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honestabe

What does no reserve really mean on BOB?

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honestabe    10
honestabe

Hi guys .

I am relatively new to this whole online auction game and have found that i have one major issue when deciding whether to bid or not on an item.'

My issue is that many items are advertised as "no reserve" , yet there is a starting bid placed/advertised by the seller ...surely this is in fact a de facto reserve ?

Am i missing something here ?

Surely no reserve means the bidding starts at zero ..it is not no reserve if you are selling a watch for example and the starting bid is R28500 yet there are no bidders listed for the item ??

I would appreciate clarity on this matter , especially in light of the current bad publicity and scandal relating to the goings on in the conventional auction game in South Africa .

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qball    10
qball

Bidding cannot start at zero. A bid must be an amount. Therefore an auction must start at a bid amount, including conventional auctions. A reserve price is the minimum price that the seller is willing to accept for the item, or to put it another way the "ceiling" price that needs to be reached on the auction before the item can be sold. So if something starts at R1 no reserve, there is no "ceiling", and the item could be sold for as little as R1.

 

Essentially a starting bid amount could be considered the "reserve" price (or minimum amount the seller is willing to accept on the auction), but on a no reserve item the seller must sell the item at that bid amount. If the seller does not receive a bid for at least the amount of the reserve, they aren't obliged to sell the item. Once the reserve price has been met, the reserve price is no longer displayed, and they're obligated to sell the item to the winning bidder.

 

Hope this helps.

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Vinyl Lady Decals    10
Vinyl Lady Decals

No reserve, means that there isn't a hidden reserve that you can't see for the item.

A reserve means that the seller is not willing to let an item go for less than a certain amount, it does not have to be the starting price.

A seller could put a reserve on a piece of art of R1000.00 and start the bidding at R500.00 to gain interest.

This means that the item will only sell if the reserve of R1000.00 is met or increased.

If there is no reserve, it means that the winning bidder will win the item regardless of the price they bid on when the auction closes, it could be the starting price or anything above that.

 

The conventional auction scenario is very different from online auctions as Bidorbuy monitors bidding activity. Should it be suspected that shill-bidding is happening (where someone like the seller has registered a second account to push the price up), this can be reported to community watch on bidorbuy for the security systems to check both accounts.

 

Something that you should check on are a seller's ratings, read the negatives to see what kind of a seller they are. Also check for new sellers who are only selling high-valued items as these could be fraudulent, if unsure, check with community watch, they have various security systems in place to minimise fraudulent activity.

 

Hi Cuan, sorry, was posting at the same time

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honestabe    10
honestabe

I find the concept as used on BOB of "no reserve" to be rather disingenous if i am to work on the definition you give in your reply to my post . NO reserve means no reserve , it means starting at R1 ...the definition you give means that there is in fact a reserve and I think you should change the terminology used , your definition would definitely not stand up in a court of law and would be considered false advertising .IF THERE IS A RESERVE DONT SUGARCOAT IT , JUST STATE IT AND GET ON WITH BUSINESS !!

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voldermort    10
voldermort

[quote=honestabe;136282

My issue is that many items are advertised as "no reserve" , yet there is a starting bid placed/advertised by the seller ...surely this is in fact a de facto reserve ?

 

Any auction, be it online or live auction worldwide, unless it is absolute rubbish being sold, has a starting price. The starting price is the item they will be willing to let it go, therefore after the starting price there is no reserve. Nowhere in the world will you find a starting price for anything valuable starting at eg: R0.50 - there will always be a starting price. The two - starting price and reserve price - are completely different things. Remember too that by putting a reserve price is a good way to gauge interest in an item as well - without committing yourself to a sale that may not be feasible at all.

Edited by voldermort

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Vinyl Lady Decals    10
Vinyl Lady Decals

Sorry, you are wrong about that. The standard that Bidorbuy uses is standard throughout the world, it is nothing unique to bidorbuy.

Go and read what no-reserve auction means on wikipedia Auction - Wikipedia, the free encyclopedia

 

I have copied this out from the page:

 

  • No-reserve auction (NR), also known as an absolute auction, is an auction in which the item for sale will be sold regardless of price.[25][26] From the seller's perspective, advertising an auction as having no reserve price can be desirable because it potentially attracts a greater number of bidders due to the possibility of a bargain.[25] If more bidders attend the auction, a higher price might ultimately be achieved because of heightened competition from bidders.[26] This contrasts with a reserve auction, where the item for sale may not be sold if the final bid is not high enough to satisfy the seller. In practice, an auction advertised as "absolute" or "no-reserve" may nonetheless still not sell to the highest bidder on the day, for example, if the seller withdraws the item from the auction or extends the auction period indefinitely,[27] although these practices may be restricted by law in some jurisdictions or under the terms of sale available from the auctioneer.
  • Reserve auction is an auction where the item for sale may not be sold if the final bid is not high enough to satisfy the seller; that is, the seller reserves the right to accept or reject the highest bid.[26] In these cases a set 'reserve' price known to the auctioneer, but not necessarily to the bidders, may have been set, below which the item may not be sold.[25] The reserve price may be fixed or discretionary. In the latter case, the decision to accept a bid is deferred to the auctioneer, who may accept a bid that is marginally below it. A reserve auction is safer for the seller than a no-reserve auction as they are not required to accept a low bid, but this could result in a lower final price if less interest is generated in the sale.[26]

