Reserves Best Practices

“Reserve" is a dirty word in the auction industry. The typical reasons a consignor requests to have an asset published with a reserve are:

• They don't trust the auction format. They don't understand that the best way to determine market value is to put the asset in front of thousands of bidders.

• They have an unrealistically high perception of their asset's worth.

• They believe their asset won't be seen by the right buyer(s), the ones that truly understand the value of the asset they're selling.

• They just are not ready to sell the item.

If your consignor falls into one of these categories, your best/most profitable move may be to pass on the consignment altogether. The bottom line is don't agree to sell an asset with a reserve before you've done the due diligence necessary to determine the asset's value.

The formula for determining the highest acceptable reserve for an asset is:

Common “No Show" reasons from the bidder:

• Failed to show up on removal day or the agreed-upon alternate removal day.

• Refused to take possession of the asset at the removal. Important: The lot description and picture must accurately reflect the asset to be considered a “No Show."

• Didn’t realize the auction location or decided a low-value item was not worth picking up.

• Claims he didn’t place a bid.

• Decides shipping is too expensive/didn’t realize shipping wasn’t available on the asset

• A canceled check, disputed credit card transaction or credit card has been declined.

Other issues to consider:

• If a "like" item has not previously sold on Equip-Bid, is it the type of item the affiliate would expect to do well on Equip-Bid?

• Will bidders appreciate the value of the item? Sometimes items are so specialized bidders don’t have any idea how to value the item. In this case, the affiliate either needs to provide the education the bidder needs (through the item description, YouTube, PDF, link to a website, etc.) to assess true value. In some cases, the affiliate may end up determining Equip-Bid is not the best venue for selling the item. It is better to forego an item almost assured to not reach the reserve than it is to publish the item and disappoint everyone, the seller, the bidders, the affiliate, and Equip-Bid.

• Will the timing of the sale make a difference in the final bid price? While an item may have a history of selling well on Equip-Bid, affiliates need to consider when they are publishing certain items to yield the highest return for the seller. For example, selling a boat in May will receive a much higher bid price than it will in October. Has the affiliate or another affiliate just recently sold a number of "like" items, thereby saturating the target market, which will drive bid prices lower?

It’s important to recognize as an affiliate you are serving two masters, your consignors and your bidders. Both are very important. While no one wants to see an item sold way below value (if that were the case, everyone’s supply lines would dry up); it’s critical not to burden yourself with posting items that won’t meet the reserve for some reason (see above). In the end, the most important relationship an affiliate has is with their bidders. Bidders need to trust the affiliate isn’t wasting their time by posting items that will never sell. Bidders tend to be loyal to the affiliates they believe to sell the stuff they are interested in. It doesn't take long for bidders to lose interest in an affiliate’s auctions if they have spent the time to watch and bid on their auctions, but continually see items not selling because the reserve wasn't met.