Purchase Story

Knowing the Reserve

The practice of revealing auction price reserves to bidders has been debated for a long time. Both sides of the argument have solid points, and right now it is up to individual auction houses or consignors to decide.

If Oregon’s Senate Bill 734 passes, auctioneers in Oregon would be required by law to disclose reserves to the public in any advertising.
The bill, sponsored by state senator Fred Girod, amends Oregon state code governing auctions. The bill states that “any advertisement for an auction... must state whether an item subject to auction has a reserve price and, if so, must disclose the reserve price.”

The first part of the proposed change seems unnecessary. Auctions in the United States are subject to the Uniform Commercial Code, which mandates that any auction is assumed to have a reserve, unless “the goods are in explicit terms put up without reserve.” In other words, unless a sale is specifically advertised as “no reserve,” the sale has a reserve. No questions asked.

It’s the second part of the proposed bill that’s troubling. While disclosing the reserve price may bring trans-parency to bidders, it might put consignors and auctioneers on the defensive. Any lot would essentially have to open at the reserve—why would anyone bid otherwise? If a lot passes, any post-auction negotiations would put sellers at a disadvantage.

The bill would also eliminate the opportunity to adjust reserves, notably lower. Auctioneers will sometimes alert consignors to the level of interest in their property. If the interest is tepid, auctioneers will often suggest a lower reserve. How effeective will a lower reserve be if a higher reserve is already published in any advertising? How would an auction with a global reserve (total sales from an auction) be handled?

Some auction houses do reveal reserves—often using the term “minimum bid.” That’s their choice, but to mandate it by law seems like a bad idea.

Originally published in the April 2023 issue of Maine Antique Digest. © 2023 Maine Antique Digest

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