Recently I have come across thread postings on a couple of different web forum websites that I am a member on that had topics and stories of sellers not going through with a transaction for something that the seller had listed up for auction on a website. The sellers had stated to the winning bidders, that they were not going to go through with a sale because they didn’t get a good enough winning bid for them to complete the transaction.
These were what is called a “No-Reserve” auction. Now, in a “No-Reserve” auction a seller lists their product/item/etc. for sale and they are supposed to sell it to the winning bidder, no matter what the winning bid amount is. These type of auction listings are usually put up by the seller as a “No-Reserve” auction so that it will draw more attention to their auction listing, thus increasing the potential for more bidders on their auction listing and hopefully a higher price that they would have gotten with a “Reserve Price” auction.
A “No-Reserve” auction draws more attention than an auction for a product/item/service that has a set reserve price (a minimum price of which a seller is willing to sell what is listed) partly because it gets people to want to bid in the auction listing because they are trying to get a good deal on what is listed in the auction listing.
Another thing that helps to draw people into viewing and bidding on a “No-Reserve” auction listing is that a seller will usually have the starting price for the auction at a ridiculously low price. It’s common to have a “No-Reserve” auction listing have a starting price of just $.99 or perhaps $1.00. What this does is that it will get a lot of people to check the auction listing out because of such a low starting price.
Then, a seller hopes that the combination of this extremely low starting price and the fact the auction is a “No-Reserve” auction will get a lot of people interested in what they have listed in this auction and it will start getting lots of people bidding on it. This will drive up the price that the item will eventually sell for, and that is what the seller is trying to achieve.
The down side of listing your product/item/etc. for sale in a “No-Reserve” auction is that the auction might not get but one bid and if it does then the buyer will win the auction for whatever the starting price is. If the auction comes to it’s scheduled closing time and the auction ends the buyer is supposed to pay the seller and the seller is supposed to sell the item for the low starting bid that they started the auction at.
This is a chance that a seller must take if they are listing something up for auction in a “No-Reserve” auction. As a seller, you take the chance that you since you have no reserve price and a low starting bid, you might no get a good price for what you are auctioning and are supposed to sell the product/item/etc. for this low price. That’s the chance you take when you are hoping that the “No-Reserve” auction with a low starting price will draw more bidders and it doesn’t have that affect.
So, if you are a seller who lists something up for auction and you don’t get a price that you are happy with, you have to ask yourself exactly what your reputation as a seller is worth? Do you choose to go through with the transaction and perhaps take a financial loss for what you had listed in the auction, or do you back out of the deal and choose not to complete the transaction and gain a bad reputation as a seller?
My belief is that a good reputation as a seller is way too valuable and precious to keep, so I personally would take the loss on that particular auction and gain and earn the respect of my buyers and potential buyers. My thought is that with a good reputation as a seller you will make more money in the long run, so backing out of an auction transaction of which I didn’t get a price that I was happy with is NOT an option I would take.
So I ask all people who sell products/items/etc. in auctions, What is your reputation worth?
If you have a question, comment or something else to share, feel free to leave a reply below!