As Barry stated due to the economic environment you cannot expect all consignors or sellers to willingly list items in the auction format without reserves. I think we are going to see a lot more measures taken to offer some protection to those whose material is being offered up. It takes at least two interested parties to make an auction successful to bring the item to current full market value and right now you cannot count on having two interested parties willing to do that. If one person thinks something is worth $1,000 and has the means and others who are interested have more limited means and can only take the item up to $600, what is the item worth? If you are the buyer you say the next increment over $600 but if you are the seller and you have an interested buyer are you not entitled to get the $1,000?
That said I have no trouble participating in an auction with high opening bid or one which employs reserves (disclosed or not). I think it is kind of foolish to be turned off from bidding in an auction with an unknown reserve. The very act of bidding in an auction where you do not know who your competition is carries with it the same concept of a hidden reserve. You do not know who you are bidding against and what level it is they are willing to go to. We have seen countless times where an item sells for far more than we "think" it is worth. The result can be the same as what we perceive as a high hidden reserve. The value of an item is not necessarily the same to all interested parties. In the example above I would have no problem being the bidder who paid the $1,000 for the item since getting the item is what is important to me.
High opening or reserve auctions are not as appealing since many bidders interpret those mechanisms as a seller setting a fixed price and assume the seller is going to be unreasonable. The reason the auction format is so appealing to bidders is that they feel they are in control of what they pay for an item since they are bidding and setting the price. But it is not an isolated event as bidders are bidding against other interested parties whose means and interest they cannot gauge. Sure it is a free market but the result may not be any different than a seller saying I want $X for my card. Many times a bidder is willing to pay even more than a seller would be asking.
An item is only worth what someone is willing to pay for it at that given moment under very specific conditions. When you have more than one person participating in the pricing then you find a more accurate market value on that item. But what about when you don't? Auctions are not supposed to unfairly enrich a either a buyer or a seller but in a buyer driven market selling without reasonable reserves or reasonable higher opening bids may result in buyers being enriched to the detriment of the seller more times than not. The market is clearly unbalanced right now and the reserves or high opening bids create equilibrium as long as those who are setting them are reasonable.
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06-30-2010, 06:27 PM
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