auctions as well. The reserve ensures that if, for any reason, there is a low "turnout" (or few page views) they will not get less than a certain minimum. There really is no minimum bid in live auctions as the auctioneer starts with whatever he thinks will get people started. I've often seen auctioneers start with something like $10, drop it to $1 to get any bid at all and then get bids near to or over $100. Yes, there's psychology involved.

Back to the reserve. In on-line auctions there are sometimes glitches with computers. The reserve protects the seller. If a high bid is below the reserve and the seller believes the high bid better reflects the true market value than his possibly arbitrary reserve he can take that bid. BUT, the seller is under no obligation to do so.

In reality, auctions formalize normal seller-buyer negotiations with a structure that makes possible such negotiations with many potential buyers at one time with a price benefit to the seller. IOW, auctions do exactly what they are intended to do. ALL sellers would like to get the highest price possible and all sellers the lowest price possible.

The buy-it-now is an on-line deal to encourage buyers to skip the bidding process (and wait) and pony up what the seller wants.

A smart seller will use all the tools available. #1 he sets a low minimum so that he can entice interest in and bids on his item. #2 he sets a reserve to protect his investment, i.e. so he won't lose money on the item. #3 he uses a buy-it-now price for what he'd LIKE to get out of it.

Sometimes buyers do bid over the buy-it-now. Sometimes this happens because of bid increment rules bracketing the buy-it-now price and forcing auction continuation, sometimes because people who are inattentive or ignorant bidding over the buy-it-now price.

[pharmseller]

I hate reserve auctions and with very few exceptions will not bid on one unless the reserve is already met. I can't figure those sellers out. By the same token I can't figure out buyers that will bid $200 on a Reserve auction when there is a Buy Now price of $3,000.

I do this sometimes just 'cause it's fun.

P

[Mike D.]

Many if these sellers can't seem to get it into their hard heads that the guns simply will not sell at their over-the-top starting bid, let alone meet the reserve. If you notice, there a lots of guns that have been relisted for over a year, yet the seller will not accept a reasonable offer. There are some that I would not buy from, for various reasons, but we will not open that can of worms. Basically, it is a buyer beware situation that you must be conscience of when bidding on any internet site. GA is the only one where the price is stated and you have a simple choice, buy it or don't. Cabela's has a lot of guns, too. Their prices average about 120% of actual value, hoping to find a sucker, which they often do. Knowing what they actually paid for a rifle also helps in dealing with them. They ALWAYS at least double the cost and go from there. Getting them to sell at a small profit is another story.

[rhead]

On the sights where the seller pays a percentage of the reserve price (like in regular auctions) whether the item sells or not the reserves are usually more reasonable. Often it is someone wanting a free appraisal. If I bid on something with a reserve it is something I really want and can't get elsewhere.

[marlinman93]

There are numerous problems and mistakes made by those selling guns or anything else at online auctions.
The most successful sellers not only sell with extremely low prices (even 1 cent!) but they don't use reserves. They sell their stuff easily, and almost always for much more than it would ever go with a reserve, or high starting price.
If a gun goes up for auction with a start or reserve that is too high it seems to get "tainted", and if the seller lowers the start or reserve it often still doesn't get a bid because people remember it, and begin to question why nobody is buying it. Low starts will get a lot of tire kickers who don't really want the gun, but for some odd reason they just enjoy bidding, and will drop out low enough to ensure they wont accidentally win it! Not sure what "kick" these individuals get from bidding a gun up, but I see a lot of the same names bidding against me, and those same people never bid anything realistic before they quit.
I have a friend who does this for a living, and mostly by consignment. I was pretty nervous the first few times I listed guns with him and he started at a penny, with no reserve, but when every one of them got much more after his commission than I could have sold it for, I realised the method to his madness!

[Hobie]

Jack knows what he's doing.

[Otto]

Is there a way to tell how long a gun has been on the auction site? I've been watching a couple of guns on Gunbroker all week. They are both on 24-hour auction, but nobody bids on them. As soon as the auction ends, they get reposted for the exact same starting bid. You'd think that, after awhile, the guy would figure out that he will have to either lower the price or keep the guns. I bid on one, but didn't meet the reserve. The next day I bid the exact same amount.

[piller]

I have never done any online bidding at an auction for anything. This thread was a big help in understanding how to start if I decide to. Thanks Gentlemen.

[natedontgo]

MM93 has nailed one of the top reasons why "Jack the dog" is such a successful internet gun seller...Accurate descriptions and lengthy record for integrity complete his portfolio..This also results,of course,in his sales rarely ,if ever,going below fair market value,if s/h and transfer fees are in the calculation... ...Nate...