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qball    10
qball
I find the concept as used on BOB of "no reserve" to be rather disingenous if i am to work on the definition you give in your reply to my post . NO reserve means no reserve , it means starting at R1 ...the definition you give means that there is in fact a reserve and I think you should change the terminology used , your definition would definitely not stand up in a court of law and would be considered false advertising .IF THERE IS A RESERVE DONT SUGARCOAT IT , JUST STATE IT AND GET ON WITH BUSINESS !!

 

Thank you for your comments honestabe.

 

I think Tananka has answered your post with the correct definition. The term is used correctly and won't be changed I'm afraid and doesn't amount to "false advertising" in our view. Reserve prices are never disclosed until the actual bid reaches the reserve price.

 

Please kindly refrain from shouting (as denoted by the use of Upper case - it is considered impolite in internet etiquette) thanks. :bigsmile:

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qball    10
qball

Further to this, we are obligated to disclose whether the auction has a reserve or not.

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honestabe    10
honestabe

in the end we are discussing semantics here .I am simply stating that when applying any kind of logic the idea of calling something no reserve is in fact incorrect as used by BOB in many cases . It is misleading and this would be obvious to you if you put yourselves in the position of the buyer . There are in fact auctions that are genuine no reserve auctions for items worth far more than many of the so called no reserve auctions on BOB ...have you ever been to a live car auction ? The auctioneer may start at R10000 , but if no one bids he will then open the bidding to the floor ...and the market will decide what is a fair price for that item on that day !! That is in fact a genuine no reserve auction . No matter how you sugarcoat it and what language you use to justify it , having a starting bid that the seller will not go below is in fact a de facto reserve as i have said before . If an auction is advertised as no reserve on BOB but has a starting bid do i have the right to bid below this ? Is the seller obliged to accept my bid ? Is the term no reserve in fact binding on either party ?

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MsPlod    10
MsPlod

Have to confess that the "reserve not met" gets my goat COMPLETELY too. Why not just list it at the minimum price one is prepared to attain and let the market/demand take it from there?

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wayjen    10
wayjen

I am not clued up with all this but I can understand where honestabe is coming from and what qball is saying but then also have to agree with what MsPlod has just said, why on earth set a reserve on an item when you can start said item at the "reserve" price you have set it for?

 

If I want to sell an item for R1000 and put a reserve price on it at R1000 and put it on a R1.00 auction, I will in no time chase people away long before the reserve is even met but if I started selling it at R1000 I have a better chance of selling it.

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voldermort    10
voldermort
Have to confess that the "reserve not met" gets my goat COMPLETELY too. Why not just list it at the minimum price one is prepared to attain and let the market/demand take it from there?

 

Because Lee, some people do not necessarily want to sell their item but want to get an indication of the value, how much interest is shown in it, how much potential buyers are willing to pay..............they know it is valuable, just not sure how valuable so put as a reserve a price that they think is correct, erring on the higher side

Must admit though I also couldn't be bothered with these auctions.

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wayjen    10
wayjen
Because Lee, some people do not necessarily want to sell their item but want to get an indication of the value, how much interest is shown in it, how much potential buyers are willing to pay..............they know it is valuable, just not sure how valuable so put as a reserve a price that they think is correct, erring on the higher side

Must admit though I also couldn't be bothered with these auctions.

 

If these people want to test the market by listing an item with a reserve price of lets say R1000 and list it for R1.00 they are obviously gonna get people interested. Should they be lucky enough to get the sale well then congrats to them but I bet you they have alienated (I am polite here) plenty other people off along the way.

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voldermort    10
voldermort
I am not clued up with all this but I can understand where honestabe is coming from and what qball is saying but then also have to agree with what MsPlod has just said, why on earth set a reserve on an item when you can start said item at the "reserve" price you have set it for?

 

If I want to sell an item for R1000 and put a reserve price on it at R1000 and put it on a R1.00 auction, I will in no time chase people away long before the reserve is even met but if I started selling it at R1000 I have a better chance of selling it.

 

Ok so let's put it this way....you need to pay your rent of R5000 at the end of the month & all you have to sell is a diamond ring with a valuation certificate for R30 000 - so you know without a doubt that you will get R5000 for this ring & that is what you desperately need for rent, so you put R5000 as your starting price, ordinary auction.....

however let's say you have a stamp that is not even known to exist - rare, rare, rare so you want to advertise it & gauge interest in it.........you want to know how much people would be willing to pay BUT you don't want to sell it really, so you choose a ridiculously low starting price because people will be interested in bidding on a unique/valuable item with a low starting price however your reserve could be R100 000.00, obviously if you receive a bid for R100 000.00 you should be happy that your reserve has been met, however it the reserve is not met, you are not obligated to sell the item but you have garnered interest in that item in the meantime....and then too let's say you have a bid of R90 000, you could always do a PO as well.

