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Reserve-Price Auctions on eBay

Unlike a minimum bid, which is required in any eBay auction, a reserve price protects sellers from having to sell an item for less than the minimum amount they want for it. You may be surprised to see a 1968 Jaguar XKE sports car up for auction on eBay with a minimum bid of only a dollar. It’s a fair bet that the seller has put a reserve price on this car to protect himself from losing money. The reserve price allows sellers to set lower minimum bids, and lower minimum bids attract bidders. Unfortunately, if a seller makes the reserve price too high and it isn’t met by the end of the auction, no one wins.

eBay charges a fee for sellers to run these auctions. Nobody knows (except the seller and the eBay computer system) what the reserve price is until the auction is over (assuming that the reserve price is met and that someone wins the auction), but you can tell from the auction page whether you’re dealing with a reserve-price auction.

Reserve-price auctions are in the listings alongside the other items, so you have to click to find out whether it has a reserve. If bids have been made on an item, a message also appears on the page telling you if the reserve price hasn’t been met; next to the current dollar amount in the auction, you see (Reserve not met). The moment a reserve is met, the indicator disappears.

If you’re bidding on a reserve-price auction, don’t be afraid to e-mail the seller and ask what the reserve is. Yeah, reserves are mostly kept secret, but there’s no harm in asking — and many sellers gladly tell you.

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