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Understanding Reserve Auctions

What to do with reserve listings, whether you're a buyer or a seller

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Understanding Reserve Auctions

If you see the words "Reserve not met" below the auction's current high bid, you know the seller has set a reserve price for the auction

Image: Aron Hsiao / eBay
Reserve price auctions can be a confusing topic whether you're an eBay seller or a would-be bidder or buyer. Though they're not the majority of auctions on eBay, reserve price auctions are common enough and useful enough that you'll likely encounter them eventually.

Here's what you need to know to make the most of reserve price buying and selling.

What is a reserve price?

When a seller lists an item for auction on eBay, they are given the option to supply eBay with an optional "reserve price" for the item. This price, which is kept secret from bidders, is the minimum amount for which the seller is willing to sell.

If a seller supplies a reserve price, and bidding for the item doesn't reach the price before the auction is over, the seller is not required to sell the item to the auction's high bidder.

Reserve price auctions can be identified either by the words "Reserve not met" shown underneath the current high bid for the auction (see illustration).

Reserve Tips for Bidders/Buyers

The act of placing a bid on a reserve auction is no different from the act of placing a bid on any other eBay auction-enter your maximum bid and let eBay's proxy bidding system do the rest as usual, or snipe if you prefer and wait for the auction to end.

The results of a reserve price auction, however, can be different from what many eBay bidders expect, and the rules surrounding reserve price auctions are slightly different. This can make for a confusing and frustrating state of affairs.

  • If the reserve isn't met, you don't win anything. Because the seller isn't obligated to sell the item to you if the reserve price isn't met by auction's end, you may place a bid, wait days for time to run out, and end up as the highest bidder only to learn that the reserve was not met and the seller thus won't sell to you.

  • You have to wait, even if your bid doesn't meet reserve. Whether you're using eBay's proxy bidding system or a sniping system, when you bid on a reserve auction you can't tell whether you're obligated to buy until the auction is actually over. Even if your bid doesn't meet the reserve price at first, don't simply give up and bid on a competing item. As the reserve auction progresses and competing bidders act, the reserve could end up being met while you're not looking, with you as the high bidder. If this happens and you've also bid on another item, you'll suddenly be on the hook to by both of them.

  • Reserve auctions often end with few/low bids. Because of the uncertainty described above, many bidders are reluctant to place bids on reserve auctions. As a result, it's actually common for reserve auctions to show a current bid well below the going rate for the item in question, and for the item to receive fewer bids than a matching non-reserve item-which tends to make it less likely that the reserve price will actually be met!

  • Reserve prices can be higher than you'd expect. Reserve prices are often set by sellers just "testing the water" or who have unreasonable expectations, so it's also common to realize, as bids go higher and higher and the reserve remains unmet, that the reserve price on a given auction is set at an unreasonably high level and all bidders are effectively wasting their time.

  • Reserve auctions are often used by less experienced sellers. Because they tend to generate fewer bids and are designed to protect a seller that isn't sure of the market value of his or her goods, reserve auctions are often used by new or inexperienced eBay sellers that may be slower to communicate, offer customer service, and/or ship goods.

Reserve auctions tend to be the least desirable types of auctions for a given item for most bidders, even though the current bid price of reserve auctions tends to be much lower than that of non-reserve auctions. For most buyers it's too big an inconvenience to bid on an auction through which they might not get an item even if they "win" the bidding, but that they must nonetheless wait to complete before placing another bid.

For these reasons, it's generally good policy as a buyer to bid on a reserve auction only if there is a compelling reason to do so-a lack of competing non-reserve auctions for similar items, for example, or superior seller feedback that justifies the inconvenience and uncertainty.

Are you a seller? Have a specific question?

Read on for tips about reserve price auctions specifically addressed to sellers, as well as a list of frequently asked questions about reserve price listings, along with their answers.

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