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honestabe    10
honestabe

http://www.ehow.com/facts_6818034__no-reserve__-definition.html

According to one seller with whom i communicated as it was their auction I was interested in , it is BOB who tag an auction as "no reserve" automatically when a reserve is not put in place , which is maybe correct grammatically but misleading for all practical purposes .

If you read the link i have provided it will give a definition of what a true " no reserve " auction entails .

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voldermort    10
voldermort
If these people want to test the market by listing an item with a reserve price of lets say R1000 and list it for R1.00 they are obviously gonna get people interested. Should they be lucky enough to get the sale well then congrats to them but I bet you they have alienated (I am polite here) plenty other people off along the way.

 

Quite agree which is why I say I couldn't be bothered with these types of auctions.

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LuckySilver    10
LuckySilver

As far as I understand, the reserve price can only be a maximum of 20% above the starting bid prices, so we shall not be finding examples of R1 auctions garnering interest for an item which the seller reserves at R1000. With this knowledge I think it is definitely acceptable to use a reserve price which as a buyer you may understand is just 20% less than what the seller is truly willling to sell at and at the same time the seller is able to gain greater attention for their listing - although I must admit I have not yet made use of this option as it just adds complexity to the listings which I judge our South African buyers do not prefer.

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voldermort    10
voldermort

Sorry, should have made myself clear, certain auctions do only allow you to put a reserve of whatever % above starting price, most however allow you to put your reserve as you see fit.

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qball    10
qball
in the end we are discussing semantics here .I am simply stating that when applying any kind of logic the idea of calling something no reserve is in fact incorrect as used by BOB in many cases . It is misleading and this would be obvious to you if you put yourselves in the position of the buyer . There are in fact auctions that are genuine no reserve auctions for items worth far more than many of the so called no reserve auctions on BOB ...have you ever been to a live car auction ? The auctioneer may start at R10000 , but if no one bids he will then open the bidding to the floor ...and the market will decide what is a fair price for that item on that day !! That is in fact a genuine no reserve auction . No matter how you sugarcoat it and what language you use to justify it , having a starting bid that the seller will not go below is in fact a de facto reserve as i have said before . If an auction is advertised as no reserve on BOB but has a starting bid do i have the right to bid below this ? Is the seller obliged to accept my bid ? Is the term no reserve in fact binding on either party ?

 

Thanks for your feedback honestabe. I think we should agree to disagree :wink: , although I do hear what you are saying.

 

The answer to your questions:

 

No, you must start at the starting bid amount, you won't be permitted to bid below that (R1 being the lowest nominal amount to start an auction) - if there is a reserve set, you can bid below that but your bid won't be accepted as with conventional auctions. The seller can't accept a lower bid as they has already stated a starting bid amount (lowest possible start amount) to start the auction and technically the auction is starting at zero. The bids are binding, and should an item sell for R1 no reserve the seller has to sell it at R1, and your winning bid amount will be binding too.

 

These terms are used in the correct manner. As you said it is semantics and we could argue this point til we are blue in the face, we believe the manner in which it is used is correct and not misleading. In essence an auction must start at a certain amount, but the first bid amount must be an amount, and that is set by the seller, as with conventional auctions that is set by the auctioneer, and it is at the auctioneers discretion to lower this, knowing what the actual seller is willing to let it go for. An auction cannot start at a bid amount of R0, a bid must be placed, the absolute minimum we allow is R1 (the lowest nominal amount to start the auction off on the R1 no reserve auctions).

 

The point is an auction must start somewhere and a bid must be placed to get the auction going - a starting bid amount applies to any auction, whether online or conventional auctions, even if the auctioneer opens it up to the bidders (at his discretion, not the bidders, and he will try to get the best price for the item, he also has the discretion if no one bids, to move on to the next lot, knowing what the owner of the item is willing to accept). Online auctions are different from real world conventional auctions in some respects and this is the universal standard used by online auction sites and basically follow the same principles as conventional auctions (despite technical and time challenges).

 

Thanks again for your comments.

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qball    10
qball

We are also required in terms of the CPA to disclose whether a reserve price is applicable on the auction.

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wayjen    10
wayjen

Ok so a person enters a reserve price to see the market interested but how will they know if the bids, below the reserve, are not accepted, are they alerted to the fact that there are bids and how much but it is below the reserve price?

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lilythepink    10
lilythepink

I suppose we need to check all bids on our items and keep following up on the checking?!

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qball    10
qball

They will be alerted to the bids. The bidders will be alerted that they have not reached the Reserve price.

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dbotha5    10
dbotha5

what happens if a seller refuses to sell item?

 

lets say a no reserve auction is won at R1. What happens if the seller refuses to sell due to the low bid price?

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NooNooBug    10
NooNooBug

That would be grounds to report them to Community Watch !

If there is no reserve then no matter the closing price (be it R!) they have to sell it at that !

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