What determines opening bid at live auctions?
jonathanb
Posts: 3,646 ✭✭✭✭✭
Something I've been meaning to ask for a while... This question is about live auctions with a real auctioneer in front of a room of people. eBay isn't relevent here.
Suppose the auction house has a lot that they honestly think is worth $1000. So they'll list "Estimate: $1000" in their catalog, and the listed minimum bid in the catalog will generally be 1/2 or 1/3 of that or so. I get that part.
A couple of times recently I've been at a live auction and a lot like that came up, and the auctioneer says, "OK, we'll start the bidding at $2000". So presumably they have some absentee bid(s).
Is there any rule-of-thumb formula for how the opening bid is related to the absentee bids in a case like that? It doesn't seem to me like they're jumping to the max of the absentee bids, since I've seen "the book" bid even higher in cases where the live bidders stayed in it. But at the same time it's convinced me not to bid at all on those lots, since if the auction house isn't starting to the max of the absentee bids, then I know in advance that I'd have to bid a lot higher -- or more than one increment, anyway -- to have any chance of winning the lot. That doesn't sound like it's to the auction house's advantage either.
Can anyone shed light on this?
Thanks!
jonathan
Suppose the auction house has a lot that they honestly think is worth $1000. So they'll list "Estimate: $1000" in their catalog, and the listed minimum bid in the catalog will generally be 1/2 or 1/3 of that or so. I get that part.
A couple of times recently I've been at a live auction and a lot like that came up, and the auctioneer says, "OK, we'll start the bidding at $2000". So presumably they have some absentee bid(s).
Is there any rule-of-thumb formula for how the opening bid is related to the absentee bids in a case like that? It doesn't seem to me like they're jumping to the max of the absentee bids, since I've seen "the book" bid even higher in cases where the live bidders stayed in it. But at the same time it's convinced me not to bid at all on those lots, since if the auction house isn't starting to the max of the absentee bids, then I know in advance that I'd have to bid a lot higher -- or more than one increment, anyway -- to have any chance of winning the lot. That doesn't sound like it's to the auction house's advantage either.
Can anyone shed light on this?
Thanks!
jonathan
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In the event that there is only one pre-sale bid or none at all, the opening bid can be as low as $1, etc. though that can vary greatly from one auction house to another. Some auction companies start the bidding at a fixed percentage of the pre-sale estimate, instead.
<< <i>Jonathan, ideally, the opening bid, on behalf of the high pre-sale bidder, will be at a small, fixed increment over the second highest pre-sale bid.
In the event that there is only one pre-sale bid or none at all, the opening bid can be as low as $1, etc. though that can vary greatly from one auction house to another. Some auction companies start the bidding at a fixed percentage of the pre-sale estimate, instead. >>
Great Info!