The illusion of no reserve
Joey29
Posts: 458 ✭✭✭
I have been noticing on some auction site that no reserve lots attract large number of bids but always seem to go for almost full market price or even sometimes over market price. But many regular reserve lots often get passed on with no bids. Don’t understand the logic of this phenomenon. What do you Guys make of it?
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Psychology!
My collecting “Pride & Joy” is my PCGS Registry Dansco 7070 Set:
https://www.pcgs.com/setregistry/type-sets/design-type-sets/complete-dansco-7070-modified-type-set-1796-date/publishedset/213996
Depends on who's bidding on what coin. Ya never know. Peace Roy
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Many bidders will participate and bid enthusiastically for unreserved lots, while completely ignoring reserved ones.
When a lot is reserved, numerous potential bidders assume - often incorrectly - that the reserve price is higher than fair market value. So they simply move on, without further thought. On the other hand, when lots are offered at no reserve, there tends to be more interest and excitement, at the hope or thought that the item can be bought at a favorable price. And that often leads to strong prices. The bottom line is that many unreserved lots sell or sell for more, rather than not selling or selling for less than they would, if offered with a reserve.
Mark Feld* of Heritage Auctions*Unless otherwise noted, my posts here represent my personal opinions.
Nailed it Mr. Feld.....Cheers, RickO
All true.
I'm not sure it should be surprising that an unreserved lot goes for market value. Auctions are retail venues. A lot of people seem to think they are wholesale venues.
This reminds me of the live coin auctions I used to attend back in our small town in Ohio.
The auctioneer clearly knew coins, fair market value, and his audience.
Essentially everything was no reserve. But knowing fair market value, he’d always attempt to start the bidding at that price. But no one ever bit. He always had to keep dropping the initial bid, almost always to a token bid of $10, at which 5-6 hands would shoot up, and we were off to the races. And time and again, the bidding would end up right where he’d tried to start it…. And sometimes higher. Yes everyone wants a bargain, but there’s also FOMO and auction fever at play.
This...........Why just throw out a line with one hook on a reserved lot when you can throw out a line with 10 hooks on a open reserve
Steve
Since "reserves" are often full retail, why bother? In addition, reserved lots are often owned by the auction companies themselves and they aren't interested in letting them go cheap.
People think they're going to get a bargain price on unreserved lots and that reserved lots are overpriced.
Don't worry about what other people do, lots of them don't understand how to account for buyer's fees either. If you like the coin, make your bid. You'll either win it or you won't.
Bottom line- a no reserve auction that already has a bid is no different than an auction with a reserve. In each of them, there is no way to tell beforehand how much you'll need to bid to win the lot.
I bid on a coin that I want.
I set my max bid and either win it or not so a reserved or no reserve lot does not affect me.
I do not sell coins so it has no resale value to me.
Wayne
Kennedys are my quest...
The illusion of no reverse is where an eBay auction shows only the obverse of a coin. Hope that helps...
P.s. it seems like have to put a :-) on everything that's a joke, or people won't realize it's supposed to be funny. So here you go... 💀
Sometimes I misread "no reserve" as "no reverse".
Young Numismatist • My Toned Coins
Life is roadblocks. Don't let nothing stop you, 'cause we ain't stopping. - DJ Khaled
Also it should be noted that many auction houses will place bids on coins that are below market value for their wholesale operations. I believe but don’t know for sure that many have policies that disallows them from bidding on reserved lots as it could create the impression of an insiders advantage. Anything that suppresses bids will cost sellers money in the long run even if a few high liquidity coins are immune to the effects.
11.5$ Southern Dollars, The little “Big Easy” set
I love coin auctions.
My 1866 Philly Mint Set
Auctions are exciting, bin's are dull. People like excitement.
I recently but up a coin on eBay with a starting bid of $330 and bin of $550. Someone quickly bid $330 (most likely to take down the BIN price of $550) . The original bidder wound up buying the coin for $680 (which he could have bought for the BIN of $550).
I also put up a low grade 1892 Barber half dollar with a bin of $29 and it sold for $32. Starting price $9.99. I get a lot of similar auctions to these, where the final bid beats out the BIN. Ok with me if someone wants to pay more then I want for a coin.
I have no definitive evidence, but the sense I have is when I started bidding in auctions in 2014, I was bidding mainly against dealers and fewer collectors. My sense is that over the past few years, more collectors have started bidding in the major auctions (put another way, my GUESS is the percentage of bidders that are collectors and not dealers has grown over the past few years). If I’m right, that means I’m now bidding against mainly collectors as opposed to competing against mainly dealers. As a generalization, I bid on coins ranging in price from $500 - $5,000.
Steve
My collecting “Pride & Joy” is my PCGS Registry Dansco 7070 Set:
https://www.pcgs.com/setregistry/type-sets/design-type-sets/complete-dansco-7070-modified-type-set-1796-date/publishedset/213996
My thoughts are:
-when someone else is bidding, and going up to the price you feel is fair value, it becomes re-assuring to a lot of people. As it goes past the fair value price, and especially if you can see the number of different bidders, it makes some feel as though they were under valuing the coin, so they bid more thinking that there will be buyers at the higher price if they ever sell.
-when you are in a fixed price buy it now, or on a dealers website with a fixed price, even if you are sure of your fair value price, there is always some uncertainty for the average collector. Sometimes you will buy it, but many times you won’t, then when it sells, you have the regret that you didn’t pull the trigger. This is where I think the experienced collectors or dealers do well. They are confident in their analysis.
-lastly, everyone hopes for a bargain. When you fall in love with a coin, hoping for a bargain…sometimes it’s very easy to say,” ah what is another increment or two” …I really like the coin
I see this phenomenon with many nice, but fairly common CWT’s often. I probably am only winning about 5% of the items I bid on, 1 in 20 auctions, when something slips by. Besides that, most seem to go at least 20% higher than equivalent buy it now tokens.
My two cents.
I perceive the same and the pandemic likely brought more collectors into this space.
Yes it’s par for the course. It’s like a herd mentality. In general - If your not giving it away they not bidding. Shows the ignorance of the general audience. Or the audience just bargain hunters looking for a good rip.
Another factor is a dealer might put in a snipe of 60-70 pct MV but going down the list ignore any thing else not starting real low or does not have bids near the 99c opening bid.
When the pandemic came I had really strong retail sales and any auctions I had did well. Since then it’s slacked off a bit.